SAN JOSE, CA--(Marketwire - May 4, 2011) - Pericom Semiconductor Corporation (NASDAQ: PSEM), a worldwide supplier of high-speed integrated circuits and frequency control products, today announced results for its fiscal third quarter ended April 2, 2011.
Net revenues for the third quarter were $39.6 million, a decrease of 3% from the $40.7 million reported in the second quarter of fiscal 2011, and up 8% from the $36.7 million reported in the comparable period last year. The sequential revenue decline primarily resulted from lower volume associated with customer inventory adjustments to align with end user demand, an adjustment period that we believe has now been completed. The second and third quarters of fiscal 2011 included a full three months of Pericom Technology, Inc. ("PTI") operations, acquired on August 31, 2010.
GAAP gross margin was 31.3% in the third quarter, down from 33.5% last quarter and from 35.3% in the comparable period last year. On a non-GAAP basis, gross margin was 32.6% in the third quarter, which reflects exclusion of share-based compensation, amortization of intangible assets, and amortization of fair value adjustments and compensation expense accruals from the PTI acquisition. The comparable non-GAAP gross margins were 36.3% last quarter and 35.6% in the comparable period last year. The decline in gross margin primarily reflects higher absorption charges from lower production volumes.
GAAP net income attributable to Pericom shareholders for the third quarter was $531,000, or $0.02 per diluted share, compared with net income of $1.8 million, or $0.07 per diluted share in the second quarter, and net income of $3.1 million, or $0.12 per diluted share in the comparable period last year. GAAP net income for the second and third quarters of fiscal 2011 included share-based compensation, amortization of intangible assets, amortization of fair value adjustments, and other PTI acquisition related expenses. Excluding these items, non-GAAP net income for the third quarter was $2.5 million or $0.10 per diluted share, compared with $4.1 million or $0.16 per diluted share in the second quarter, and non-GAAP net income of $3.8 million, or $0.15 per diluted share in the comparable period last year.
"We believe the inventory corrections are largely complete as our book-to-bill ratio exceeded 1.0 for the first time in three quarters. We reduced in-house inventory 11% and reduced channel inventory by one week to seven weeks at the end of the third quarter. In addition, sales out of our distribution channel increased by 3% from the previous quarter, signaling healthy end user demand," said Alex Hui, President and CEO of Pericom.
"We continue to see strong adoption of our second and third generation serial connectivity and timing products for computer, communication and consumer applications. Our near term outlook is positive for all Pericom product areas and end markets and we expect to resume revenue growth and gross margin improvement in the remaining quarters of CY2011."
New Products
In the March quarter, Pericom introduced a total of 17 new products across the Signal Integrity, Timing, and Connectivity product areas.
-- We expanded our solutions for high-speed serial protocol signal
integrity by introducing 6 new ReDriver™ products for SATA3, SAS2,
and PCIe 2.0/5Gb protocols. These products address volume notebook,
server, storage, and embedded market segments, with the SATA3 and
SAS2 redrivers offering low power consumption from a competitive
standpoint. The PCIe 5Gb ReDriver is optimized for the longer
transmission distances in networking and embedded applications.
-- Adding to our high-speed connectivity solutions, we introduced 3 new
products with highly integrated features for PCIe 3.0 lane and signal
switching, HDMI active switching, and USB port charging. The PCIe 3.0
switch targets server, storage, and embedded markets, the HDMI switch
targets digital media applications, and the USB Sleep and Charge™
product for mobile device charging targets the notebook and tablet
computing segments.
-- Expanding our timing solutions for next generation platforms, we
introduced 8 new products across 2 new HiFlex™ crystal oscillator
(XO) and clock generator product families. These 2 new families offer
attractively low jitter and package footprints and target server,
storage, networking and embedded market segments.
Fiscal Q4 2011 Outlook
The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially.
-- Revenues in the fourth fiscal quarter are expected to be in the range
of $41.5 million to $43.5 million.
-- GAAP gross margins are expected to be between 33.3% and 35.3%, and
adjusting for share-based compensation, amortization of intangibles,
fair value adjustments, and compensation accruals that are expected to
total approximately 1.2%, non-GAAP gross margins are expected to be in
the 34.5% to 36.5% range.
-- GAAP operating expenses are expected to be between $12.4 and $13.0
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 $10.7 to $11.3 million.
-- Other income is expected to be between $0.4 and $0.7 million on a GAAP
basis and $0.6 and $0.9 million on a non-GAAP basis.
-- The effective tax rate is expected to be approximately 30-33% on a GAAP
basis and 27-30% 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 May 4, 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 Wednesday, May 11th. To listen to the replay, dial (800) 642-1687 and reference conference ID 62720092.
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, restructuring expenses, 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, restructuring expenses associated with headcount reductions, 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 Q4 2011 Outlook", which regard the anticipated revenues, gross margin, operating expenses, other income, net income and effective tax rate in the fourth fiscal quarter of 2011, and statements from our CEO quoted on the second page of this press release regarding revenue growth and margin improvement, the completion of inventory adjustments, end user demand, strong adoption of Pericom products, the positive outlook for products and markets, 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 January 2, 2010, and, in particular, the risk factors sections contained in that report.
See Attached Tables
Pericom Semiconductor Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
------------------------------- ---------------------
April 2, January 1, March 27, April 2, March 27,
2011 2011 2010 2011 2010
--------- ---------- ---------- ---------- ---------
Net revenues $ 39,555 $ 40,671 $ 36,661 $ 123,001 $ 105,418
Cost of revenues 27,190 27,058 23,723 82,488 69,900
--------- ---------- ---------- ---------- ---------
Gross profit 12,365 13,613 12,938 40,513 35,518
Operating expenses:
Research and
development 5,238 5,060 4,251 14,695 12,633
Selling, general and
administrative 7,231 6,986 6,201 21,960 19,065
--------- ---------- ---------- ---------- ---------
Total operating
expenses 12,469 12,046 10,452 36,655 31,698
--------- ---------- ---------- ---------- ---------
Income (loss) from
operations (104) 1,567 2,486 3,858 3,820
Interest and other
income 1,132 614 1,219 13,683 4,150
--------- ---------- ---------- ---------- ---------
Income before income
taxes 1,028 2,181 3,705 17,541 7,970
Income tax expense 514 446 1,260 6,338 2,737
--------- ---------- ---------- ---------- ---------
Net income from
consolidated
companies 514 1,735 2,445 11,203 5,233
Equity in net income
of unconsolidated
affiliates 17 77 608 651 1,671
--------- ---------- ---------- ---------- ---------
Net income 531 1,812 3,053 11,854 6,904
Net income attributable
to noncontrolling
interests - - - - (28)
--------- ---------- ---------- ---------- ---------
Net income
attributable to
Pericom
shareholders $ 531 $ 1,812 $ 3,053 $ 11,854 $ 6,876
========= ========== ========== ========== =========
Basic income per
share to Pericom
shareholders $ 0.02 $ 0.07 $ 0.12 $ 0.48 $ 0.27
========= ========== ========== ========== =========
Diluted income per
share to Pericom
shareholders $ 0.02 $ 0.07 $ 0.12 $ 0.47 $ 0.27
========= ========== ========== ========== =========
Shares used in
computing basic
income per share 24,993 24,894 25,386 24,926 25,479
========= ========== ========== ========== =========
Shares used in
computing diluted
income per share 25,341 25,270 25,697 25,291 25,762
========= ========== ========== ========== =========
Pericom Semiconductor Corporation
Condensed Consolidated Statements of Operations
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
----------------------------- -------------------
April 2, January 1, March 27, April 2, March 27,
2011 2011 2010 2011 2010
--------- --------- --------- --------- ---------
Share-based compensation
Cost of revenues $ 62 $ 57 $ 70 $ 192 $ 198
Research and
development 421 353 371 1,164 1,065
Selling, general and
administrative 708 591 557 1,899 1,598
--------- --------- --------- --------- ---------
Share-based
compensation
expense $ 1,191 $ 1,001 $ 998 $ 3,255 $ 2,861
Amortization of
intangible assets
Cost of revenues $ 338 $ 564 $ 29 $ 1,171 $ 87
Selling, general and
administrative 290 285 54 704 160
--------- --------- --------- --------- ---------
Amortization of
intangible assets $ 628 $ 849 $ 83 $ 1,875 $ 247
Pericom Semiconductor Corporation
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
---------------------------- ------------------
April 2, January 1, March 27, April 2, March 27,
2011 2011 2010 2011 2010
-------- -------- -------- -------- --------
GAAP net income
attributable to Pericom
shareholders $ 531 $ 1,812 $ 3,053 $ 11,854 $ 6,876
Reconciling items:
Share-based compensation
expense 1,191 1,001 998 3,255 2,861
Amortization of
intangible assets 628 849 83 1,875 247
Fair value adjustment
amortization on
acquired inventory - 412 - 614 -
Gain on previously held
interest at PTI - - - (11,004) -
Acquisition-related costs - 4 - 598 -
Interest expense accrual
relating to PTI
acquisition earnout 204 204 - 482 -
Fair value adjustment to
depreciation expense on
acquired fixed assets 49 46 - 110 -
Compensation expense
accrual relating to PTI
acquisition 360 359 - 847 -
Restructuring charge 118 - - 118
Tax effect of
adjustments (606) (618) (318) 2,118 (855)
-------- -------- -------- -------- --------
Total reconciling
items 1,944 2,257 763 (987) 2,253
-------- -------- -------- -------- --------
Non-GAAP net income
attributable to Pericom
shareholders $ 2,475 $ 4,069 $ 3,816 $ 10,867 $ 9,129
======== ======== ======== ======== ========
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 $ 0.02 $ 0.07 $ 0.12 $ 0.47 $ 0.27
Adjustments:
Share-based compensation
expense 0.05 0.04 0.04 0.13 0.11
Amortization of
intangible assets 0.02 0.03 0.00 0.07 0.01
Fair value adjustment
amortization on
acquired inventory - 0.02 - 0.02 -
Gain on previously held
interest at PTI - - - (0.44) -
Acquisition-related costs - 0.00 - 0.02 -
Interest expense accrual
relating to earnout 0.01 0.01 - 0.02 -
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 - 0.03 -
Restructuring charge 0.01 - - 0.01 -
Tax effect of
adjustments (0.02) (0.02) (0.01) 0.08 (0.03)
-------- -------- -------- -------- --------
Total adjustments 0.08 0.09 0.03 (0.04) 0.09
-------- -------- -------- -------- --------
Non-GAAP diluted income
per share attributable
to Pericom shareholders $ 0.10 $ 0.16 $ 0.15 $ 0.43 $ 0.35
======== ======== ======== ======== ========
Shares used in diluted
net income per share
calculation:
GAAP 25,341 25,270 25,697 25,291 25,762
Exclude the benefit of
share-based compensation
expense (1) 362 346 206 324 154
-------- -------- -------- -------- --------
Non-GAAP 25,703 25,616 25,903 25,616 25,916
======== ======== ======== ======== ========
(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 Nine Months Ended
---------------------------- ------------------
April 2, January 1, March 27, April 2, March 27,
2011 2011 2010 2011 2010
-------- -------- -------- -------- --------
GAAP gross margin $ 12,365 $ 13,613 $ 12,938 $ 40,513 $ 35,518
- % of revenues 31.3% 33.5% 35.3% 32.9% 33.7%
Reconciling items:
Share-based compensation 62 57 70 192 198
Amortization of
intangible assets 338 564 29 1,171 87
Fair value adjustment
amortization on
acquired inventory - 412 - 614 -
Fair value adjustment to
depreciation expense on
acquired fixed assets 10 9 - 20 -
Compensation expense
accrual relating to PTI
acquisition 105 104 - 246 -
-------- -------- -------- -------- --------
Total reconciling
items 515 1,146 99 2,243 285
-------- -------- -------- -------- --------
Non-GAAP gross margin $ 12,880 $ 14,759 $ 13,037 $ 42,756 $ 35,803
======== ======== ======== ======== ========
- % of revenues 32.6% 36.3% 35.6% 34.8% 34.0%
Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses
(unaudited)
GAAP research and
development expenses $ 5,238 $ 5,060 $ 4,251 $ 14,695 $ 12,633
- % of revenues 13.2% 12.4% 11.6% 11.9% 12.0%
Reconciling items:
Share-based compensation (421) (353) (371) (1,164) (1,065)
Fair value adjustment to
depreciation expense on
acquired fixed assets (10) (9) - (27) -
Compensation expense
accrual relating to PTI
acquisition (117) (117) - (276) -
-------- -------- -------- -------- --------
Total reconciling
items (548) (479) (371) (1,467) (1,065)
-------- -------- -------- -------- --------
Non-GAAP research and
development expenses $ 4,690 $ 4,581 $ 3,880 $ 13,228 $ 11,568
======== ======== ======== ======== ========
- % of revenues 11.9% 11.3% 10.6% 10.8% 11.0%
Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses
(unaudited)
GAAP selling, general and
administrative expenses $ 7,231 $ 6,986 $ 6,201 $ 21,960 $ 19,065
- % of revenues 18.3% 17.2% 16.9% 17.9% 18.1%
Reconciling items:
Share-based compensation (708) (591) (557) (1,899) (1,598)
Amortization of
intangible assets (290) (285) (54) (704) (160)
Acquisition-related
costs - (4) - (598) -
Fair value adjustment to
depreciation expense on
acquired fixed assets (29) (28) - (63) -
Restructuring cost (118) - - (118) -
Compensation expense
accrual relating to PTI
acquisition (138) (138) - (325) -
-------- -------- -------- -------- --------
Total reconciling
items (1,283) (1,046) (611) (3,707) (1,758)
-------- -------- -------- -------- --------
Non-GAAP selling, general
and administrative
expenses $ 5,948 $ 5,940 $ 5,590 $ 18,253 $ 17,307
======== ======== ======== ======== ========
- % of revenues 15.0% 14.6% 15.2% 14.8% 16.4%
Pericom Semiconductor Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
As of As of
April 2, 2011 July 3, 2010
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 23,324 $ 29,495
Restricted cash 2,947 -
Short-term investments 61,997 76,454
Accounts receivable - trade 25,007 25,365
Inventories 25,452 23,431
Prepaid expenses and other current assets 8,929 6,825
Deferred income taxes 3,184 3,119
------------- -------------
Total current assets 150,840 164,689
Property, plant and equipment-net 60,247 50,760
Investments in unconsolidated affiliates 2,507 13,183
Deferred income taxes non current 3,904 3,868
Long-term investments in marketable securities 35,532 12,977
Goodwill 16,443 1,681
Intangible assets 16,359 1,452
Other assets 9,894 7,438
------------- -------------
Total assets $ 295,726 $ 256,048
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 12,518 $ 15,585
Accrued liabilities and other 17,983 10,781
Short-term debt 6,995 -
------------- -------------
Total current liabilities 37,496 26,366
Industrial development subsidy 8,811 6,577
Other long-term liabilities 8,638 1,199
------------- -------------
Total liabilities 54,945 34,142
Shareholders' equity:
Common stock and paid in capital 132,351 130,536
Retained earnings and other comprehensive
income 108,430 91,370
------------- -------------
Total shareholders' equity 240,781 221,906
------------- -------------
Total liabilities and shareholders'
equity $ 295,726 $ 256,048
============= =============
Contact Information: Contact: Aaron Tachibana Pericom Semiconductor Tel: 408 435-0800