Pericom Semiconductor Reports Fiscal Second Quarter 2013 Financial Results

Pericom Semiconductor Reports Fiscal Second Quarter 2013 Financial Results 
SAN JOSE, CA -- (Marketwire) -- 01/29/13 --  Pericom Semiconductor
Corporation (NASDAQ: PSEM)  


 
--  Q2 revenues were $30.4 million, reflective of the global softness in
    the PC industry
--  Q2 non-GAAP gross margin increased 125 bps year-over-year, consistent
    with our focus on higher margin sectors
--  Continued strong balance sheet with quarter-end cash and investments
    at $5.29 per share

  
Pericom Semiconductor Corporation (NASDAQ: PSEM), a worldwide supplier
of high performance connectivity and timing solutions, today
announced results for its fiscal 2013 second quarter ended December
29, 2012.  
Net revenues for the second quarter were $30.4 million, a decrease of
17% from the $36.7 million reported in the first quarter, and a
decrease of 0.2% from the $30.5 million reported in the comparable
period last year.  
GAAP gross margin was 36.8% in the second quarter, a decrease from
37.9% last quarter and an increase from 36.0% in the comparable
period last year. On a non-GAAP basis, gross margin was 38.5% in the
second quarter, which reflects exclusion of share-based compensation,
amortization of intangible assets and amortization of fair value
adjustments on acquired fixed assets. The comparable non-GAAP gross
margins were 39.3% last quarter and 37.3% in the comparable period
last year. The improvement in gross margin from the prior year
primarily reflects favorable product mix from our focus on higher
margin opportunities in networking and telecom, server, storage, and
embedded end-market segments. The sequential decline in gross margin
primarily reflects increased underutilization expenses in the current
quarter. 
GAAP net loss for the second quarter was $5.3 million, or $0.23 per
diluted share, compared with net income of $1.2 million, or $0.05 per
diluted share in the first quarter, and net loss of $0.3 million, or
$0.01 per diluted share in the comparable period last year. GAAP net
income for all periods included share-based compensation,
amortization of intangible assets, and amortization of fair value
adjustments, and the current quarter also included a $5.0 million tax
provision resulting from intercompany transactions completed in the
implementation o
f an operating structure to more efficiently align
our transaction flows with our geographic business operations.
Excluding these items, non-GAAP net income for the second quarter was
$0.9 million, or $0.04 per diluted share, compared with non-GAAP net
income of $2.5 million or $0.10 per diluted share in the first
quarter, and non-GAAP net income of $1.0 million, or $0.04 per
diluted share in the comparable period last year.  
The balance sheet remained very strong with cash and cash equivalents
and investments in marketable securities of $124 million or $5.29 per
diluted share at the end of the second quarter. Inventories decreased
$1.4 million on a sequential basis to $16.1 million, which represents
78 days of supply based on non-GAAP cost of revenues. Trade accounts
receivable decreased by $4.7 million sequentially to $19.8 million,
which represents DSO of 59 days. At quarter-end, working capital was
$119 million and the current ratio was 6.4. 
"While our second quarter results reflected continued economic
softness in global markets, we were able to maintain improved gross
margins driven by market segments and product mix that aligned with
our strategic focus," said Alex Hui, President and CEO of Pericom.
"The industry continues to face challenging times, yet we remain
focused on our long-term growth strategy of expanding our customer
base in server, networking, embedded and other high-margin
applications for our high speed serial connectivity and timing
products."  
New Products  
In the second quarter of fiscal 2013, Pericom introduced a total of
23 new products in our Connectivity, Timing, and Signal Integrity
product areas.  
We introduced 13 new products across our Connectivity product
families targeting networking, server, storage, embedded,
notebook/tablet, and consumer market segments. These included an HDMI
switch, a new family of Microprocessor Supervisors ("MPS"), and a new
family of Universal Level Shifters ("ULS"). All of these products
were sampled to key customers during the quarter. 
We expanded our Timing solutions for next generation platforms with 6
new products, including embedded clocks, a new family of ultra low
jitter buffers, and a PCIe clock generator. These products target
mainly networking, storage, server and embedded segments. 
For Signal Integrity, we introduced 4 new ReDriver products targeting
USB3 applications in notebook, server, storage, and networking
applications, and a very low power PCIe GEN2 ReDriver for servers and
computing. 
Share Repurchase Update 
On April 26, 2012 the Board authorized a repurchase program for up to
$25 million of shares of our common stock. Pursuant to this
authorization, the Company repurchased 150,201 shares in the three
months ended December 29, 2012 for an aggregate cost of $1.1 million
and an average per share purchase price of $7.47. The remaining
balance of potential share repurchases under the authorization is
approximately $23.9 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 January 25, 2013, Pericom had
approximately 23.5 million shares of common stock outstanding. 
Fiscal Q3 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 Q3 2013. 


 
--  Revenues in the second fiscal quarter are expected to be in the range
    of $27.5 million to $30.5 million.
    
    
--  GAAP gross margins are expected to be between 34.1% and 36.6%, and
    adjusting for share-based compensation, amortization of intangibles
    and fair value adjustments that are expected to total approximately
    1.9%, non-GAAP gross margins are expected to be in the 36.0% to 38.5%
    range.
    
    
--  GAAP operating expenses are expected to be between $12.5 million and
    $12.9 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 $11.3 million to $11.7
    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 30-32% 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 January 29, 2013. 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 Monday, February 4th. To
listen to the replay, dial toll-free (855) 859-2056 and reference
conference ID 91148924. 
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.
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 of acquired inventory, a 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 the
fair value adjustments related to acquired inventory, tax on an
intercompany transaction and the corresponding tax effects of these
adjustments 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 revenues 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 Q3 2013 Outlook", which regard the anticipated revenues,
gross margin, operating expenses, other income, and effective tax
rate in the third fiscal quarter of 2013, and statements from our CEO
regarding challenging times for the industry 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 June 30, 2012, our
quarterly report on Form 10-Q for the quarter ended September 29,
2012, and in particular, the risk factors section contained in those
reports. 


 
                                                                            
                                                                            
                     Pericom Semiconductor Corporation                      
              Condensed Consolidated Statements of Operations               
                   (In thousands, except per share data)                    
                                (unaudited)                                 
                                                                            
                                Three Months Ended        Six Months Ended  
                          -----------------------------  ------------------ 
                          December   September December  December  December 
                          29, 2012   29, 2012  31, 2011  29, 2012  31, 2011 
                          --------  ---------- --------  --------  -------- 
                                                                            
Net revenues              $ 30,433  $   36,749 $ 30,481  $ 67,182  $ 65,813 
                                                                            
Cost of revenues            19,239      22,838   19,504    42,077    42,299 
                          --------  ---------- --------  --------  -------- 
                                                                            
   Gross profit             11,194      13,911   10,977    25,105    23,514 
                                                                            
Operating expenses:                                                         
                                                                            
   Research and                                                             
    development              5,097       5,323    5,277    10,420    10,593 
                                                                            
   Selling, general and                                                     
    administrative           7,532       7,639    7,060    15,171    14,399 
                          --------  ---------- --------  --------  -------- 
                                                                            
      Total operating                                                       
       expenses             12,629      12,962   12,337    25,591    24,992 
                          --------  ---------- --------  --------  -------- 
                                                                   
         
Income (loss) from                                                          
 operations                 (1,435)        949   (1,360)     (486)   (1,478)
                                                                            
Interest and other                                                          
 income, net                   795         635      638     1,430     1,708 
                          --------  ---------- --------  --------  -------- 
                                                                            
Income (loss) before                                                        
 income taxes                 (640)      1,584     (722)      944       230 
                                                                            
Income tax expense                                                          
 (benefit)                   4,756         500     (335)    5,256       199 
                          --------  ---------- --------  --------  -------- 
 
                                                                            
Net income (loss) from                                                      
 consolidated companies     (5,396)      1,084     (387)   (4,312)       31 
                                                                            
Equity in net income of                                                     
 unconsolidated affiliate       57         108       52       165        79 
                          --------  ---------- --------  --------  -------- 
                                                                            
Net income (loss)         $ (5,339) $    1,192 $   (335) $ (4,147) $    110 
                          ========  ========== ========  ========  ======== 
                                                                            
Basic income (loss) per                                                     
 share                    $  (0.23) $     0.05 $  (0.01) $  (0.18) $   0.00 
                          ========  ========== ========  ========  ======== 
                                                                            
Diluted income (loss) per                                                   
 share                    $  (0.23) $     0.05 $  (0.01) $  (0.18) $   0.00 
                          ========  ========== ========  ========  ======== 
                                                                            
Shares used in computing                                                    
 basic income (loss) per                                                    
 share                      23,515      23,543   24,244    23,529    24,368 
                          ========  ========== ========  ========  ======== 
                                                                            
Shares used in computing                                                    
 diluted income (loss)                                                      
 per share                  23,515      23,740   24,244    23,529    24,469 
                          ========  ========== ========  ========  ======== 
                                                                            
                                                                            
                                                                            
                      Pericom Semiconductor Corporation                     
               Condensed Consolidated Statements of Operations              
                               (In thousands)                               
                                 (unaudited)                                
                                                                            
                                Three Months Ended         Six Months Ended 
                          ------------------------------ -------------------
                           December  September  December  December  December
                           29, 2012  29, 2012   31, 2011  29, 2012  31, 2011
                          --------- ---------- --------- --------- ---------
                                                                            
Share-based compensation                                                    
   Cost of revenues       $      43 $       52 $      47 $      95 $     101
   Research and                                                             
    development                 333        322       357       655       728
   Selling, general and                                                     
    administrative              484        467       528       951     1,077
                          --------- ---------- --------- --------- ---------
      Share-based                                                           
       compensation                                                         
       expense            $     860 $      841 $     932 $   1,701 $   1,906
                                                                            
Amortization of                                                             
 intangible assets                                                          
   Cost of revenues       $     481 $      477 $     331 $     958 $     785
   Research and                                                             
    development                  49         56       167       105       327
   Selling, general and                                                     
    administrative              242        243       241       485       480
                          --------- ---------- --------- --------- ---------
      Amortization of                                                       
       intangible assets  $     772 $      776 $     739 $   1,548 $   1,592
                                                                            
                                                                            
                                                                            
                     Pericom Semiconductor Corporation                      
      Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income       
                               (In thousands)                               
                                (unaudited)                                 
                                                                            
                                Three Months Ended        Six Months Ended  
                          -----------------------------  ------------------ 
                          December  September  December  December  December 
                          29, 2012   29, 2012  31, 2011  29, 2012   31,2011 
                          --------  ---------  --------  --------  -------- 
GAAP net income (loss)    $ (5,339) $   1,192  $   (335) $ (4,147) $    110 
Reconciling items:                                                          
   Share-based                                             
                 
    compensation expense       860        841       932     1,701     1,906 
   Amortization of                                                          
    intangible assets          772        776       739     1,548     1,592 
   Fair value adjustment                                                    
    to depreciation                                                         
    expense on acquired                                                     
    fixed assets                50         50        50       100       100 
   Tax on intercompany                                                      
    transaction              4,987          -         -     4,987         - 
   Tax effect of                                                            
    adjustments               (408)      (402)     (428)     (810)     (906)
                          --------  ---------  --------  --------  -------- 
      Total reconciling                                                     
       items                 6,261      1,265     1,293     7,526     2,692 
                          --------  ---------  --------  --------  -------- 
Non-GAAP net income       $    922  $   2,457  $    958  $  3,379  $  2,802 
                          ========  =========  ========  ========  ======== 
                                                                            
         Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS         
                                (unaudited)                                 
                                                                            
Diluted net income (loss)                                                   
 per share:                                                                 
   GAAP diluted income                                                      
    (loss) per share      $  (0.23) $    0.05  $  (0.01) $  (0.18) $   0.00 
   Adjustments:                                                             
   Share-based                                                              
    compensation expense      0.04       0.04      0.04      0.08      0.08 
   Amortization of                                                          
    intangible assets         0.03       0.03      0.03      0.06      0.07 
   Fair value adjustment                                                    
    to depreciation                                                         
    expense on acquired                                                     
    fixed assets                 -          -         -         -         - 
   Tax on intercompany                                                      
    transaction               0.21          -         -      0.21         - 
   Tax effect of                                                            
    adjustments              (0.02)     (0.02)    (0.02)    (0.04)    (0.04)
   Difference in share                                                      
    count  
                   0.01          -         -      0.01           
                          --------  ---------  --------  --------  -------- 
      Total adjustments       0.27       0.05      0.05      0.32      0.11 
                          --------  ---------  --------  --------  -------- 
   Non-GAAP diluted                                                         
    income per share      $   0.04  $    0.10  $   0.04  $   0.14  $   0.11 
                          ========  =========  ========  ========  ======== 
                                                                            
Shares used in diluted                                                      
 net income (loss) per                                                      
 share calculation:                                                         
   GAAP                     23,515     23,740    24,244    23,529    24,469 
      Change in diluted                                                     
       shares from GAAP                                                     
       net loss to non-                                                     
       GAAP net income         141          -       111       169         - 
      Exclude the benefit                                                   
       of share-based                                                       
       compensation                                                         
       expense (1)             507        308       334       408       379 
                          --------  ---------  --------  --------  -------- 
   Non-GAAP                 24,163     24,048    24,689    24,106    24,848 
                          ========  =========  ========  ========  ======== 
                                                                            
(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  
                          -----------------------------  ------------------ 
                          December  September  December  December  December 
                          29, 2012   29, 2012  31, 2011  29, 2012  31, 2011 
                          --------  ---------  --------  --------  -------- 
GAAP gross margin         $ 11,194  $  13,911  $ 10,977  $ 25,105  $ 23,514 
 - % of revenues              36.8%      37.9%     36.0%     37.4%     35.7%
    Reconciling items:                                                      
    Share-based                                                             
     compensation               43         52        47        95       101 
    Amortization of                                                         
     intangible assets         481        477       331       958       785 
    Fair value adjustment                                                   
     to depreciation                                                        
     expense on acquired                                                    
     fixed assets               10         10        10        20        20 
                          --------  ---------  --------  --------  -------- 
       Total reconciling                                                    
        items                  534        539       388     1,073       906 
                          --------  ---------  --------  --------  -------- 
Non-GAAP gross margin     $ 11,728  $  14,450  $ 11,365  $ 26,178  $ 24,420 
                          ========  =========  ========  ========  ======== 
 - % of revenues              38.5%      39.3%     37.3%     39.0%     37.1%
                                                                            
        Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses        
                                (unaudited)                                 
                                                                            
GAAP research and                                                           
 development expenses     $  5,097  $   5,323  $  5,277  $ 10,420  $ 10,593 
 - % of revenues              16.7%      14.5%     17.3%     15.5%     16.1%
    Reconciling items:                                                      
    Share-based                                                             
     compensation             (333)      (322)     (357)     (655)     (728)
    Amortization of                                                         
     intangible assets         (49)       (56)     (167)     (105)     (327)
    Fair value adjustment                                                   
     to depreciation                                                        
     expense on acquired                                                    
     fixed assets              (10)       (10)      (10)      (20)      (20)
                          --------  ---------  --------  --------  -------- 
       Total reconciling                                                    
        items                 (392)      (388)     (534)     (780)   (1,075)
                          --------  ---------  --------  --------  -------- 
Non-GAAP research and                                                       
 development expenses     $  4,705  $   4,935  $  4,743  $  9,640  $  9,518 
                          ========  =========  ========  ========  ======== 
 - % of revenues              15.5%      13.4%     15.6%     14.3%     14.5%
                                                                            
       Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses       
                                (unaudited)                                 
                                                                            
GAAP selling, general and                                                   
 administrative expenses  $  7,532  $   7,639  $  7,060  $ 15,171  $ 14,399 
 - % of revenues              24.7%      20.8%     23.2%     22.6%     21.9%
    Reconciling items:                                                      
    Share-based                                                             
     compensation             (484)      (467)     (528)     (951)   (1,077)
    Amortization of                                                         
     intangible assets        (242)      (243)     (241)     (485)     (480)
    Fair value adjustment                                                   
     to depreciation                                                        
     expense on acquired                                                    
     fixed assets              (30)       (30)      (30)      (60)      (60)
                          --------  ---------  --------  --------  -------- 
       Total reconciling                                                    
        items                 (756)      (740)     (799)   (1,496)   (1,617)
                          --------  ---------  --------  --------  -------- 
Non-GAAP selling, general                                                   
 and administrative                                                         
 expenses                 $  6,776  $   6,899  $  6,261  $ 13,675  $ 12,782 
                          ========  =========  ========  ========  ======== 
 - % of revenues              22.3%      18.8%     20.5%     20.4%     19.4%
                                                                            
                                                                            
                                                                            
                      Pericom Semiconductor Corporation                     
                    Condensed Consolidated Balance Sheets                   
                               (In thousands)                               
                                 (unaudited)                                
                                                                            
                                                                            
                                                       As of       As of    
                                                   December 29,   June 30,  
                                                       2012         2012    
                                                   ------------ ------------
                      Assets                                                
                                                                            
Current assets:                                                             
                                                                            
     Cash and cash equivalents                     $     29,716 $     24,283
     Short-term investments                              69,362       79,924
     Accounts receivable - trade                         19,828       24,010
     Inventories                                         16,134       16,604
     Prepaid expenses and other current assets            4,784        6,099
     Deferred income taxes                                1,611        1,549
                                                   ------------ ------------
          Total current assets                          141,435      152,469
                                                                            
Property, plant and equipment-net                        61,838       56,102
Investments in unconsolidated affiliates                  2,375        2,474
Deferred income taxes non-current                         2,358        2,447
Long-term investments in marketable securities           25,224       23,628
Goodwill                                                 16,829       16,797
Intangible assets-net                                    11,317       12,831
Other assets                                              8,817        9,058
                                                   ------------ ------------
          Total assets                             $    270,193 $    275,806
                                                   ============ ============
                                                                            
                                                                            
       Liabilities and Shareholders' Equity                                 
                                                                            
Current liabilities:                                                        
                                                                            
     Short-term debt                               $      1,338 $      1,364
     Accounts payable                                     8,654       14,860
     Accrued liabilities                                 12,075        8,608
                                                   ------------ ------------
          Total current liabilities                      22,067       24,832
                                                                            
Industrial development subsidy                            7,578        8,577
     Deferred income tax liabilities                      5,986        6,191
     Other long-term liabilities                          3,450        2,571
                                                   ------------ ------------
          Total liabilities                              39,081       42,171
                                                                            
Shareholders' equity:                                                       
     Common stock and paid in capital                   123,664      123,362
     Retained earnings and other comprehensive                              
      income                                            107,448      110,273
                                                   ------------ ------------
          Total shareholders' equity                    231,112      233,635
                                                   ------------ ------------
                                                                            
          Total liabilities and shareholders'                               
           equity                                  $    270,193 $    275,806
                                                   ============ ============

  
Contact: 
Aaron Tachibana
Pericom Semiconductor
Tel: 408 435-0800 
atachibana@pericom.com