- Net revenues increased 1.0% year-over-year to $30.7 million.
- Achieved 40.8% gross margin (42.5% non-GAAP) and year-over-year increase of 505 bps.
- Net income improved to $0.07 per diluted share; $0.08 on a non-GAAP basis.
- Announces a $20 million increase in its share buyback program.
Pericom Semiconductor Corporation (
Net revenues for the third quarter were $30.7 million, a decrease of 4.2% from the $32.0 million reported in the second quarter, and an increase of 1.0% from the $30.4 million reported in the comparable period last year. The revenue increase from the prior year is the result of volume increases in the consumer sector, notably digital media and ultramobility.
GAAP gross margin was 40.8% in the third quarter, an increase from 38.1% last quarter and an increase from 35.7% in the comparable period last year. On a non-GAAP basis, gross margin was 42.5% in the third quarter, which excludes share-based compensation, amortization of intangible assets and amortization of fair value adjustments on acquired fixed assets. The comparable non-GAAP gross margins were 39.8% last quarter and 37.5% in the comparable period last year. The improvement in gross margin primarily reflects improved product mix in target applications.
GAAP net income for the third quarter was $1.6 million, or $0.07 per diluted share, compared with net income of $1.2 million, or $0.05 per diluted share in the second quarter, and net loss of $0.7 million, or $0.03 per diluted share in the comparable period last year. On a non-GAAP basis, net income for all periods excludes share-based compensation, amortization of intangible assets, and amortization of fair value adjustments, and the current quarter also excludes a restructuring charge and the benefit of a release of tax reserves. The resulting non-GAAP net income for the third quarter was $1.8 million, or $0.08 per diluted share, compared with non-GAAP net income of $1.9 million or $0.08 per diluted share in the second quarter, and non-GAAP net income of $1.0 million, or $0.04 per diluted share in the comparable period last year.
The balance sheet remained very strong with cash and cash equivalents and investments in marketable securities of $120.6 million or $5.39 per share outstanding ($5.27 per diluted share) at the end of the third quarter. At quarter-end, working capital was $114.5 million and the current ratio was 6.7.
"The strong improvement in gross margin has been driven by increased shipments into embedded, networking and high-end consumer markets and aligns with our strategy," said Alex Hui, President and CEO of Pericom. "We are introducing a wave of new products in timing, switching and connectivity. We believe these products strengthen our solution to target applications and will contribute significantly to our future revenue growth and margin improvement"
New Products
In the third quarter of fiscal 2014, Pericom introduced a total of 18 new products targeted at our focus market segments that were also sampled to key customers during the quarter.
We introduced 10 new products across our Connectivity/Switching product families which included power management, USB chargers, analog switches, video decoders and UART bridges.
We also expanded our Timing solutions for next generation platforms with 3 new products, including high performance clock buffers and a low jitter clock generator.
For Signal Integrity, we introduced 5 new products, including PCIe GEN3 for cloud computing and advanced USB3 redrivers for next generation mobility platforms.
Share Repurchase Update and Additional Authorization
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 443,368 shares in the three months ended March 29, 2014 for an aggregate cost of $3,735,000 and an average per share purchase price of $8.42. The remaining balance of potential share repurchases under the authorization is approximately $11.1 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 24, 2014, Pericom had approximately 22.2 million shares of common stock outstanding.
On April 24, 2014, the Board authorized an additional $20 million of share repurchases. We have had share repurchase programs in place since 2007, and through the quarter ended March 29, 2014 we have repurchased approximately 7.5 million shares under these programs.
Fiscal Q4 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 $31.0 million to $34.0 million.
- GAAP gross margins are expected to be between 38.5% and 41.5%, and adjusting for share-based compensation, amortization of intangibles and fair value adjustments that are expected to total approximately 1.5%, non-GAAP gross margins are expected to be in the 40.0% to 43.0% range.
- GAAP operating expenses are expected to be between $11.8 million and $12.4 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 $10.7 million to $11.3 million.
- Other income is expected to be between $0.5 million and $0.8 million on a GAAP basis and on a non-GAAP basis, and consists of interest income and realized gains on sales of marketable securities, other income and expenses, and currency exchange gains and losses.
- The effective tax rate is expected to be approximately 30-34% 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 April 29, 2014. 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.
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 on acquired fixed assets, write-off of property and equipment, restructuring charge, lease restructuring and moving costs, release of tax reserves, 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 property and equipment, restructuring charge, lease restructuring and moving costs, release of tax reserves, 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 statements by our CEO concerning future business and revenue growth and margin improvement and the statements under the captions "Fiscal Q4 2014 Outlook", which regard the anticipated revenues, gross margin, operating expenses, other income, and effective tax rate in the fourth 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, our quarterly report on Form 10-Q for the quarter ended December 28, 2013, 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 Nine Months Ended
------------------------------- --------------------
December
March 29, 28, March 30, March 29, March 30,
2014 2013 2013 2014 2013
--------- --------- --------- --------- ---------
Net revenues $ 30,681 $ 32,040 $ 30,366 $ 95,329 $ 97,548
Cost of revenues 18,175 19,820 19,521 57,795 61,597
--------- --------- --------- --------- ---------
Gross profit 12,506 12,220 10,845 37,534 35,951
Operating expenses:
Research and
development 4,694 5,274 5,277 15,013 15,697
Selling, general and
administrative 7,407 7,126 7,193 22,220 22,364
--------- --------- --------- --------- ---------
Total operating
expenses 12,101 12,400 12,470 37,233 38,061
--------- --------- --------- --------- ---------
Income (loss) from
operations 405 (180) (1,625) 301 (2,110)
Interest and other
income, net 802 1,047 1,318 2,336 2,748
--------- --------- --------- --------- ---------
Income (loss) before
income taxes 1,207 867 (307) 2,637 638
Income tax expense
(benefit) (421) (331) 395 (521) 5,652
--------- --------- --------- --------- ---------
Net income (loss)
from consolidated
companies 1,628 1,198 (702) 3,158 (5,014)
Equity in net income
of unconsolidated
affiliate 13 27 21 82 186
--------- --------- --------- --------- ---------
Net income (loss) $ 1,641 $ 1,225 $ (681) $ 3,240 $ (4,828)
========= ========= ========= ========= =========
Basic income (loss)
per share $ 0.07 $ 0.05 $ (0.03) $ 0.14 $ (0.21)
========= ========= ========= ========= =========
Diluted income (loss)
per share $ 0.07 $ 0.05 $ (0.03) $ 0.14 $ (0.21)
========= ========= ========= ========= =========
Shares used in
computing basic
income (loss) per
share 22,659 22,800 23,162 22,751 23,407
========= ========= ========= ========= =========
Shares used in
computing diluted
income (loss) per
share 22,880 23,019 23,162 22,950 23,407
========= ========= ========= ========= =========
Pericom Semiconductor Corporation
Supplemental Information
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
-------------------------------- ---------------------
December
March 29, 28, March 30, March 29, March 30,
2014 2013 2013 2014 2013
---------- ---------- ---------- ---------- ----------
Share-based
compensation
Cost of revenues $ 40 $ 50 $ 51 $ 126 $ 146
Research and
development 257 313 317 867 972
Selling, general and
administrative 420 388 474 1,204 1,425
---------- ---------- ---------- ---------- ----------
Share-based
compensation
expense $ 717 $ 751 $ 842 $ 2,197 $ 2,543
Amortization of
intangible assets
Cost of revenues $ 483 $ 481 $ 482 $ 1,452 $ 1,440
Research and
development - 17 51 67 156
Selling, general and
administrative 249 249 242 745 727
---------- ---------- ---------- ---------- ----------
Amortization of
intangible assets $ 732 $ 747 $ 775 $ 2,264 $ 2,323
Pericom Semiconductor Corporation
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
------------------------------- --------------------
December
March 29, 28, March 30, March 29, March 30,
2014 2013 2013 2014 2013
--------- --------- --------- --------- ---------
GAAP net income
(loss) $ 1,641 $ 1,225 $ (681) $ 3,240 $ (4,828)
Reconciling items:
Share-based
compensation
expense 717 751 842 2,197 2,543
Amortization of
intangible assets 732 747 775 2,264 2,323
Fair value
adjustment to
depreciation
expense on acquired
fixed assets 51 51 50 153 150
Restructuring charge 95 95 - 190 -
Write-off of
property and
equipment - 210 - 210 -
Release of tax
reserves (1,035) (741) - (1,776) -
Tax on intercompany
transaction - - 382 15 5,369
Lease restructuring
and moving costs - - - 522 -
Tax effect of
adjustments (383) (452) (403) (1,378) (1,213)
--------- --------- --------- --------- ---------
Total reconciling
items 177 661 1,646 2,397 9,172
--------- --------- --------- --------- ---------
Non-GAAP net income $ 1,818 $ 1,886 $ 965 $ 5,637 $ 4,344
========= ========= ========= ========= =========
Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS
(unaudited)
Diluted net income
(loss) per share:
GAAP diluted income
(loss) per share $ 0.07 $ 0.05 $ (0.03) $ 0.14 $ (0.21)
Adjustments:
Share-based
compensation expense 0.03 0.03 0.04 0.09 0.12
Amortization of
intangible assets 0.03 0.03 0.03 0.10 0.09
Fair value adjustment
to depreciation
expense on acquired
fixed assets - - - 0.01 -
Restructuring charge 0.01 0.01 - 0.01 -
Write-off of property
and equipment - 0.01 - 0.01 -
Release of tax
reserves (0.04) (0.03) - (0.08) -
Tax on intercompany
transaction - - 0.02 - 0.23
Lease restructuring
and moving costs - - - 0.02 -
Tax effect of
adjustments (0.02) (0.02) (0.02) (0.06) (0.06)
Difference in share
count - - - - 0.01
--------- --------- --------- --------- ---------
Total adjustments 0.01 0.03 0.07 0.10 0.39
--------- --------- --------- --------- ---------
Non-GAAP diluted
income per share $ 0.08 $ 0.08 $ 0.04 $ 0.24 $ 0.18
========= ========= ========= ========= =========
Shares used in diluted
net income (loss) per
share calculation:
GAAP 22,880 23,019 23,162 22,950 23,407
Change in diluted
shares from GAAP net
loss to non-GAAP net
income - - 99 - 120
Exclude the benefit
of share-based
compensation expense
(1) 526 426 523 447 446
--------- --------- --------- --------- ---------
Non-GAAP 23,406 23,445 23,784 23,397 23,973
========= ========= ========= ========= =========
(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 29, December 28, March 30, March 29, March 30,
2014 2013 2013 2014 2013
--------- ------------- --------- --------- ---------
GAAP gross margin $ 12,506 $ 12,220 $ 10,845 $ 37,534 $ 35,951
- % of revenues 40.8% 38.1% 35.7% 39.4% 36.9%
Reconciling items:
Share-based
compensation 40 50 51 126 146
Amortization of
intangible assets 483 481 482 1,452 1,440
Fair value adjustment
to depreciation
expense on acquired
fixed assets 10 10 10 30 30
--------- ------------- --------- --------- ---------
Total reconciling
items 533 541 543 1,608 1,616
--------- ------------- --------- --------- ---------
Non-GAAP gross margin $ 13,039 $ 12,761 $ 11,388 $ 39,142 $ 37,567
========= ============= ========= ========= =========
- % of revenues 42.5% 39.8% 37.5% 41.1% 38.5%
Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses
(unaudited)
GAAP research and
development expenses $ 4,694 $ 5,274 $ 5,277 $ 15,013 $ 15,697
- % of revenues 15.3% 16.5% 17.4% 15.7% 16.1%
Reconciling items:
Share-based
compensation (257) (313) (317) (867) (972)
Amortization of
intangible assets - (17) (51) (67) (156)
Fair value adjustment
to depreciation
expense on acquired
fixed assets (10) (10) (10) (30) (30)
Restructuring charge (59) (78) - (137) -
Write-off of property
and equipment - (210) - (210) -
--------- --------- --------- --------- ---------
Total reconciling
items (326) (628) (378) (1,311) (1,158)
--------- --------- --------- --------- ---------
Non-GAAP research and
development expenses $ 4,368 $ 4,646 $ 4,899 $ 13,702 $ 14,539
========= ========= ========= ========= =========
- % of revenues 14.2% 14.5% 16.1% 14.4% 14.9%
Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses
(unaudited)
GAAP selling, general
and administrative
expenses $ 7,407 $ 7,126 $ 7,193 $ 22,220 $ 22,364
- % of revenues 24.1% 22.2% 23.7% 23.3% 22.9%
Reconciling items:
Share-based
compensation (420) (388) (474) (1,204) (1,425)
Amortization of
intangible assets (249) (249) (242) (745) (727)
Fair value adjustment
to depreciation
expense on acquired
fixed assets (31) (31) (30) (93) (90)
Restructuring charge (36) (17) - (53) -
Lease restructuring
and moving costs - - - (522) -
--------- --------- --------- --------- ---------
Total reconciling
items (736) (685) (746) (2,617) (2,242)
--------- --------- --------- --------- ---------
Non-GAAP selling,
general and
administrative
expenses $ 6,671 $ 6,441 $ 6,447 $ 19,603 $ 20,122
========= ========= ========= ========= =========
- % of revenues 21.7% 20.1% 21.2% 20.6% 20.6%
Pericom Semiconductor Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
As of As of
March 29, 2014 June 29, 2013
--------------- ---------------
Assets
Current assets:
Cash and cash equivalents $ 34,386 $ 30,844
Short-term investments 57,677 29,447
Accounts receivable - trade 22,765 22,105
Inventories 13,281 14,844
Prepaid expenses and other current assets 6,209 5,886
Deferred income taxes 425 585
--------------- ---------------
Total current assets 134,743 103,711
Property, plant and equipment-net 58,874 60,959
Investments in unconsolidated affiliates 2,614 2,525
Deferred income taxes non-current 3,187 3,411
Long-term investments in marketable
securities 28,569 57,392
Intangible assets 7,708 9,944
Other assets 8,162 8,625
--------------- ---------------
Total assets $ 243,857 $ 246,567
=============== ===============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 10,705 $ 12,184
Accrued liabilities 9,491 8,731
--------------- ---------------
Total current liabilities 20,196 20,915
Industrial development subsidy 6,582 7,263
Deferred tax liabilities 5,848 5,798
Other long-term liabilities 1,948 3,700
--------------- ---------------
Total liabilities 34,574 37,676
Shareholders' equity:
Common stock and paid in capital 116,824 119,591
Retained earnings and other comprehensive
income 92,459 89,300
--------------- ---------------
Total shareholders' equity 209,283 208,891
--------------- ---------------
Total liabilities and shareholders'
equity $ 243,857 $ 246,567
=============== ===============
Contact: Kevin Bauer Pericom Semiconductor Tel: 408 232-9100 Email Contact