- Q4 revenues increased 10% sequentially and 4% year-over-year, and annual revenues increased 13% from FY10.
- Q4 GAAP gross margin increased by 374 bps sequentially and decreased 175 bps year-over-year, while annual gross margin decreased 108 bps from FY10.
- Q4 GAAP net income increased 203% sequentially and decreased 59% year-over-year, and annual net income increased 25% from FY10.
Pericom Semiconductor Corporation (
Net revenues for the fourth quarter were $43.3 million, an increase of 10% from the $39.6 million reported in the third quarter of fiscal 2011, and up 4% from the $41.5 million reported in the comparable period last year. Net revenues for fiscal year 2011 were $166.3 million, an increase of 13% from the $146.9 million reported for fiscal year 2010. When normalizing for the additional, fourteenth week, during the fourth quarter of fiscal 2010, the fourth quarter net revenues increased by 12% year-over-year and increased by 16% for the full fiscal year. The sequential quarter revenue increase primarily resulted from networking and enterprise computing end-market strength. The fiscal year 2011 results included Pericom Technology, Inc. ("PTI") operations, which was acquired on August 31, 2010. The first quarter included only one month of PTI results due to the timing of the acquisition.
GAAP gross margin was 35.0% in the fourth quarter, up from 31.3% last quarter and down from 36.7% in the comparable period last year. On a non-GAAP basis, gross margin was 36.2% in the fourth quarter, which reflects exclusion of share-based compensation, amortization of intangible assets, and amortization of fair value adjustments and compensation expense accruals from the PTI acquisition. The comparable non-GAAP gross margins were 32.6% last quarter and 37.0% in the comparable period last year. The improvement in sequential gross margin primarily reflects favorable product mix from higher networking and lower consumer end-market shipments, as well as lower absorption charges from increased volume. For the full fiscal year 2011, GAAP gross margin was 33.5% compared with 34.6% for fiscal year 2010. On a non-GAAP basis, gross margin was 35.1% for fiscal year 2011 compared with 34.8% for fiscal year 2010.
GAAP net income attributable to Pericom shareholders for the fourth quarter was $1.6 million, or $0.06 per diluted share, compared with net income of $0.5 million, or $0.02 per diluted share in the third quarter, and net income of $3.9 million, or $0.15 per diluted share in the comparable period last year. GAAP net income attributable to Pericom shareholders for the fiscal year 2011 was $13.5 million, or $0.53 per diluted share, compared with net income of $10.8 million, or $0.42 per diluted share in fiscal year 2010. GAAP net income for all periods of fiscal 2011 included share-based compensation, amortization of intangible assets, amortization of fair value adjustments, and other PTI acquisition related expenses, and for fiscal year 2010, GAAP net income included share-based compensation and amortization of intangible assets. Excluding these items, non-GAAP net income for the fourth quarter was $3.6 million or $0.14 per diluted share, compared with $2.5 million or $0.10 per diluted share in the third quarter, and non-GAAP net income of $4.8 million, or $0.19 per diluted share in the comparable period last year. For the fiscal year 2011, non-GAAP net income was $14.4 million, or $0.56 per diluted share compared with $14.3 million, or $0.55 per diluted share for fiscal year 2010.
The balance sheet remained very strong with cash and investments in marketable securities of $128 million at the end of the fourth quarter, and cash and investments per basic share was $5.12 for the fourth quarter. Our cash position improved by $7 million during the quarter, net of $3 million of share repurchases. Working capital was $129 million and the current ratio was 4.2 to 1.
"For the fourth quarter, we were pleased to see nice sequential revenue growth and improvement in gross margin," said Alex Hui, President and CEO of Pericom. "We were also pleased by the 14% reduction of in-house inventory while channel inventory remained flat in the 7 week range at the end of the fourth quarter. This is important as the overall industry slows down a bit due to the macro-economic conditions."
New Products
In the June quarter, Pericom introduced a total of 17 new products across the Signal Integrity, Timing, and Connectivity product areas.
- Signal Integrity: We expanded our solutions for high-speed serial protocol signal integrity by introducing 5 new ReDriver™ products for SATA3, SAS2, and the new USB3 (SuperSpeed) protocols. These products address volume notebook, server, storage, and embedded market segments, with all five redrivers offering low power consumption from a competitive standpoint. The new USB3 products are specifically designed to meet the latest industry compliance testing requirements for next generation platforms with integrated USB3 controllers.
- Connectivity: Adding to our high-speed connectivity solutions, we introduced 3 products for the new Thunderbolt, Display Port and USB protocols. These products are specifically aimed at next generation notebook, tablet, and embedded market segments.
- Timing: Expanding our timing solutions for next generation platforms, we introduced 9 new products in the HiFlex™ crystal oscillator (XO) and clock generator product families. These product families offer attractively low jitter and package footprints and target server, storage, networking and embedded market segments.
Share Repurchase Update
On April 29, 2008, our Board of Directors authorized the repurchase of $30 million of our common stock. Pursuant to the 2008 authority, the Company repurchased 334,452 shares in the three months ended July 2, 2011 for an aggregate cost of $2,966,297 and an average per share purchase price of $8.87. The remaining balance of potential share repurchases under the 2008 authority is approximately $12.3 million.
Fiscal Q1 2012 Outlook
The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially.
The overall macro environment has been weak the past few months and we have seen a slowdown in demand. Q4's book-to-bill ratio was slightly less than 1:1, which resulted in lower backlog entering fiscal Q1 2012 than the prior sequential quarter. Below are the estimates for fiscal Q1 2012.
- Revenues in the first fiscal quarter are expected to be in the range of $38.0 million to $41.5 million.
- GAAP gross margins are expected to be between 33.5% and 35.5%, and adjusting for share-based compensation, amortization of intangibles, fair value adjustments, and compensation accruals that are expected to total approximately 1.0%, non-GAAP gross margins are expected to be in the 34.5% to 36.5% range.
- GAAP operating expenses are expected to be between $12.2 and $12.8 million, and adjusting for share-based compensation, amortization of intangibles, fair value adjustments, and compensation accruals that are expected to total approximately $1.4 million, non-GAAP operating expenses are expected to be in the range of $10.8 to $11.4 million.
- Other income is expected to be between $0.6 and $0.7 million on a GAAP basis and on a non-GAAP basis.
- The effective tax rate is expected to be approximately 34-36% on a GAAP basis and 32-34% 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 August 9, 2011. To listen to the call, dial (877) 377-7103 and reference "Pericom." A slide presentation will accompany the conference call. To view the slides, please visit the investor relations section of www.pericom.com.
The Pericom financial results conference call will be available via a live webcast on the investor relations section of the web site at http://www.pericom.com. Access the web site 15 minutes prior to the start of the call to download and install any necessary audio software. An archived webcast replay will be available on the web site for approximately 90 days.
A taped replay of the conference call will be made available for the period from this evening through midnight on Tuesday, August 16th. To listen to the replay, dial toll-free (855) 859-2056 and reference conference ID 87723981.
About Pericom
Pericom Semiconductor Corporation (
Non-GAAP Financial Information
In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), this announcement of operating results contains non-GAAP financial measures that exclude the income statement effects of share-based compensation, amortization of intangible assets, fair value adjustments of acquired inventory, acquisition-related expenses, a one-time gain on the previously held interest in PTI, restructuring expenses, and the effects of excluding share-based compensation upon the number of diluted shares used in calculating non-GAAP earnings per share.
We have excluded share-based compensation expense in calculating these non-GAAP financial measures. These expenses are non-cash in nature and rely on valuations of the future market price of our common stock that is difficult to predict and is affected by market factors that are largely not within the control of management. We have excluded amortization of intangible assets, amortization of the fair value adjustments related to acquired inventory, acquisition related expenses, the gain on the previously held interest in PTI, restructuring expenses associated with headcount reductions, and the corresponding tax effect because we do not consider them to be related to our core operating performance.
We use the non-GAAP financial measures that exclude these items to make strategic decisions, forecast future results and evaluate the Company's current performance. We believe that the presentation of non-GAAP financial measures that exclude these items is useful to investors because we do not consider these charges either part of the day-to-day business or reflective of the core operational activities of the Company that are within the control of management or that are used to evaluate the Company's operating performance.
The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Safe Harbor Statement
This press release contains forward-looking statements as defined under The Securities Litigation Reform Act of 1995. Forward-looking statements in this release include the statements under the captions "Fiscal Q1 2012 Outlook", which regard the anticipated revenues, gross margin, operating expenses, other income, and effective tax rate in the first fiscal quarter of 2012, and statements from our CEO regarding revenue growth and normalized margin levels, reductions in in-house inventories and channel inventories being flat, potential industry slowdown due to macro-economic conditions, and other future expectations. The Company's actual results could differ materially from what is set forth in such forward-looking statements due to a variety of risk factors, including softness in demand for our products, price erosion for certain of our products, unexpected difficulties in developing new products, customer decisions to reduce inventory, economic or financial difficulties experienced by our customers, or technological and market changes. All forward-looking statements included in this document are made as of the date hereof, based on information available to the Company as of the date hereof, and Pericom assumes no obligation to update any forward-looking statements. Parties receiving this release are encouraged to review our quarterly report on Form 10-Q for the quarter ended April 2, 2011, and in particular, the risk factors sections contained in that report.
Pericom Semiconductor Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
------------------------------ -------------------
July 2, April 2, July 3, July 2, July 3,
2011 2011 2010 2011 2010
--------- --------- --------- --------- ---------
Net revenues $ 43,342 $ 39,555 $ 41,495 $ 166,343 $ 146,913
Cost of revenues 28,173 27,190 26,246 110,661 96,146
--------- --------- --------- --------- ---------
Gross profit 15,169 12,365 15,249 55,682 50,767
Operating expenses:
Research and
development 5,535 5,238 4,575 20,230 17,208
Selling, general and
administrative 7,487 7,231 7,413 29,447 26,478
--------- --------- --------- --------- ---------
Total operating
expenses 13,022 12,469 11,988 49,677 43,686
--------- --------- --------- --------- ---------
Income (loss) from
operations 2,147 (104) 3,261 6,005 7,081
Interest and other
income 695 1,132 1,072 14,377 5,222
--------- --------- --------- --------- ---------
Income before income
taxes 2,842 1,028 4,333 20,382 12,303
Income tax expense 1,281 514 1,174 7,619 3,911
--------- --------- --------- --------- ---------
Net income from
consolidated companies 1,561 514 3,159 12,763 8,392
Equity in net income of
unconsolidated
affiliates 48 17 759 700 2,430
--------- --------- --------- --------- ---------
Net income 1,609 531 3,918 13,463 10,822
Net income attributable
to noncontrolling
interests - - - - (28)
--------- --------- --------- --------- ---------
Net income attributable
to Pericom shareholders $ 1,609 $ 531 $ 3,918 $ 13,463 $ 10,794
========= ========= ========= ========= =========
Basic income per share
to Pericom shareholders $ 0.06 $ 0.02 $ 0.16 $ 0.54 $ 0.42
========= ========= ========= ========= =========
Diluted income per share
to Pericom shareholders $ 0.06 $ 0.02 $ 0.15 $ 0.53 $ 0.42
========= ========= ========= ========= =========
Shares used in computing
basic income per share 24,917 24,993 25,210 24,923 25,412
========= ========= ========= ========= =========
Shares used in computing
diluted income per
share 25,140 25,341 25,582 25,254 25,717
========= ========= ========= ========= =========
Pericom Semiconductor Corporation
Condensed Consolidated Statements of Operations
(In thousands)
(unaudited)
Three Months Ended Twelve Months Ended
-------------------------- -------------------
July 2, April 2, July 3, July 2, July 3,
2011 2011 2010 2011 2010
-------- -------- -------- --------- ---------
Share-based compensation
Cost of revenues $ 58 $ 62 $ 88 $ 250 $ 286
Research and development 372 421 441 1,536 1,506
Selling, general and
administrative 601 708 659 2,500 2,257
-------- -------- -------- --------- ---------
Share-based compensation
expense $ 1,031 $ 1,191 $ 1,188 $ 4,286 $ 4,049
Amortization of intangible
assets
Cost of revenues $ 342 $ 338 $ 29 $ 1,513 $ 116
Research and development 246 - - 246 -
Selling, general and
administrative 294 290 54 998 216
-------- -------- -------- --------- ---------
Amortization of
intangible assets $ 882 $ 628 $ 83 $ 2,757 $ 332
Pericom Semiconductor Corporation
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands)
(unaudited)
Three Months Ended Twelve Months Ended
---------------------------- --------------------
July 2, April 2, July 3, July 2, July 3,
2011 2011 2010 2011 2010
-------- -------- -------- --------- ---------
GAAP net income
attributable to Pericom
shareholders $ 1,609 $ 531 $ 3,918 $ 13,463 $ 10,794
Reconciling items:
Share-based
compensation expense 1,031 1,191 1,188 4,286 4,049
Amortization of
intangible assets 882 628 83 2,757 332
Fair value adjustment
amortization on
acquired inventory - - - 614 -
Gain on previously
held interest at PTI - - - (11,004) -
Acquisition-related
costs - - - 598 -
Interest expense
accrual relating to
PTI acquisition
earnout 206 204 - 688 -
Fair value adjustment
to depreciation
expense on acquired
fixed assets 49 49 - 159 -
Compensation expense
accrual relating to
PTI acquisition 364 360 - 1,211 -
Restructuring charge - 118 - 118
Tax effect of
adjustments (569) (606) (380) 1,549 (917)
-------- -------- -------- --------- ---------
Total reconciling
items 1,963 1,944 891 976 3,464
-------- -------- -------- --------- ---------
Non-GAAP net income
attributable to Pericom
shareholders $ 3,572 $ 2,475 $ 4,809 $ 14,439 $ 14,258
======== ======== ======== ========= =========
Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS
(unaudited)
Diluted net income per
share:
GAAP diluted income per
share attributable to
Pericom shareholders $ 0.06 $ 0.02 $ 0.15 $ 0.53 $ 0.42
Adjustments:
Share-based
compensation expense 0.04 0.05 0.05 0.17 0.16
Amortization of
intangible assets 0.03 0.02 - 0.09 0.01
Fair value adjustment
amortization on
acquired inventory - - - 0.03 -
Gain on previously held
interest at PTI - - - (0.43) -
Acquisition-related
costs - - - 0.02 -
Interest expense
accrual relating to
earnout 0.01 0.01 - 0.03 -
Fair value adjustment
to depreciation
expense on acquired
fixed assets - - - 0.01 -
Compensation expense
accrual relating to
PTI acquisition 0.01 0.01 - 0.04 -
Restructuring charge - 0.01 - - -
Tax effect of
adjustments (0.02) (0.02) (0.01) 0.06 (0.04)
Difference in share
count - - - 0.01
-------- -------- -------- -------- ---------
Total adjustments 0.08 0.08 0.04 0.03 0.13
-------- -------- -------- -------- ---------
Non-GAAP diluted income
per share attributable
to Pericom
shareholders $ 0.14 $ 0.10 $ 0.19 $ 0.56 $ 0.55
======== ======== ======== ======== =========
Shares used in diluted
net income per share
calculation:
GAAP 25,140 25,341 25,582 25,248 25,762
Exclude the benefit
of share-based
compensation expense
(1) 369 362 265 332 154
-------- -------- -------- -------- ---------
Non-GAAP 25,509 25,703 25,847 25,580 25,916
======== ======== ======== ======== =========
(1) For purposes of calculating non-GAAP diluted net income per share, the
GAAP diluted weighted average shares outstanding is adjusted to exclude
the benefits of unamortized stock compensation costs that are treated as
proceeds assumed to be used to repurchase shares under the GAAP treasury
stock method.
Pericom Semiconductor Corporation
Reconciliation of GAAP Gross Margin to Non-GAAP Gross Margin
(In thousands)
(unaudited)
Three Months Ended Twelve Months Ended
---------------------------- -------------------
July 2, April 2, July 3, July 2, July 3,
2011 2011 2010 2011 2010
-------- -------- -------- -------- ---------
GAAP gross margin $ 15,169 $ 12,365 $ 15,249 $ 55,682 $ 50,767
- % of revenues 35.0% 31.3% 36.7% 33.5% 34.6%
Reconciling items:
Share-based
compensation 58 62 88 250 286
Amortization of
intangible assets 342 338 29 1,513 116
Fair value adjustment
amortization on
acquired inventory - - - 614 -
Fair value adjustment
to depreciation
expense on acquired
fixed assets 10 10 - 30 -
Compensation expense
accrual relating to
PTI acquisition 106 105 - 352 -
-------- -------- -------- -------- ---------
Total reconciling
items 516 515 117 2,759 402
-------- -------- -------- -------- ---------
Non-GAAP gross margin $ 15,685 $ 12,880 $ 15,366 $ 58,441 $ 51,169
======== ======== ======== ======== =========
- % of revenues 36.2% 32.6% 37.0% 35.1% 34.8%
Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses
(unaudited)
GAAP research and
development expenses $ 5,535 $ 5,238 $ 4,575 $ 20,230 $ 17,208
- % of revenues 12.8% 13.2% 11.0% 12.2% 11.7%
Reconciling items:
Share-based
compensation (372) (421) (441) (1,536) (1,506)
Amortization of
intangible assets (246) - - (246) -
Fair value adjustment
to depreciation
expense on acquired
fixed assets (10) (10) - (37) -
Compensation expense
accrual relating to
PTI acquisition (119) (117) - (395) -
-------- -------- -------- -------- ---------
Total reconciling
items (747) (548) (441) (2,214) (1,506)
-------- -------- -------- -------- ---------
Non-GAAP research and
development expenses $ 4,788 $ 4,690 $ 4,134 $ 18,016 $ 15,702
======== ======== ======== ======== =========
- % of revenues 11.0% 11.9% 10.0% 10.8% 10.7%
Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses
(unaudited)
GAAP selling, general and
administrative expenses $ 7,487 $ 7,231 $ 7,413 $ 29,447 $ 26,478
- % of revenues 17.3% 18.3% 17.9% 17.7% 18.0%
Reconciling items:
Share-based
compensation (601) (708) (659) (2,500) (2,257)
Amortization of
intangible assets (294) (290) (54) (998) (216)
Acquisition-related
costs - - - (598) -
Fair value adjustment
to depreciation
expense on acquired
fixed assets (29) (29) - (92) -
Restructuring cost - (118) - (118) -
Compensation expense
accrual relating to
PTI acquisition (139) (138) - (464) -
-------- -------- -------- -------- ---------
Total reconciling
items (1,063) (1,283) (713) (4,770) (2,473)
-------- -------- -------- -------- ---------
Non-GAAP selling, general
and administrative
expenses $ 6,424 $ 5,948 $ 6,700 $ 24,677 $ 24,005
======== ======== ======== ======== =========
- % of revenues 14.8% 15.0% 16.1% 14.8% 16.3%
Pericom Semiconductor Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
As of As of
July 2, 2011 July 3, 2010
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 30,023 $ 29,495
Restricted cash 2,947 -
Short-term investments 76,266 76,454
Accounts receivable - trade 28,185 25,365
Inventories 21,942 23,431
Prepaid expenses and other current assets 7,788 6,825
Deferred income taxes 2,564 3,119
------------ ------------
Total current assets 169,715 164,689
Property, plant and equipment-net 60,859 50,760
Investments in unconsolidated affiliates 2,596 13,183
Deferred income taxes non-current 4,324 3,868
Long-term investments in marketable securities 21,282 12,977
Goodwill 16,669 1,681
Intangible assets 15,690 1,452
Other assets 9,881 7,438
------------ ------------
Total assets $ 301,016 $ 256,048
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 12,221 $ 15,585
Accrued liabilities and other 19,645 10,781
Short-term debt 8,671 -
------------ ------------
Total current liabilities 40,537 26,366
Industrial development subsidy 9,075 6,577
Other long-term liabilities 8,679 1,199
------------ ------------
Total liabilities 58,291 34,142
Shareholders' equity:
Common stock and paid in capital 130,960 130,536
Retained earnings and other comprehensive income 111,765 91,370
------------ ------------
Total shareholders' equity 242,725 221,906
------------ ------------
Total liabilities and shareholders' equity $ 301,016 $ 256,048
============ ============
Contact: Pericom Semiconductor Tel: 408 435-0800 Email Contact