Pericom Semiconductor Reports Fiscal Third Quarter 2013 Financial Results

Pericom Semiconductor Reports Fiscal Third Quarter 2013 Financial Results 
SAN JOSE, CA -- (Marketwired) -- 04/30/13 --  Pericom Semiconductor
Corporation (NASDAQ: PSEM) 


 
--  Q3 revenues were $30.4 million, in line with prior quarter, despite
    continuing global softness in the PC industry
--  Q3 gross margin increased 100 bps year-over-year, consistent with our
    focus on higher margin sectors
--  Continued strong balance sheet with quarter-end cash and investments
    at $5.15 per share

  
Pericom Semiconductor Corporation (NASDAQ: PSEM), a worldwide supplier
of high performance connectivity and timing solutions, today
announced results for its fiscal 2013 third quarter ended March 30,
2013.  
Net revenues for the third quarter were $30.4 million, a decrease of
$67,000 or 0.2% from revenues reported in the second quarter, and a
decrease of 9.0% from the $33.4 million reported in the comparable
period last year.  
GAAP gross margin was 35.7% in the third quarter, a decrease from
36.8% last quarter and an increase from 34.7% in the comparable
period last year. On a non-GAAP basis, gross margin was 37.5% in the
third 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 38.5% last quarter and 36.2% 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 third quarter was $0.7 million, or $0.03 per
diluted share, compared with net loss of $5.3 million, or $0.23 per
diluted share in the second 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 second and third quarter also included tax
provisions totaling $5.4 million resulting from intercompany
tran
sactions completed in implementing an operating structure to more
efficiently align transaction flows with our geographic business
operations. Excluding these items, non-GAAP net income for the third
quarter was $1.0 million, or $0.04 per diluted share, compared with
non-GAAP net income of $0.9 million, or $0.04 per diluted share in
the second quarter, and non-GAAP net income of $1.7 million, or $0.07
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 $119 million or $5.15 per
diluted share at the end of the third quarter. Inventories decreased
$2.3 million or 14% on a sequential basis to $13.9 million, which
represents 67 days of supply based on non-GAAP cost of revenues.
Trade accounts receivable increased by $0.9 million sequentially to
$20.7 million, which represents DSO of 62 days. At quarter-end,
working capital was $115 million and the current ratio was 6.9. 
"We are pleased to deliver revenue and gross margin at the high end
of our previous guidance. While business from the computing segment
remained soft, we were able to offset the decline in computing
revenue with increased revenue from embedded market segments and
delivered sequentially flat revenue," said Alex Hui, President and
CEO of Pericom. "We will continue to focus on our long-term growth
strategy of expanding our customer base in networking, cloud
computing and embedded applications with our high performance serial
connectivity and timing solutions." 
New Products  
In the third quarter of fiscal 2013, Pericom introduced a total of 17
new products in our Connectivity, Timing, and Signal Integrity
product areas enabling networking, cloud computing, embedded and
smart mobile applications.  
We introduced 9 new products across our Connectivity product
families. These included a new family of load switches, a home
appliance controller, a USB 2.0 switch and a family of multi-GHz
switches.  
We expanded our Timing solutions with 5 new products, including GHz
clock buffers and TCXOs.  
For Signal Integrity we introduced 3 new products enhancing USB3
signal integrity in low power, high performance systems.  
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 609,639 shares in the three
months ended March 30, 2013 for an aggregate cost of $4.3 million and
an average per share purchase price of $7.03. The remaining balance
of potential share repurchases under the authorization is
approximately $19.6 million. Shares may be repurchased from time to
time in the open market or through private transactions, at the
discretion of Pericom management. As of April 25, 2013, Pericom had
approximately 22.7 million shares of common stock outstanding. 
Fiscal Q4 2013 Outlook  
The following statements are based on current expectations. These
statements are forward looking, and actual results may differ
materially. 


 
--  Revenues are expected to be in the range of $29.5 million to $32.5
    million.
    
    
--  GAAP gross margins are expected to be between 35.2% and 37.2%, and
    adjusting for share-based compensation, amortization of intangibles
    and fair value adjustments that are expected to total approximately
    1.8%, non-GAAP gross margins are expected to be in the 37.0% to 39.0%
    range.
    
    
--  GAAP operating expenses are expected to be between $12.4 million and
    $12.9 million, and adjusting for share-based compensation,
    amortization of intangibles and fair value adjustments that are
    expected to total approximately $1.1 million, non-GAAP operating
    expenses are expected to be in the range of $11.3 million to $11.8
    million.
    
    
--  Other income is expected to be between $0.8 million and $1.1 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 April 30, 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, May 6th. To
listen to the replay, dial toll-free (855) 859-2056 and reference
conference ID 48246302. 
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 on acquired fixed assets, 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 fair
value adjustments on acquired fixed assets, 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 Q4 2013 Outlook", which regard the anticipated revenues,
gross margin, operating expenses, other income, and effective tax
rate in the fourth 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 December 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            Nine Months Ended  
                   ----------------------------------  -------------------- 
                   March 30,  December 29,  March 31,  March 30,  March 31, 
                      2013        2012         2012       2013       2012   
                   ---------  ------------  ---------  ---------  --------- 
                                  
                                          
Net revenues       $  30,366  $     30,433  $  33,378  $  97,548  $  99,191 
                                                                            
Cost of revenues      19,521        19,239     21,789     61,597     64,088 
                   ---------  ------------  ---------  ---------  --------- 
                                                                            
  Gross profit        10,845        11,194     11,589     35,951     35,103 
                                                                            
Operating                                                                   
 expenses:                                                                  
                                                                            
  Research and                                                              
   development         5,277         5,097      5,669     15,697     16,262 
                                                                            
  Selling, general                                                          
   and                                                                      
   administrative      7,193         7,532      7,114     22,364     21,513 
                   ---------  ------------  ---------  ---------  --------- 
                                                                            
    Total                                                                   
     operating                                                              
     expenses         12,470        12,629     12,783     38,061     37,775 
                   ---------  ------------  ---------  ---------  --------- 
                                                                            
Loss from                                                                   
 operations           (1,625)       (1,435)    (1,194)    (2,110)    (2,672)
                                                                            
Interest and other                                                          
 income, net           1,318           795        847      2,748      2,555 
                   ---------  ------------  ---------  ---------  --------- 
                                                                            
Income (loss)                                                               
 before income                                                              
 taxes                  (307)         (640)      (347)       638       (117)
                                                                            
Income tax expense                                                          
 (benefit)               395         4,756        (76)     5,652        123 
                   ---------  ------------  ---------  ---------  --------- 
                                                                            
Net loss from                                                   
            
 consolidated                                                               
 companies              (702)       (5,396)      (271)    (5,014)      (240)
                                                                            
Equity in net                                                               
 income of                                                                  
 unconsolidated                                                             
 affiliate                21            57          4        186         83 
                   ---------  ------------  ---------  ---------  --------- 
                                                                            
Net loss           $    (681) $     (5,339) $    (267) $  (4,828) $    (157)
                   =========  ============  =========  =========  ========= 
                                                                            
Basic loss per                                                              
 share             $   (0.03) $      (0.23) $   (0.01) $   (0.21) $   (0.01)
                   =========  ============  =========  =========  ========= 
                                                                            
Diluted loss per                                                            
 share             $   (0.03) $      (0.23) $   (0.01) $   (0.21) $   (0.01)
                   =========  ============  =========  =========  ========= 
                                                                            
Shares used in                                                              
 computing basic                                                            
 loss per share       23,162        23,515     24,030     23,407     24,255 
                   =========  ============  =========  =========  ========= 
                                                                            
Shares used in                                                              
 computing diluted                                                          
 loss per share       23,162        23,515     24,030     23,407     24,255 
                   =========  ============  =========  =========  ========= 
                                                                            
                                                                            
                      Pericom Semiconductor Corporation                     
               Condensed Consolidated Statements of Operations              
                               (In thousands)                               
                                 (unaudited)                                
                                                                            
                               Three Months Ended         Nine Months Ended 
                        -------------------------------- -------------------
                        March 30, December 29, March 31, March 30, March 31,
                           2013       2012        2012      2013      2012  
                        --------- ------------ --------- --------- ---------
                                                                            
Share-based                                                                 
 compensation                                                               
  Cost of revenues      $      51 $         43 $      60 $     146 $     161
  Research and                                                              
   development                317          333       371       972     1,099
  Selling, general and                                                      
   administrative             474          484       496     1,425     1,573
                        --------- ------------ --------- --------- ---------
    Share-based                                                             
     compensation                                                           
     expense            $     842 $        860 $     927 $   2,543 $   2,833
                                                                            
Amortization of                                                             
 intangible assets                                                          
  Cost of revenues      $     482 $        481 $     334 $   1,440 $   1,119
  Research and                                                              
   development                 51           49       201       156       528
  Selling, general and                                                      
   administrative             242          242       243       727       723
                        --------- ------------ --------- --------- ---------
    Amortization of                                                         
     intangible assets  $     775 $        772 $     778 $   2,323 $   2,370
                                                                            
                                                                            
                     Pericom Semiconductor Corporation                      
           Reconciliation of GAAP Net Loss to Non-GAAP Net Income           
                               (In thousands)                               
                                (unaudited)                                 
                                                                            
                           Three Months Ended            Nine Months Ended  
                   ----------------------------------  -------------------- 
                   March 30,  December 29,  March 31,  March 30,  March 31, 
                      2013        2012         2012       2013       2012   
                   ---------  ------------  ---------  ---------  --------- 
GAAP net loss      $    (681) $     (5,339) $    (267) $  (4,828) $    (157)
Reconciling items:                                                          
 Share-based                                                                
  compensation                                                              
  expense                842           860        927      2,543      2,833 
 Amortization of                                                            
  intangible                                                                
  assets                 775           772        778      2,323      2,370 
 Fair value                                                                 
  adjustment to                                                             
  depreciation                                                              
  expense on                                                                
  acquired fixed                                                            
  assets                  50            50         50        150        150 
 Restructuring                                                              
  charge                   -             -        460          -        460 
 Tax on                                                                     
  intercompany                                                              
  transaction            382         4,987          -      5,369          - 
 Tax effect of                                                              
  adjustments           (403)         (408)      (285)    (1,213)    (1,191)
                   ---------  ------------  ---------  ---------  --------- 
  Total                                                                     
   reconciling                                                              
   items               1,646         6,261      1,930      9,172      4,622 
                   ---------  ------------  ---------  ---------  --------- 
Non-GAAP net                                                                
 income            $     965  $        922  $   1,663  $   4,344  $   4,465 
                   =========  ============  =========  =========  ========= 
                                                                            
         Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS         
                                (unaudited)                                 
                                                                            
Diluted net loss                                                            
 per share:                                                                 
 GAAP diluted                                                               
  income (loss)                                                             
  per share        $   (0.03) $      (0.23) $   (0.01) $   (0.21) $   (0.01)
 Adjustments:                                                               
 Share-based                                                                
  compensation                                                              
  expense               0.04          0.04       0.04       0.12       0.11 
 Amortization of                                                            
  intangible                                                                
  assets                0.03          0.03       0.03       0.09       0.09 
 Fair value                                                                 
  adjustment to                                                             
  depreciation                                                              
  expense on                                                                
  acquired fixed                                                            
  assets                   -             -          -          -       0.01 
 Restructuring                                                              
  charge                   -             -       0.02          -       0.02 
 Tax on                                                                     
  intercompany                                                              
  transaction           0.02          0.21          -       0.23          - 
 Tax effect of                                                              
  adjustments          (0.02)        (0.02)     (0.01)     (0.06)     (0.05)
 Difference in                                                              
  share count              -          0.01          -       0.01          - 
                   ---------  ------------  ---------  ---------  --------- 
  Total                                                                     
   adjustments          0.07          0.27       0.08       0.39       0.19 
                   ---------  ------------  ---------  ---------  --------- 
 Non-GAAP diluted                                                           
  income per share $    0.04  $       0.04  $    0.07  $    0.18  $    0.18 
                   =========  ============  =========  =========  ========= 
                                                                            
Shares used in                                                              
 diluted net                                                                
 income (loss) per                                                          
 share                                                                      
 calculation:                                                               
 GAAP                 23,162        23,515     24,030     23,407     24,255 
  Change in                                                                 
   diluted shares                                                           
   from GAAP net                                                            
   loss to non-                                                             
   GAAP net income        99           141        105        120        103 
  Exclude the                                                               
   benefit of                                                               
   share-based                                                              
   compensation                                                             
   expense (1)           523           507        370        446        375 
                   ---------  ------------  ---------  ---------  --------- 
 Non-GAAP             23,784        24,163     24,505     23,973     24,733 
                   =========  ============  =========  =========  ========= 
                                                                            
(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  
                   ----------------------------------  -------------------- 
                   March 30,  December 29,  March 31,  March 30,  March 31, 
                      2013        2012         2012       2013       2012   
                   ---------  ------------  ---------  ---------  --------- 
GAAP gross margin  $  10,845  $     11,194  $  11,589  $  35,951  $  35,103 
 - % of revenues        35.7%         36.8%      34.7%      36.9%      35.4%
Reconciling items:                                                          
 Share-based                                                                
  compensation            51            43         60        146        161 
 Amortization of                                                            
  intangible                                                                
  assets                 482           481        334      1,440      1,119 
 Fair value                                                                 
  adjustment to                                                             
  depreciation                                                              
  expense on                                                                
  acquired fixed                                                            
  assets                  10            10         10         30         30 
 Restructuring                                                              
  charge                   -             -         78          -         78 
                   ---------  ------------  ---------  ---------  --------- 
  Total                                                                     
   reconciling                                                              
   items                 543           534        482      1,616      1,388 
                   ---------  ------------  ---------  ---------  --------- 
Non-GAAP gross                                                              
 margin            $  11,388  $     11,728  $  12,071  $  37,567  $  36,491 
                   =========  ============  =========  =========  ========= 
 - % of revenues        37.5%         38.5%      36.2%      38.5%      36.8%
                                                                            
        Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses        
                                (unaudited)                                 
                                                                            
GAAP research and                                                           
 development                                                                
 expenses          $   5,277  $      5,097  $   5,669  $  15,697  $  16,262 
 - % of revenues        17.4%         16.7%      17.0%      16.1%      16.4%
Reconciling items:                                                          
 Share-based                                                                
  compensation          (317)         (333)      (371)      (972)    (1,099)
 Amortization of                                                            
  intangible                                                                
  assets                 (51)          (49)      (201)      (156)      (528)
 Fair value                                                                 
  adjustment to                                                             
  depreciation                                                              
  expense on                                                                
  acquired fixed                                                            
  assets                 (10)          (10)       (10)       (30)       (30)
 Restructuring                                                              
  charge                   -             -       (164)                 (164)
                   ---------  ------------  ---------  ---------  --------- 
  Total                                                                     
   reconciling                                                              
   items                (378)         (392)      (746)    (1,158)    (1,821)
                   ---------  ------------  ---------  ---------  --------- 
Non-GAAP research                                                           
 and development                                                            
 expenses          $   4,899  $      4,705  $   4,923  $  14,539  $  14,441 
                   =========  ============  =========  =========  ========= 
 - % of revenues        16.1%         15.5%      14.7%      14.9%      14.6%
                                                                            
       Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses       
                                (unaudited)                                 
                                                                            
GAAP selling,                                                               
 general and                                                                
 administrative                                                             
 expenses          $   7,193  $      7,532  $   7,114  $  22,364  $  21,513 
 - % of revenues        23.7%         24.7%      21.3%      22.9%      21.7%
Reconciling items:                                                          
 Share-based                                                                
  compensation          (474)         (484)      (496)    (1,425)    (1,573)
 Amortization of                                                            
  intangible                                                                
  assets                (242)         (242)      (243)      (727)      (723)
 Fair value                                                                 
  adjustment to                                                             
  depreciation                                                              
  expense on                                                                
  acquired fixed                                                            
  assets                 (30)          (30)       (30)       (90)       (90)
 Restructuring                                                              
  charge                   -             -       (218)         -       (218)
                   ---------  ------------  ---------  ---------  --------- 
  Total                                                                     
   reconciling                                                              
   items                (746)         (756)      (987)    (2,242)    (2,604)
                   ---------  ------------  ---------  ---------  --------- 
Non-GAAP selling,                                                           
 general and                                                                
 administrative                                                             
 expenses          $   6,447  $      6,776  $   6,127  $  20,122  $  18,909 
                   =========  ============  =========  =========  ========= 
 - % of revenues        21.2%         22.3%      18.4%      20.6%      19.1%
                                                                            
                                                                            
                      Pericom Semiconductor Corporation                     
                    Condensed Consolidat
ed Balance Sheets                   
                               (In thousands)                               
                                 (unaudited)                                
                                                                            
                                                      As of         As of   
                                                    March 30,     June 30,  
                                                      2013          2012    
                                                  ------------  ------------
    Assets                                                                  
                                                                            
Current assets:                                                             
                                                                            
  Cash and cash equivalents                       $     27,193  $     24,283
  Short-term investments                                65,432        79,924
  Accounts receivable - trade                           20,739        24,010
  Inventories                                           13,874        16,604
  Prepaid expenses and other current assets              5,841         6,099
  Deferred income taxes                                  1,564         1,549
                                                  ------------  ------------
    Total current assets                               134,643       152,469
                                                                            
Property, plant and equipment-net                       60,329        56,102
Investments in unconsolidated affiliates                 2,390         2,474
Deferred income taxes non-current                        2,416         2,447
Long-term investments in marketable securities          26,566        23,628
Goodwill                                                16,901        16,797
Intangible assets-net                                   10,578        12,831
Other assets                                             8,643         9,058
                                                  ------------  ------------
    Total assets                                  $    262,466  $    275,806
                                                  ============  ============
                                                                            
                                                                            
    Liabilities and Shareholders' Equity                                    
                                                                            
Current liabilities:                                                        
                                                                            
  Short-term debt                                 $        197  $      1,364
  Accounts payable                                      10,203        14,860
  Accrued liabilities                                    8,982         8,608
                                                  ------------  ------------
    Total current liabilities                           19,382        24,832
                                                                            
Industrial development subsidy                           7,385         8,577
Deferred income tax liabilities                          5,888         6,191
Other long-term liabilities                              3,428         2,571
                                                  ------------  ------------
    Total liabilities                                   36,083        42,171
                                                                            
Shareholders' equity:                                                       
  Common stock and paid in capital                     120,222       123,362
  Retained earnings and other comprehensive income     106,161       110,273
                                                  ------------  ------------
  
  Total shareholders' equity                         226,383       233,635
                                                  ------------  ------------
                                                                            
    Total liabilities and shareholders' equity    $    262,466  $    275,806
                                                  ============  ============

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