Pericom Semiconductor Reports Fiscal Q1 2010 Financial Results


SAN JOSE, CA--(Marketwire - November 4, 2009) - Pericom Semiconductor Corporation (NASDAQ: PSEM), a worldwide supplier of high-speed integrated circuits and frequency control products, today announced results for its fiscal first quarter of 2010 ended September 26, 2009.

Quarterly Highlights

--  Net revenues grew 10.9% sequentially to $33.0 million
--  Gross margins improved 328 basis points sequentially to 32.0%
--  Net income increased 28.4% sequentially to $1.3 million
    

First Quarter 2010 Operating Results

Net revenues for the first quarter were $33.0 million, up 10.9% from the $29.7 million reported in the fourth quarter, and down 24.8% from the $43.8 million reported in the comparable period last year. Gross margin was 32.0%, increased from 28.7% last quarter, and down from 36.5% in the comparable period last year. Operating expenses in the quarter were $10.9 million, up from $9.5 million in the previous quarter and down from $11.1 million in the comparable period last year. Operating expenses in the quarter included $1.2 million in legal and accounting fees related to an accounting review and financial restatements, in addition to the normal year-end audit. Stock-based compensation expense in the quarter was $930,000, up from $888,000 in the previous quarter and $795,000 in the comparable period last year. Net income in the quarter was $1.3 million, or $0.05 per diluted share, compared with net income of $1.0 million, or $0.04 per diluted share in the fourth quarter and net income of $3.7 million, or $0.14 per diluted share, in the same period a year ago.

"Our business has continued to improve with increased billings and bookings in FYQ1," said Alex Hui, president and CEO of Pericom. "We also entered the December quarter with higher backlog coverage as compared to last quarter.

"In the first quarter we saw gross margins recover from the reduced levels of the previous quarter, a result of increased shipping volumes, reduced product costs and improved product mix. We expect to see continued improvement in our gross margins in FYQ2.

"Enabling serial connectivity in computer, communication and consumer applications remains our primary focus. In FY09, we had a broad deployment of our serial connectivity and timing solutions in PC notebook, desktop and digital video applications. As we entered FY10, we are pleased to see the application base expanding into new areas including PC servers and embedded systems. We enjoyed very strong sequential increases in revenue from PCI Express and e-SATA products in FYQ1, which accounted for 24% of total quarterly revenue. We expect revenue from these products would further increase in FYQ2 as we ramp up shipments into embedded applications. We continue to leverage our core technologies in signal switching and routing, signal integrity and timing to develop solutions for new serial protocols. This is exemplified in our recent introduction of five new products supporting the emerging USB 3.0 Superspeed standard."

New Products

Pericom introduced 15 new products across the Signal Integrity, Switching, Timing and Connectivity product areas in this quarter.

Expanding its solutions for high-speed serial protocol signal integrity, Pericom introduced five new ReDriver products. Two of these products are 'first to market' and address the new USB 'Superspeed' 5 Gigabits/sec protocol, two products address SATA2 and offer slumber mode, and one product addresses the new DisplayPort video standard. These products address the volume Consumer and Computer market segments.

Adding to high speed connectivity solutions, Pericom introduced six new switching and connectivity products targeted across USB Superspeed, DisplayPort, and HDMI protocols. One of the products provides mobile device charging from notebook USB ports. Target market segments include volume consumer digital video, PC notebook, desktop, and graphics, and ultra mobility platforms such as cell phones and PDA.

Expanding its timing solutions for next generation platforms, Pericom introduced four new products in the past quarter -- two advanced low jitter clock generators addressing the Gb Ethernet, PCIe Gen2, and USB Superspeed protocol applications, and two advanced XO (crystal oscillator) products targeting the networking and computer market segments.

Fiscal Q2 Outlook

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

--  Revenues in the second fiscal quarter are expected to be in the range
    of $34.0 million to $36.0 million (midpoint up 6.2% sequentially).
    
--  Gross margins are expected to be in the 32.5% to 34.0% range. Margins
    are influenced by the product mix of turns business and sales, if any, of
    previously reserved inventory.
    
--  Operating expenses are expected to be in the range of $9.7 to $10.5
    million, which include stock-based compensation expense of approximately
    $1.0 million.
    
--  Other income is expected to be approximately $0.9 million, consisting
    primarily of interest income.
    
--  Net income from unconsolidated affiliates PTI and JCP is expected to
    be approximately $0.4 million.
    
--  The effective tax rate is expected to be approximately 32%.
    

Conference Call

The press release will be followed by a conference call beginning at 1:30 p.m. Pacific time. To listen to the call, dial (888) 504-7953 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.

A taped replay of the conference call will be made available for five business days. To listen to the replay, dial (888) 203-1112 and reference conference number 4192687. 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 and consumer market segments. Pericom's analog, digital and mixed-signal integrated circuits, along with its SaRonix-eCERA 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.

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 caption 'Fiscal Q2 Outlook', which regard the anticipated revenues, gross margin, operating expenses, other income and tax rate in the second fiscal quarter, and statements regarding end user demand strengthening, initiatives to reduce product cost and improve mix, and Pericom being well positioned for long term growth. 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 27, 2009, and, in particular, the risk factors section contained therein.

                    Pericom Semiconductor Corporation
              Condensed Consolidated Statements of Operations
                  (In thousands, except per share data)
                                (unaudited)


                                                   Three Months Ended
                                              ----------------------------
                                               Sep 26    Jun 27    Sep 27
                                                2009      2009      2008
                                              --------  --------  --------

Net revenues                                  $ 32,952  $ 29,721  $ 43,798

Cost of revenues                                22,416    21,193    27,805
                                              --------  --------  --------

  Gross profit                                  10,536     8,528    15,993

Operating expenses:

  Research and development                       4,046     4,117     4,221

  Selling, general and administrative            6,828     5,343     6,901

  Restructuring charge                               -        74         -
                                              --------  --------  --------

          Total                                 10,874     9,534    11,122

Income (loss) from operations                     (338)   (1,006)    4,871

Interest and other income, net                   1,643     1,677     1,106

Other than temporary decline in value of
 investment                                          -         -      (458)
                                              --------  --------  --------

Income before income taxes                       1,305       671     5,519

Income tax expense                                 475      (135)    1,930
                                              --------  --------  --------

Income from consolidated companies                 830       806     3,589

Equity in income of unconsolidated affiliates      527       256       117
                                              --------  --------  --------

Net income including noncontrolling interests    1,357     1,062     3,706

Noncontrolling interest in net income              (22)      (22)      (45)
                                              --------  --------  --------

Net income                                    $  1,335  $  1,040  $  3,661
                                              ========  ========  ========

Basic income per share                        $   0.05  $   0.04  $   0.14
                                              ========  ========  ========

Diluted income per share                      $   0.05  $   0.04  $   0.14
                                              ========  ========  ========

Shares used in computing basic income
 per share                                      25,509    25,354    25,679
                                              ========  ========  ========

Shares used in computing diluted income
 per share                                      25,678    25,485    26,239
                                              ========  ========  ========





                    Pericom Semiconductor Corporation
                  Condensed Consolidated Balance Sheets
                              (In thousands)
                                (unaudited)

                                                    As of         As of
                                                Sept 26, 2009 Jun 27, 2009
                                                ------------- -------------
          Assets

Current Assets:

    Cash & cash equivalents                     $      43,516 $      37,321
    Restricted cash                                     3,200         3,200
    Short-term investments                             74,578        75,471
    Accounts receivable - trade                        21,791        22,875
    Inventories                                        16,032        16,340
    Prepaid expenses and other current assets           2,975         3,738
    Deferred income taxes                               2,723         2,433
                                                ------------- -------------
          Total current assets                        164,815       161,378

Property and equipment, net                            48,799        47,238
Investments in unconsolidated affiliates               11,319        10,826
Deferred income taxes - non current                     3,708         4,657
Long-term investments in marketable securities          9,108        11,780
Goodwill                                                1,679         1,673
Intangible assets                                       1,696         1,764
Other assets                                            6,900         6,742
                                                ------------- -------------
          Total assets                          $     248,024 $     246,058
                                                ============= =============


          Liabilities and Shareholders' Equity

Current liabilities:

    Accounts payable                            $      11,667 $      10,824
    Accrued liabilities                                12,049        15,118
    Current portion of long-term debt                      91            60
                                                ------------- -------------
          Total current liabilities                    23,807        26,002

Long-term debt                                          1,605         1,610
Industrial development subsidy                          4,217         3,718
Deferred tax liabilities                                    -             -
Other long term liabilities                             1,274         1,287
                                                ------------- -------------
          Total liabilities                            30,903        32,617

Shareholders' equity:
    Common stock                                      134,375       133,162
    Retained earnings and other                        81,492        79,046
                                                ------------- -------------
          Company shareholders' equity                215,867       212,208
                                                ------------- -------------
    Noncontrolling interests                            1,254         1,233
                                                ------------- -------------
          Total equity                                217,121       213,441
                                                ------------- -------------

          Total liabilities and shareholders'
           equity                               $     248,024 $     246,058
                                                ============= =============





                    Pericom Semiconductor Corporation
                         Share-Based Compensation
                              (In thousands)
                                (unaudited)


                                                    Three Months Ended
                                              -----------------------------
                                               Sep 26    Jun 27    Sep 27
                                                2009      2009      2008
                                              --------- --------- ---------

Manufacturing                                 $      63 $      67 $      51

Research & development                              352       354       307

Selling, general & administrative                   515       467       437
                                              --------- --------- ---------

                                              $     930 $     888 $     795
                                              ========= ========= =========

Contact Information: Contact: Robert Strickland Pericom Semiconductor Tel: 408 435-0800