Pericom Semiconductor Reports Fiscal First Quarter 2014 Financial Results

Pericom Semiconductor Reports Fiscal First Quarter 2014 Financial Results 
MILPITAS, CA -- (Marketwired) -- 10/29/13 --  Pericom Semiconductor
Corporation (NASDAQ: PSEM) 


 
--  Net revenues increased 3% sequentially, driven by new product
    shipments into wireless mobile.
--  Exceeded Q1 guidance for gross margin and operating profit.
--  Achieved 39.3% gross margin (40.9% non-GAAP), and sequential increase
    of 170 bps.

  
Pericom Semiconductor Corporation (NASDAQ: PSEM), a worldwide supplier
of high performance connectivity and timing solutions, today
announced results for its fiscal 2014 first quarter ended September
28, 2013.  
Net revenues for the first quarter were $32.6 million, an increase of
2.8% from the $31.7 million reported in the fourth quarter of fiscal
2013, and down 11.3% from the $36.7 million reported in the
comparable period last year. The revenue increase from the prior
quarter is primarily due to volume increases in the consumer and
embedded end-market segments. GAAP gross margin was 39.3% in the
first quarter, an increase from 37.6% last quarter and from 37.9% in
the comparable period last year. On a non-GAAP basis, gross margin
was 40.9% in the first 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 also in
the comparable period last year.  
GAAP net income for the first quarter was $374,000, or $0.02 per
diluted share, compared with net loss of $16.8 million, or $0.74 per
diluted share last quarter, and net income of $1.2 million, or $0.05
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 $522,000 of lease restructuring and
moving costs and a tax provision of $15,000 on an intercompany
transaction. Excluding these items, non-GAAP net income for the first
quarter was $1.9 million, or $0.08 per diluted share, compared with
non-GAAP net income of $1.6 million or $0.07 per diluted share in the
prior quarter, and non-GAAP net income of $2.5 million, or $0.10 per
diluted share in the comparable period last year.  
The balance sheet remained very strong with cash and investments in
marketable securities of $116.2 million or $5.06 per diluted share at
the end of the first quarter. At quarter-end, working capital was
$102.3 million and the current ratio was 5.9. 
"We were pleased to deliver operating results better than our
previous guidance, driven by shipment of new products with better
gross margin," said Alex Hui, President and CEO of Pericom. "We
continue to focus on the execution of our strategy to grow business
in networking, cloud computing and embedded applications with our
broad serial connectivity and timing solutions. During the quarter,
we shipped several million units of our USB 3.0 signal integrity
product to a tier one wireless mobile customer, which further
endorses our leadership position in signal integrity solutions." 
New Products  
In the first quarter of fiscal 2014, Pericom introduced a total of 21
new products in our Signal Integrity, Connectivity/Switching, and
Timing product areas. All of these products are targeted to our focus
market segments, and were sampled to key customers during the
quarter.  
We introduced 12 new products across our Connectivity/Switching
product families which included power management USB chargers, video
decoders and universal voltage level shifters. 
We also expanded our Timing solutions for next generation platforms
with 6 new products including high performance clock generators and
clock buffers.  
For Signal Integrity, we introduced 3 new products targeting 10Gb
Ethernet, 12Gb SAS3 and HDMI applications. 
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 106,645 shares in the three
months ended September 28, 2013 for an aggregate cost of $765,000 and
an average per share purchase price of $7.17. The remaining balance
of potential share repurchases under the authorization is
approximately $17.2 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 October 8, 2013, Pericom had
approximately 22.8 million shares of common stock outstanding. 
Fiscal Q2 2014 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 $31.6 million to $33.6
    million.
    
    
--  GAAP gross margins are expected to be between 37.4% and 39.4%, and
    adjusting for share-based compensation, amortization of intangibles
    and fair value adjustments that are expected to total approximately
    1.6%, non-GAAP gross margins are expected to be in the 39.0% to 41.0%
    range.
    
    
--  GAAP operating expenses are expected to be between $11.9 million and
    $12.3 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 $10.8 million to $11.2
    million.
    
    
--  Other income is expected to be between $0.5 million and $0.7 million
    on a GAAP basis and on a non-GAAP basis.
    
    
--  The effective tax rate is expected to be approximately 34-38% on a
    GAAP basis and 24-28% 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 October 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 Wednesday, November 6th.
To listen to the replay, dial toll-free (855) 859-2056 and reference
conference ID 89036087. 
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 Milpitas, 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, write off of equipment,
goodwill impairment, 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, write off of equipment,
goodwill impairment, a tax provision on intercompany transactions and
the corresponding tax effects 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 goods sold 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 Q2 2014 Outlook", which regard the anticipated revenues,
gross margin, operating expenses, other income, and effective tax
rate in the second fiscal quarter of 2014. 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 29, 2013, 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             
                               ---------------------------------------------
                                September 28,    June 29,      September 29,
                                    2013           2013            2012     
                               -------------- --------------  --------------
                                                                            
Net revenues                   $       32,608 $       31,707  $       36,749
                                                                            
Cost of revenues                       19,800         19,791          22,838
                               -------------- --------------  --------------
                                                                            
  Gross profit                         12,808         11,916          13,911
                                                                            
Operating expenses:                                                         
                                                                            
  Research and development              5,045          5,320           5,323
                                                                            
  Selling, general and                                                      
   administrative                       7,687          7,217           7,639
                                                                            
  Goodwill impairment                       -         16,899               -
                               -------------- --------------  --------------
                                                                            
    Total operating expenses           12,732         29,436          12,962
                               -------------- --------------  --------------
                                                                            
Income (loss) from operations              76        (17,520)            949
                                                                            
Interest and other income, net            486          1,277             635
                               -------------- --------------  --------------
                                                                            
Income before income taxes                562        (16,243)          1,584
                                                                            
Income tax expense                        231            573             500
                               -------------- --------------  --------------
                                                                            
Net income (loss) from                                                      
 consolidated companies                   331        (16,816)          1,084
                                                                            
Equity in net income of        
                                             
 unconsolidated affiliates                 43             30             108
                               -------------- --------------  --------------
                                                                            
Net income (loss)              $          374 $      (16,786) $        1,192
                               ============== ==============  ==============
                                                                            
Basic income (loss) per share  $         0.02 $        (0.74) $         0.05
                               ============== ==============  ==============
                                                                            
Diluted income (loss) per                                                   
 share                         $         0.02 $        (0.74) $         0.05
                               ============== ==============  ==============
                                                                            
Shares used in computing basic                                              
 income (loss) per share               22,794         22,783          23,543
                               ============== ==============  ==============
                                                                            
Shares used in computing                                                    
 diluted income (loss) per                                                  
 share                                 22,951         22,783          23,740
                               ============== ==============  ==============
                                                                            
                                                                            
                                                                            
                      Pericom Semiconductor Corporation                     
               Condensed Consolidated Statements of Operations              
                               (In thousands)                               
                                 (unaudited)                                
                                                                            
                                             Three Months Ended             
                                --------------------------------------------
                                 September 28,    June 29,     September 29,
                                     2013           2013           2012     
                                -------------- -------------- --------------
                                                                            
Share-based compensation                                                    
  Cost of revenues              $           36 $           41 $           52
  Research and development                 297            309            322
  Selling, general and                                                      
   administrative                          396            447            467
                                -------------- -------------- --------------
    Share-based compensation                                                
     expense                    $          729 $          797 $          841
                                                                            
Amortization of intangible                                                  
 assets                                                                     
  Cost of revenues              $          488 $          486 $          477
  Research and development                  50             50             56
  Selling, general and                                                      
   administrative                          247            245            243
                                -------------- -------------- --------------
    Amortization of intangible                                              
     assets                     $          785 $          781 $          776
                                                                            
                                                                            
                                                                            
                     Pericom Semiconductor Corporation                      
      Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income       
                               (In thousands)                               
                                (unaudited)                                 
                                                                            
                                           Three Months Ended               
                             ---------------------------------------------- 
                              September 28,     June 29,      September 29, 
                                  2013            2013            2012      
                             --------------  --------------  -------------- 
GAAP net income (loss)       $          374  $      (16,786) $        1,192 
Reconciling items:                                                          
  Share-based compensation                                                  
   expense                              729             797             841 
  Amortization of intangible                                                
   assets                               785             781             776 
  Write off of equipment                  -             184               - 
  Fair value adjustment to                                                  
   depreciation expense on                                                  
   acquired fixed assets                 51              51              50 
  Goodwill impairment                     -          16,899               - 
  Tax on intercompany                                                       
   transaction                           15             118               - 
  Lease restructuring and                                                   
   moving costs                         522               -               - 
  Tax effect of adjustments            (543)           (420)           (402)
                             --------------  --------------  -------------- 
    Total reconciling items           1,559          18,410           1,265 
                             --------------  --------------  -------------- 
Non-GAAP net income          $        1,933  $        1,624  $        2,457 
                             ==============  ==============  ============== 
                                                                            
         Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS         
                                 (unaudited)                                
                                                                            
Diluted net income (loss)                                                   
 per share:                                                                 
  GAAP diluted income per                                                   
   share                     $         0.02  $        (0.74) $         0.05 
  Adjustments:                                                              
  Share-based compensation                                                  
   expense                             0.03            0.03            0.04 
  Amortization of intangible                                                
   assets                              0.03            0.04            0.03 
  Write off of equipment                  -            0.01               - 
  Fair value adjustment to                                                  
   depreciation expense on                                                  
   acquired fixed assets                  -            0.01               - 
  Goodwill impairment            
         -            0.72               - 
  Tax on intercompany                                                       
   transaction                            -            0.01               - 
  Lease restructuring and                                                   
   moving costs                        0.02               -               - 
  Tax effect of adjustments           (0.02)          (0.02)          (0.02)
  Difference in share count               -            0.01               - 
                             --------------  --------------  -------------- 
    Total adjustments                  0.06            0.81            0.05 
                             --------------  --------------  -------------- 
  Non-GAAP diluted income                                                   
   per share                 $         0.08  $         0.07  $         0.10 
                             ==============  ==============  ============== 
                                                                            
Shares used in diluted net                                                  
 income per share                                                           
 calculation:                                                               
  GAAP                               22,951          22,783          23,740 
    Change in diluted shares                                                
     from GAAP net loss to                                                  
     non-GAAP net income                  -             117               - 
    Exclude the benefit of                                                  
     share-based                                                            
     compensation expense                                                   
     (1)                                390             467             308 
                             --------------  --------------  -------------- 
  Non-GAAP                           23,341          23,367          24,048 
                             ==============  ==============  ============== 
                                                                            
(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               
                             ---------------------------------------------- 
                              September 28,     June 29,      September 29, 
                                  2013            2013            2012      
                             --------------  --------------  -------------- 
 GAAP gross margin           $       12,808  $       11,916  $       13,911 
  -% of revenues                       39.3%           37.6%           37.9%
Reconciling items:                                                          
  Share-based compensation               36              41              52 
  Amortization of intangible                                                
   assets                               488             486             477 
  Fair value adjustment to                                                  
   depreciation expense on                                                  
   acquired fixed assets                 10              10              10 
                             --------------  --------------  -------------- 
    Total reconciling items             534             537             539 
                             --------------  --------------  -------------- 
Non-GAAP gross margin        $       13,342  $       12,453  $       14,450 
                             ==============  ==============  ============== 
  -% of revenues                       40.9%           39.3%           39.3%
                                                                            
        Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses        
                                 (unaudited)                                
                                                                            
GAAP research and                                                           
 development expenses        $        5,045  $        5,320  $        5,323 
  -% of revenues                       15.5%           16.8%           14.5%
Reconciling items:                                                          
  Share-based compensation             (297)           (309)           (322)
  Amortization of intangible                                                
   assets                               (50)            (50)            (56)
  Write off of equipment                  -            (184)              - 
  Fair value adjustment to                                                  
   depreciation expense on                                                  
   acquired fixed assets                (10)            (10)            (10)
                             --------------  --------------  -------------- 
    Total reconciling items            (357)           (553)           (388)
                             --------------  --------------  -------------- 
Non-GAAP research and                                                       
 development expenses        $        4,688  $        4,767  $        4,935 
                             ==============  ==============  ============== 
  -% of revenues                       14.4%           15.0%           13.4%
                                                                            
       Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses       
                                 (unaudited)                                
                                                                            
GAAP selling, general and                                                   
 administrative expenses     $        7,687  $        7,217  $        7,639 
  -% of revenues                       23.6%           22.8%           20.8%
Reconciling items:                                                          
  Share-based compensation             (396)           (447)           (467)
  Amortization of intangible                                                
   assets                              (247)           (245)           (243)
  Fair value adjustment to                                                  
   depreciation expense on                                                  
   acquired fixed assets                (31)            (31)            (30)
  Lease restructuring and                                                   
   moving costs                        (522)              -               - 
                             --------------  --------------  -------------- 
    Total reconciling items          (1,196)           (723)           (740)
                             --------------  --------------  -------------- 
Non-GAAP selling, general                                                   
 and administrative expenses $        6,491  $        6,494  $        6,899 
                             ======
========  ==============  ============== 
  -% of revenues                       19.9%           20.5%           18.8%
                                                                            
                                                                            
                                                                            
                      Pericom Semiconductor Corporation                     
                    Condensed Consolidated Balance Sheets                   
                               (In thousands)                               
                                 (unaudited)                                
                                                                            
                                                    As of          As of    
                                                September 28,  June 29, 2013
                                                    2013                    
                                               -------------- --------------
                    Assets                                                  
                                                                            
Current assets:                                                             
                                                                            
  Cash and cash equivalents                    $       24,963 $       30,844
  Short-term investments                               52,129         29,447
  Accounts receivable - trade                          24,049         22,105
  Inventories                                          14,633         14,844
  Prepaid expenses and other current assets             6,654          5,886
  Deferred income taxes                                   570            585
                                                -------------  -------------
    Total current assets                              122,998        103,711
                                                                            
Property, plant and equipment-net                      61,824         60,959
Investments in unconsolidated affiliates                2,585          2,525
Deferred income taxes non-current                       3,283          3,411
Long-term investments in marketable securities         39,121         57,392
Intangible assets                                       9,220          9,944
Other assets                                            8,498          8,625
                                                -------------  -------------
    Total assets                               $      247,529 $      246,567
                                                =============  =============
                                                                            
                                                                            
     Liabilities and Shareholders' Equity                                   
                                                                            
Current liabilities:                                                        
                                                                            
  Accounts payable                             $       11,258 $       12,184
  Accrued liabilities                                   9,449          8,731
                                                -------------  -------------
    Total current liabilities                          20,707         20,915
                                                                            
Industrial development subsidy                          7,074          7,263
Deferred tax liabilities                                5,690          5,798
Other long-term liabilities                             3,698          3,700
                                                -------------  -------------
    Total liabilities                                  37,169         37,676
                                                                            
Shareholders' equity:                                                       
  Common stock and paid in capital                    119,562        119,591
  Retained earnings and other comprehensive                                 
   income                                              90,798         89,300
                                                -------------  -------------
    Total shareholders' equity                        210,360        208,891
                                                -------------  -------------
                                                                            
    Total liabilities and shareholders' equity $      247,529 $      246,567
                                                =============  =============

  
Contact: 
Robert Strickland 
Pericom Semiconductor
Tel: 408 232-9100
rstrickland@pericom.com