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, restructuring charges, establishment of a deferred tax asset valuation allowance, note receivable write off, fair value adjustments of acquired inventory, acquisition-related expenses, a one-time gain on the previously held interest in PTI, 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, restructuring charges, establishment of a deferred tax valuation allowance, note receivable write off, amortization of the fair value adjustments related to acquired inventory, acquisition related expenses, the gain on the previously held interest in PTI, and the corresponding tax effect 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 Q1 2013 Outlook," which regard the anticipated revenues, gross margin, operating expenses, other income, and effective tax rate in the first fiscal quarter of 2013, and statements from our CEO regarding improving results and future deployment of our USB 3.0 and PCIe product solutions in next generation platforms, 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 July 2, 2011, subsequent quarterly reports on Form 10-Q, and in particular, the risk factors sections contained in those reports.
Pericom Semiconductor Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
------------------------------ -------------------
June 30, March 31, July 2, June 30, July 2,
2012 2012 2011 2012 2011
-------- --------- --------- -------- ---------
Net revenues $ 37,944 $ 33,378 $ 43,342 $137,135 $ 166,343
Cost of revenues 24,396 21,789 28,173 88,484 110,661
-------- --------- --------- -------- ---------
Gross profit 13,548 11,589 15,169 48,651 55,682
Operating expenses:
Research and
development 5,460 5,669 5,535 21,722 20,230
Selling, general and
administrative 8,135 7,114 7,487 29,648 29,447
-------- --------- --------- -------- ---------
Total operating
expenses 13,595 12,783 13,022 51,370 49,677
-------- --------- --------- -------- ---------
Income (loss) from
operations (47) (1,194) 2,147 (2,719) 6,005
Interest and other
income, net 1,059 847 695 3,614 14,377
-------- --------- --------- -------- ---------
Income (loss) before
income taxes 1,012 (347) 2,842 895 20,382
Income tax expense
(benefit) 2,974 (76) 1,281 3,097 7,619
-------- --------- --------- -------- ---------
Net income (loss) from
consolidated companies (1,962) (271) 1,561 (2,202) 12,763
Equity in net income of
unconsolidated
affiliates 51 4 48 134 700
-------- --------- --------- -------- ---------
Net income (loss) $ (1,911) $ (267) $ 1,609 $ (2,068) $ 13,463
======== ========= ========= ======== =========
Basic income (loss) per
share $ (0.08) $ (0.01) $ 0.06 $ (0.09) $ 0.54
======== ========= ========= ======== =========
Diluted income (loss) per
share $ (0.08) $ (0.01) $ 0.06 $ (0.09) $ 0.53
======== ========= ========= ======== =========
Shares used in computing
basic income (loss) per
share 23,611 24,030 24,917 24,094 24,923
======== ========= ========= ======== =========
Shares used in computing
diluted income (loss)
per share 23,611 24,030 25,140 24,094 25,254
======== ========= ========= ======== =========
Pericom Semiconductor Corporation
Condensed Consolidated Statements of Operations
(In thousands)
(unaudited)
Three Months Ended Twelve Months Ended
----------------------------- -------------------
June 30, March 31, July 2, June 30, July 2,
2012 2012 2011 2012 2011
--------- --------- --------- --------- ---------
Share-based compensation
Cost of revenues $ 50 $ 60 $ 58 $ 211 $ 250
Research and development 335 371 372 1,434 1,536
Selling, general and
administrative 518 496 601 2,091 2,500
--------- --------- --------- --------- ---------
Share-based
compensation expense $ 903 $ 927 $ 1,031 $ 3,736 $ 4,286
Amortization of intangible
assets
Cost of revenues $ 477 $ 334 $ 342 $ 1,596 $ 1,513
Research and development 57 201 246 585 246
Selling, general and
administrative 243 243 294 966 998
--------- --------- --------- --------- ---------
Amortization of
intangible assets $ 777 $ 778 $ 882 $ 3,147 $ 2,757
Pericom Semiconductor Corporation
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income
(In thousands)
(unaudited)
Twelve Months
Three Months Ended Ended
----------------------------- ------------------
June 30, March 31, July 2, June 30, July 2,
2012 2012 2011 2012 2011
-------- --------- -------- -------- --------
GAAP net income (loss) $ (1,911) $ (267) $ 1,609 $ (2,068) $ 13,463
Reconciling items:
Share-based
compensation expense 903 927 1,031 3,736 4,286
Amortization of
intangible assets 777 778 882 3,147 2,757
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 - 688
Fair value adjustment
to depreciation
expense on acquired
fixed assets 50 50 49 200 159
Compensation expense
accrual relating to
PTI acquisition - - 364 - 1,211
Restructuring charge - 460 - 460 118
Establishment of
deferred tax asset
valuation allowance 2,751 - - 2,751 -
Write off of note
receivable 556 - - 556 -
Tax effect of
adjustments (625) (285) (569) (1,816) 1,549
-------- --------- -------- -------- --------
Total reconciling
items 4,412 1,930 1,963 9,034 976
-------- --------- -------- -------- --------
Non-GAAP net income $ 2,501 $ 1,663 $ 3,572 $ 6,966 $ 14,439
======== ========= ======== ======== ========
Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS
(unaudited)
Diluted net income (loss)
per share:
GAAP diluted income
(loss) per share $ (0.08) $ (0.01) $ 0.06 $ (0.09) $ 0.53
Adjustments:
Share-based
compensation expense 0.04 0.04 0.04 $ 0.15 0.17
Amortization of
intangible assets 0.04 0.03 0.03 0.13 0.09
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 - 0.03
Fair value adjustment
to depreciation
expense on acquired
fixed assets - - - 0.01 0.01
Compensation expense
accrual relating to
PTI acquisition - - 0.01 - 0.04
Restructuring charge - 0.02 - 0.02 -
Establishment of
deferred tax asset
valuation allowance 0.11 - - 0.11 -
Write off of note
receivable 0.02 - - 0.02 -
Tax effect of
adjustments (0.03) (0.01) (0.02) (0.07) 0.06
Difference in share
count - - - - 0.01
-------- --------- -------- -------- --------
Total adjustments 0.18 0.08 0.08 0.37 0.03
-------- --------- -------- -------- --------
Non-GAAP diluted income
per share $ 0.10 $ 0.07 $ 0.14 $ 0.28 $ 0.56
======== ========= ======== ======== ========
Shares used in diluted
net income (loss) per
share calculation:
GAAP 23,611 24,030 25,140 24,094 25,248
Change in diluted
shares from GAAP net
loss to non-GAAP net
income 182 105 - 123 -
Exclude the benefit
of share-based
compensation expense
(1) 379 370 369 376 332
-------- --------- -------- -------- --------
Non-GAAP 24,172 24,505 25,509 24,593 25,580
======== ========= ======== ======== ========
(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)
Twelve Months
Three Months Ended Ended
----------------------------- ------------------
June 30, March 31, July 2, June 30, July 2,
2012 2012 2011 2012 2011
-------- --------- -------- -------- --------
GAAP gross margin $ 13,548 $ 11,589 $ 15,169 $ 48,651 $ 55,682
- % of revenues 35.7% 34.7% 35.0% 35.5% 33.5%
Reconciling items:
Share-based
compensation 50 60 58 211 250
Amortization of
intangible assets 477 334 342 1,596 1,513
Fair value adjustment
amortization on
acquired inventory - - - - 614
Fair value adjustment
to depreciation
expense on acquired
fixed assets 10 10 10 40 30
Compensation expense
accrual relating to
PTI acquisition - - 106 - 352
Restructuring charge - 78 - 78 -
-------- --------- -------- -------- --------
Total reconciling
items 537 482 516 1,925 2,759
-------- --------- -------- -------- --------
Non-GAAP gross margin $ 14,085 $ 12,071 $ 15,685 $ 50,576 $ 58,441
======== ========= ======== ======== ========
- % of revenues 37.1% 36.2% 36.2% 36.9% 35.1%
Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses
(unaudited)
GAAP research and
development expenses $ 5,460 $ 5,669 $ 5,535 $ 21,722 $ 20,230
- % of revenues 14.4% 17.0% 12.8% 15.8% 12.2%
Reconciling items:
Share-based
compensation (335) (371) (372) (1,434) (1,536)
Amortization of
intangible assets (57) (201) (246) (585) (246)
Fair value adjustment
to depreciation
expense on acquired
fixed assets (10) (10) (10) (40) (37)
Compensation expense
accrual relating to
PTI acquisition - - (119) - (395)
Restructuring charge - (164) - (164) -
-------- --------- -------- -------- --------
Total reconciling
items (402) (746) (747) (2,223) (2,214)
-------- --------- -------- -------- --------
Non-GAAP research and
development expenses $ 5,058 $ 4,923 $ 4,788 $ 19,499 $ 18,016
======== ========= ======== ======== ========
- % of revenues 13.3% 14.7% 11.0% 14.2% 10.8%
Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses
(unaudited)
GAAP selling, general and
administrative expenses $ 8,135 $ 7,114 $ 7,487 $ 29,648 $ 29,447
- % of revenues 21.4% 21.3% 17.3% 21.6% 17.7%
Reconciling items:
Share-based
compensation (518) (496) (601) (2,091) (2,500)
Amortization of
intangible assets (243) (243) (294) (966) (998)
Acquisition-related
costs - - - - (598)
Fair value adjustment
to depreciation
expense on acquired
fixed assets (30) (30) (29) (120) (92)
Compensation expense
accrual relating to
PTI acquisition - - (139) - (464)
Restructuring charge - (218) - (218) (118)
Write off of note
receivable (556) - - (556) -
-------- --------- -------- -------- --------
Total reconciling
items (1,347) (987) (1,063) (3,951) (4,770)
-------- --------- -------- -------- --------
Non-GAAP selling, general
and administrative
expenses $ 6,788 $ 6,127 $ 6,424 $ 25,697 $ 24,677
======== ========= ======== ======== ========
- % of revenues 17.9% 18.4% 14.8% 18.7% 14.8%
Pericom Semiconductor Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
As of As of
June 30, 2012 July 2, 2011
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 24,283 $ 30,023
Restricted cash - 2,947
Short-term investments 79,924 76,266
Accounts receivable - trade 24,010 28,185
Inventories 16,604 21,942
Prepaid expenses and other current assets 6,099 7,788
Deferred income taxes 1,549 2,564
------------- -------------
Total current assets 152,469 169,715
Property, plant and equipment-net 56,102 60,859
Investments in unconsolidated affiliates 2,474 2,596
Deferred income taxes non-current 2,447 4,324
Long-term investments in marketable securities 23,628 21,282
Goodwill 16,797 16,669
Intangible assets - net 12,831 15,690
Other assets 9,058 9,881
------------- -------------
Total assets $ 275,806 $ 301,016
============= =============
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $ 1,364 $ 8,671
Accounts payable 14,860 12,221
Accrued liabilities 8,608 19,645
------------- -------------
Total current liabilities 24,832 40,537
Industrial development subsidy 8,577 9,075
Deferred tax liabilities 6,191 6,605
Other long-term liabilities 2,571 2,074
------------- -------------
Total liabilities 42,171 58,291
Shareholders' equity:
Common stock and paid in capital 123,362 130,960
Retained earnings and other comprehensive income 110,273 111,765
------------- -------------
Total shareholders' equity 233,635 242,725
------------- -------------
Total liabilities and shareholders'
equity $ 275,806 $ 301,016
============= =============
