SOURCE: Pericom Semiconductor Corporation

Pericom Semiconductor Corporation

February 01, 2011 16:05 ET

Pericom Semiconductor Reports Fiscal Second Quarter 2011 Financial Results

SAN JOSE, CA--(Marketwire - February 1, 2011) - Pericom Semiconductor Corporation (NASDAQ: PSEM), a worldwide supplier of high-speed integrated circuits and frequency control products, today announced results for its fiscal second quarter ended January 1, 2011.

Net revenues for the second quarter were $40.7 million, a decrease of 5% from the $42.8 million reported in the first quarter of fiscal 2011, and up 14% from the $35.8 million reported in the comparable period last year. The sequential revenue decline primarily resulted from customer inventory adjustments to align with end user demand. The second quarter of fiscal 2011 included a full three months of Pericom Technology, Inc. ("PTI") operations, acquired on August 31, 2010.

GAAP gross margin was 33.5% in the second quarter, down from 34.0% last quarter and from 33.6% in the comparable period last year. On a non-GAAP basis, gross margin was 36.3% in the second quarter, which reflects exclusion of share-based compensation, amortization of intangible assets, and amortization of fair value adjustments and compensation expense accruals from the PTI acquisition.

GAAP net income attributable to Pericom shareholders for the second quarter was $1.8 million, or $0.07 per diluted share, compared with net income of $9.5 million, or $0.38 per diluted share in the first quarter, and net income of $2.5 million, or $0.10 per diluted share in the comparable period last year. GAAP net income for the second quarter of fiscal 2011 included share based compensation, amortization of intangible assets, amortization of fair value adjustments, and other PTI acquisition related expenses. GAAP net income for the first quarter of fiscal 2011 included these same items and in addition a one-time gain on the previously held interest in PTI. Excluding these items, non-GAAP net income for the second quarter was $4.1 million or $0.16 per diluted share, compared with $4.3 million or $0.17 per diluted share in the first quarter, and non-GAAP net income of $3.2 million, or $0.12 per diluted share in the comparable period last year.

"We are pleased to deliver good operating results in the quarter. Pericom generated strong cash flow with our operating profit, reduction in inventory and better DSOs," said Alex Hui, President and CEO of Pericom.

"The design activities for our serial connectivity and timing product solutions continue to be strong. We see an expanding adoption of our first and second generation serial connectivity and timing solutions across computer, communication and consumer applications. We also see strong interest and design in activities for our third generation solutions from computing/storage customers who are early adaptors of next generation high speed serial connectivity designs. We believe these design activities position us well for healthy growth as the industry completes its inventory adjustment cycle."

New Products

In the December quarter, Pericom introduced a total of 9 new products across the Signal Integrity, Timing, and Connectivity product areas.

--  We expanded our solutions for high-speed serial protocol signal
    integrity by introducing 2 new ReDriver™ products for SATA3, SAS2,
    and eSATA protocols. These products address volume notebook, server,
    storage, and embedded market segments.

--  Adding to our high-speed connectivity solutions, we introduced 4 new
    products; 2 are advanced HDMI and LVDS graphics display switches
    targeted to consumer video and computing segments, and 2 are next
    generation USB 'sleep and charge' (mobile device charging) products for
    the NB computing segment.

--  Expanding our timing solutions for next generation platforms, we
    introduced 3 new products: 2 advanced crystal oscillators (XO)
    targeting the networking and mobile computing (tablet) segments, and
    1 very small footprint xtal for wireless networking applications.

Fiscal Q3 2011 Outlook

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

--  Revenues in the third fiscal quarter are expected to be in the range of
    $38 million to $41 million.

--  GAAP gross margins are expected to be between 33.2% and 35.2%, and
    adjusting for share-based compensation, amortization of intangibles,
    fair value adjustments, and compensation accruals that are expected to
    total approximately 1.3%, non-GAAP gross margins are expected to be in
    the 34.5% to 36.5% range.

--  GAAP operating expenses are expected to be between $12.3 and
    $12.7 million, and adjusting for share-based compensation, amortization
    of intangibles, fair value adjustments, and compensation accruals that
    are expected to total approximately $1.7 million, non-GAAP operating
    expenses are expected to be in the range of $10.6 to $11.0 million.

--  Other income is expected to be approximately $0.8 million on a GAAP
    basis and $1.0 million on a non-GAAP basis.

--  The effective tax rate is expected to be approximately 27-30% on a GAAP
    basis and 23-25% 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 February 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, February 8th. To listen to the replay, dial (800) 642-1687 and reference conference ID 20773068.

About Pericom

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

Non-GAAP Financial Information

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

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

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

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

Safe Harbor Statement

This press release contains forward-looking statements as defined under The Securities Litigation Reform Act of 1995. Forward-looking statements in this release include the statements under the captions "Fiscal Q3 2011 Outlook", which regard the anticipated revenues, gross margin, operating expenses, other income, net income and effective tax rate in the third fiscal quarter of 2011, and statements from our CEO quoted on the first page of this press release regarding revenue growth 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 quarterly report on Form 10-Q for the quarter ended October 2, 2010, 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        Six Months Ended
                          ----------------------------- -------------------
                          January   October   December  January   December
                             1,        2,       26,        1,       26,
                            2011      2010      2009      2011      2009
                          --------- --------- --------  --------- --------
Net revenues              $  40,671 $  42,775 $ 35,805  $  83,446 $ 68,757

Cost of revenues             27,058    28,240   23,762     55,298   46,178
                          --------- --------- --------  --------- --------

   Gross profit              13,613    14,535   12,043     28,148   22,579

Operating expenses:

   Research and development   5,060     4,397    4,336      9,457    8,382

   Selling, general and
    administrative            6,986     7,742    6,035     14,728   12,863
                          --------- --------- --------  --------- --------

       Total operating
        expenses             12,046    12,139   10,371     24,185   21,245
                          --------- --------- --------  --------- --------

Income from operations        1,567     2,396    1,672      3,963    1,334

Interest and other income       614    11,936    1,288     12,550    2,931
                          --------- --------- --------  --------- --------

Income before income
 taxes                        2,181    14,332    2,960     16,513    4,265

Income tax expense              446     5,378    1,002      5,824    1,477
                          --------- --------- --------  --------- --------

Net income from
 consolidated companies       1,735     8,954    1,958     10,689    2,788

Equity in net income of
 unconsolidated
 affiliates                      77       556      536        633    1,063
                          --------- --------- --------  --------- --------

Net income                    1,812     9,510    2,494     11,322    3,851

Net income attributable
 to noncontrolling
 interests                        -         -       (6)         -      (28)
                          --------- --------- --------  --------- --------

Net income attributable
 to Pericom shareholders  $   1,812 $   9,510 $  2,488  $  11,322 $  3,823
                          ========= ========= ========  ========= ========

Basic income per share to
 Pericom shareholders     $    0.07 $    0.38 $   0.10  $    0.45 $   0.15
                          ========= ========= ========  ========= ========

Diluted income per share
 to Pericom shareholders  $    0.07 $    0.38 $   0.10  $    0.45 $   0.15
                          ========= ========= ========  ========= ========

Shares used in computing
 basic income per share      24,894    24,890   25,543     24,892   25,526
                          ========= ========= ========  ========= ========

Shares used in computing
 diluted income per share    25,270    25,263   25,911     25,267   25,795
                          ========= ========= ========  ========= ========




                    Pericom Semiconductor Corporation
              Condensed Consolidated Statements of Operations
                              (In thousands)
                                (unaudited)

                               Three Months Ended        Six Months Ended
                          ----------------------------- -------------------
                          January   October   December  January   December
                             1,        2,       26,        1,       26,
                            2011      2010      2009      2011      2009
                          --------- --------- --------- --------- ---------

Share-based compensation
   Cost of revenues       $      57 $      73 $      65 $     130 $     128
   Research and
    development                 353       390       342       743       694
   Selling, general and
    administrative              591       600       526     1,191     1,041
                          --------- --------- --------- --------- ---------
       Share-based
        compensation
        expense           $   1,001 $   1,063 $     933 $   2,064 $   1,863

Amortization of
 intangible assets
   Cost of revenues       $     564 $     269 $      29 $     833 $      58
   Selling, general and
    administrative              285       129        53       414       106
                          --------- --------- --------- --------- ---------
       Amortization of
        intangible assets $     849 $     398 $      82 $   1,247 $     164




                    Pericom Semiconductor Corporation
         Reconciliation of GAAP Net Income to Non-GAAP Net Income
                              (In thousands)
                                (unaudited)


                               Three Months Ended        Six Months Ended
                          ----------------------------  ------------------
                          January   October   December  January   December
                             1,        2,       26,        1,       26,
                            2011      2010      2009      2011      2009
                          --------  --------  --------  --------  --------
GAAP net income
 attributable to Pericom
 shareholders             $  1,812  $  9,510  $  2,488  $ 11,322  $  3,823
Reconciling items:
  Share-based compensation
   expense                   1,001     1,063       933     2,064     1,863
  Amortization of
   intangible assets           849       398        82     1,247       164
  Fair value adjustment
   amortization on
   acquired inventory          412       202         -       614         -
  Gain on previously held
   interest at PTI               -   (11,004)        -   (11,004)        -
  Acquisition-related costs      4       594         -       598         -
  Interest expense accrual
   relating to PTI
   acquisition earnout         204        74         -       278         -
  Fair value adjustment to
   depreciation expense on
   acquired fixed assets        46        15         -        61         -
  Compensation expense
   accrual relating to PTI
   acquisition                 359       128         -       487         -
  Tax effect of
   adjustments                (618)    3,341      (282)    2,723      (537)
                          --------  --------  --------  --------  --------
     Total reconciling
      items                  2,257    (5,189)      733    (2,932)    1,490
                          --------  --------  --------  --------  --------
Non-GAAP net income
 attributable to Pericom
 shareholders             $  4,069  $  4,321  $  3,221  $  8,390  $  5,313
                          ========  ========  ========  ========  ========



         Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS
                                (unaudited)

Diluted net income per
 share:
  GAAP diluted income per
   share attributable to
   Pericom shareholders   $   0.07  $   0.38  $   0.10  $   0.45  $   0.15
  Adjustments:
  Share-based compensation
   expense                    0.04      0.04      0.03      0.08      0.07
  Amortization of
   intangible assets          0.03      0.02      0.00      0.05      0.01
  Fair value adjustment
   amortization on
   acquired inventory         0.02      0.01         -      0.03         -
  Gain on previously held
   interest at PTI               -     (0.44)        -     (0.44)        -
  Acquisition-related
   costs                      0.00      0.02         -      0.02         -
  Interest expense accrual
   relating to earnout        0.01      0.00         -      0.01         -
  Fair value adjustment to
   depreciation expense on
   acquired fixed assets      0.00      0.00         -      0.00         -
  Compensation expense
   accrual relating to PTI
   acquisition                0.01      0.01         -      0.02         -
  Tax effect of
   adjustments               (0.02)     0.13     (0.01)     0.11     (0.02)
                          --------  --------  --------  --------  --------
     Total adjustments        0.09     (0.21)     0.02     (0.12)     0.06
                          --------  --------  --------  --------  --------
  Non-GAAP diluted income
   per share attributable to
   Pericom shareholders   $   0.16  $   0.17  $   0.12  $   0.33  $   0.21
                          ========  ========  ========  ========  ========

Shares used in diluted
 net income per share
 calculation:
  GAAP                      25,270    25,263    25,911    25,267    25,795
    Exclude the benefit of
     share-based compensation
     expense (1)               346       265       123       306       129

                          --------  --------  --------  --------  --------
  Non-GAAP                  25,616    25,528    26,034    25,572    25,923
                          ========  ========  ========  ========  ========

(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        Six Months Ended
                          ----------------------------  ------------------
                          January   October   December  January   December
                             1,        2,       26,        1,       26,
                            2011      2010      2009      2011      2009
                          --------  --------  --------  --------  --------
GAAP gross margin         $ 13,613  $ 14,535  $ 12,043  $ 28,148  $ 22,579
  - % of revenues             33.5%     34.0%     33.6%     33.7%     32.8%
Reconciling items:
   Share-based compensation     57        73        65       130       128
   Amortization of
    intangible assets          564       269        29       833        58
   Fair value adjustment
    amortization on
    acquired inventory         412       202         -       614         -
   Fair value adjustment to
    depreciation expense on
    acquired fixed assets        9         1         -        10         -
   Compensation expense
    accrual relating to PTI
    acquisition                104        37         -       141         -
                          --------  --------  --------  --------  --------
       Total reconciling
        items                1,146       582        94     1,728       186
                          --------  --------  --------  --------  --------
Non-GAAP gross margin     $ 14,759  $ 15,117  $ 12,137  $ 29,876  $ 22,765
                          ========  ========  ========  ========  ========
  - % of revenues             36.3%     35.3%     33.9%     35.8%     33.1%


   Reconciliation of GAAP Operating Expenses to Non-GAAP Operating Expenses
                                     (unaudited)

GAAP operating expenses   $ 12,046  $ 12,139  $ 10,371  $ 24,185  $ 21,245
  - % of revenues             29.6%     28.4%     29.0%     29.0%     30.9%
Reconciling items:
   Share-based compensation   (944)     (990)     (868)   (1,934)   (1,735)
   Amortization of
    intangible assets         (285)     (129)      (53)     (414)     (106)
   Acquisition-related
    costs                       (4)     (594)        -      (598)        -
   Fair value adjustment to
    depreciation expense on
    acquired fixed assets      (37)      (14)        -       (51)        -
   Compensation expense
    accrual relating to PTI
    acquisition               (255)      (91)        -      (346)        -
                          --------  --------  --------  --------  --------
       Total reconciling
        items               (1,525)   (1,818)     (921)   (3,343)   (1,841)
                          --------  --------  --------  --------  --------
Non-GAAP operating
 expenses                 $ 10,521  $ 10,321  $  9,450  $ 20,842  $ 19,404
                          ========  ========  ========  ========  ========
  - % of revenues             25.9%     24.1%     26.4%     25.0%     28.2%





                    Pericom Semiconductor Corporation
                  Condensed Consolidated Balance Sheets
                              (In thousands)
                                (unaudited)
                                                     As of        As of
                                                   January 1,    July 3,
                                                      2011        2010
                                                  ------------ ------------
          Assets

Current assets:

    Cash and cash equivalents                     $     33,719 $     29,495
    Restricted cash                                      2,947            -
    Short-term investments                              64,674       76,454
    Accounts receivable - trade                         22,049       25,365
    Inventories                                         28,523       23,431
    Prepaid expenses and other current assets            8,805        6,825
    Deferred income taxes                                3,261        3,119
                                                  ------------ ------------
          Total current assets                         163,978      164,689

Property, plant and equipment-net                       61,482       50,760
Investments in unconsolidated affiliates                 2,467       13,183
Deferred income taxes non current                        3,754        3,868
Long-term investments in marketable securities          22,513       12,977
Goodwill                                                16,457        1,681
Intangible assets                                       16,912        1,452
Other assets                                             9,707        7,438
                                                  ------------ ------------
          Total assets                            $    297,270 $    256,048
                                                  ============ ============


          Liabilities and Shareholders' Equity

Current liabilities:

    Accounts payable                              $     12,248 $     15,585
    Accrued liabilities and other                       20,764       10,781
    Short-term debt                                      7,371            -
                                                  ------------ ------------
          Total current liabilities                     40,383       26,366

Industrial development subsidy                           8,900        6,577
Other long-term liabilities                              7,872        1,199
                                                  ------------ ------------
          Total liabilities                             57,155       34,142

Shareholders' equity:
    Common stock and paid in capital                   132,157      130,536
    Retained earnings and other comprehensive
     income                                            107,958       91,370
                                                  ------------ ------------
          Total Pericom shareholders' equity           240,115      221,906
                                                  ------------ ------------

          Total liabilities and shareholders'
           equity                                 $    297,270 $    256,048
                                                  ============ ============

Contact Information

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