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Pericom Semiconductor Reports Fiscal Fourth Quarter and Full Year Results11 August 2005
Pericom Semiconductor Corporation (Nasdaq: PSEM) today announced results for its fiscal fourth
quarter and full year ended June 30, 2005. Results for the fourth quarter
are based upon 14 weeks versus a normal 13 week quarter, and the full fiscal
year includes 53 weeks rather than the normal 52 weeks. Further, results
include the acquired operations of SaRonix LLC since October 1, 2003.
As announced on August 2, 2005, the Company is also issuing restated
financial results for the first three quarters of fiscal 2005. The
restatement is the result of certain new product research and development
costs (initial wafer production costs) that were incorrectly capitalized into
inventory. As a result of the restatement, engineering expenses increased in
each quarter of fiscal 2005 from amounts previously reported and inventory and
cost of sales decreased from amounts previously reported. Future gross margin
will be benefited to the extent previously expensed new product costs are
subsequently sold. Included with this release are comparisons of the
previously reported results and the restated GAAP and pro forma results for
each restated quarter.
Net revenues for the fourth quarter were $21,121,000, up 8.7% from
$19,433,000 in the preceding quarter and are up 5.5% from $20,029,000 in the
comparable period last year. GAAP net income for the quarter was $1,173,000,
or $0.04 per share (diluted), compared to a GAAP net income (restated) of
$100,000, or $0.00 per share (diluted), in the preceding quarter and versus a
GAAP net income of $663,000, or $0.02 per share (diluted), in the comparable
period a year ago. Net revenues for the year ended June 30, 2005 were
$79,557,000, up 19.8% from $66,417,000 a year ago. GAAP net income for the
year ended June 30, 2005 was $927,000, or $0.03 per share (diluted), as
compared with a GAAP net loss of $2,110,000, or ($0.08) per share, in the
prior year comparable period.
Our GAAP financial results include non-recurring charges or events which
are explained in the reconciliation of pro forma and GAAP financial results
that appears in the financial statements portion of this release. Pro forma
results are not meant as a substitute for GAAP, but are included solely for
informational and comparative purposes. Pericom management believes pro forma
financial information is useful to investors because it illuminates underlying
operational trends by excluding significant non-recurring or otherwise unusual
transactions. Our criteria for determining pro forma results may differ from
other companies' methods, and should not be regarded as a replacement for
corresponding GAAP measures.
Pro forma net income in the quarter ended June 30, 2005 was $1,173,000, or
$0.04 per share (diluted), compared with pro forma net income (restated) of
$134,000, or $0.00 per share (diluted), in the preceding quarter and pro forma
net income of $348,000, or $0.01 per share (diluted), in the comparable period
a year ago. Pro forma net income for the year ended June 30, 2005 was $1,
465,000, or $0.05 per share (diluted), as compared with a pro forma net loss
of $923,000, or ($0.04) per share, for the prior fiscal year.
Alex Hui, President and Chief Executive Officer of Pericom said, "In our
fourth quarter, we delivered revenue and margins above the midpoint of our
guidance. We are very pleased that we've now attained five consecutive
quarters of pro forma profitability and increased our margins year over year
by 440 basis points, or 350 basis points, excluding the effect of the
restatement. Our integrated circuit (IC) focus products of Analog Switches,
Clocks, and Connect (PCI Bridges/Switches and LVDS) rose to approximately 58%
of IC revenue, evidence of the acceptance of our new product offerings and our
penetration into new market segments. We will continue to execute the
strategy that has brought us to this point: building upon the success of our
focus IC products; offering increased Application Specific Interface Solutions
to our customers served markets; and leveraging the synergies of our IC and
frequency control product lines to drive continued improvement to operating
results across the company."
Mike Craighead, Chief Financial Officer of Pericom commented, "With
respect to the restatements, our fourth quarter gross margin of 38.7% was 150
basis points higher than it would have been without the change in accounting
process. This improvement in margin was offset by an increase in engineering
expenses of $372,000 as a result of the accounting process change. Regarding
the restatements, we would like to assure our customers, investors, suppliers
and employees that we are making appropriate changes to accounting processes
and internal controls to address this issue going forward."
NEW PRODUCTS
The Company launched 15 new Clock, Analog Switch and Interface products
supporting Computing, Telecommunications, Networking, Mobile Terminals and
Digital Video applications in the June quarter.
-- PI6C4511, PI6C4512: 200MHz low jitter clock multipliers for consumer
applications such as RFID reader and storage applications like RAID controller
and network switching applications.
-- PI74SSTUA32864: a DDR II 667MHz register for memory module
applications in servers.
-- PI6C48432: a Storage area network clock generator that combines 3
high frequency LVPECL clock outputs and 4 LVCMOS clock outputs. It provides
cost effective, very low rms jitter clock source for critical storage area
network applications.
-- PI5A4213, PI5A4684, PIA4763, PIA4764, and PIA4765: Analog Switch
products based on the Chip Scale Package for mobile phone applications.
-- PI2EQX4401 and PI2EQX44022: 2 and 4-Differential Channels PCI-
Express Re-drivers with 2.5 Gbps serial data rate for Notebooks, Servers,
Test Equipment, Graphics, Networking and Telecom applications.
-- PI2EQX4410: a 4-Differential Channel, 2.5 Gbps serial PCI-Express Re-
Timer for Servers, Networking, Storage and Telecom system applications.
-- PI4ULS3V16(M) and PI4ULSV08(M): 16-bit and 8-bit voltage translators
for Mobile Terminals, Servers, Test Equipment, Data-com(Switches & Routers),
and High-end telecom line cards applications.
-- PI74LVC4245M: an 8-bit voltage translator introduced in a very small
package suitable for mobile applications,
SEPTEMBER 2005 QUARTER OUTLOOK
The following statements are based on current expectations. These
statements are forward looking, and actual results may differ materially.
-- We continue to be in a high turns environment and revenue visibility
therefore remains limited. Depending upon the strength of turns orders, and
normalizing the prior quarter to 13 weeks, we expect revenues to be in the
range of down 1% to up 3% from the prior quarter. Gross margin is expected
to be in the 37.5% range, plus or minus 100 basis points. Margins are
influenced by the product mix of turns business and sales, if any, of
previously written down inventory.
-- Operating expenses are expected to decrease 2-3% from the prior quarter
primarily as a result of the extra week in the prior quarter.
-- Other income is expected to be approximately $0.9 million.
-- We are now required to report separately our equity in the income or
loss of unconsolidated subsidiaries. This was previously included with Other
Income. This is currently estimated to be immaterial.
-- The above guidance does not include the impact of FAS123(R), Share-
Based Payment, which the Company is required to implement in the first quarter
of fiscal 2006.
Pericom will adhere to Regulation Fair Disclosure. The Company will
provide its investors and analysts with guidance in the areas of total
revenues, gross margin, operating expenses and other income each quarter in
our earnings releases and in our conference calls. We will not provide
further guidance or updates during the quarter unless we do so via a press
release.
NOTE: Our fourth quarter results telephone conference call will begin at
1:30 p.m. pacific time today. The conference call may be accessed by calling
800-949-8963 and referencing conference number 8485444. A replay of the
fourth quarter results conference call will be available for 7 days commencing
from 4:30 PM pacific time today. The replay telephone number is 800-642-1687
(domestic) or 706-645-9291 (international) and the access code is 8485444.
Please note also that the conference call will be simultaneously Webcast live
at: http://www.pericom.com/investor followed by on-demand Webcast beginning at 4:30
p.m. pacific time today through September 8, 2005 (Webcast requires Windows
MediaPlayer).
Pericom Semiconductor Corporation offers customers worldwide the
industry's most complete silicon and quartz based solutions for the Computing,
Communications, and Industrial market segments. Our broad portfolio of
leading-edge analog, digital, and mixed-signal integrated circuits and SaRonix
frequency control products are essential in the timing, transferring, routing,
and translating of high-speed signals as required by today's ever-increasing
speed and bandwidth demanding applications. Company headquarters are in San
Jose, California, with design centers and sales offices located globally.
http://www.pericom.com
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 'September 2005 Quarter
Outlook' and statements regarding the Company's ongoing shift to higher margin
focus products, our expansion of Application Specific Interface Solutions, our
future improvements in operating results, the leveraging of the synergies of
our IC and frequency control product lines, our future gross margin, and our
changes to our accounting processes and internal controls. 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,
difficulties in integrating SaRonix with our business, 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/A for the year ended June 30, 2004 and, in
particular, the risk factors sections of that filing.
Pericom Semiconductor Corporation
Consolidated Statements of Operations - GAAP
(In thousands, except per share data)
(unaudited)
Twelve Months
Three Months Ended Ended
Jun 30, Mar 31 Jun 30 Jun 30 Jun 30
2005 2005 2004 2005 2004
(Restated)
Net revenues $21,121 $19,433 $20,029 $79,557 $66,417
Cost of revenues 12,940 11,982 12,789 50,764 45,182
Gross profit 8,181 7,451 7,240 28,793 21,235
Operating expenses:
Research and development 3,992 4,022 3,513 15,767 14,161
Selling, general and
administrative 4,150 3,849 3,896 15,538 14,979
Restructuring Charge 51 243 0 294 784
Total 8,193 8,114 7,409 31,599 29,924
Income (loss) from
operations (12) (663) (169) (2,806) (8,689)
Other income, net 1,042 913 697 3,761 3,700
Recovery (write down) of
nonmarketable investment (5) (4) (15) (105) (14)
Income (loss) before income
taxes 1,025 246 513 850 (5,003)
Income tax (benefit) 120 95 78 27 (2,380)
Minority income in
consolidated subsidiary 26 22 0 58 0
Equity of income (loss) in
unconsolidated subsidiary 242 (73) 228 46 513
Net income (loss) $1,173 $100 $663 $927 $(2,110)
Basic earnings (loss) per
share $0.04 $0.00 $0.03 $0.04 $(0.08)
Diluted earnings (loss) per
share $0.04 $0.00 $0.02 $0.03 $(0.08)
Shares used in computing
basic earnings (loss) 26,371 26,531 26,388 26,476 26,075
per share
Shares used in computing
diluted earnings (loss)
per share 27,076 27,112 27,289 27,187 26,075
Note: The restatement is the result of certain new product research and
development costs (initial wafer production costs) that were incorrectly
capitalized into inventory. As a result of the restatement, engineering
expenses increased in each quarter of fiscal 2005.
Pericom Semiconductor Corporation
Consolidated Statements of Operations - Pro Forma
(In thousands, except per share data)
(unaudited)
Twelve Months
Three Months Ended Ended
Jun 30, Mar 31 Jun 30 Jun 30 Jun 30
2005 2005 2004 2005 2004
(Restated)
Net revenues $21,121 $19,433 $20,029 $79,557 $66,417
Cost of revenues 12,940 11,982 12,789 49,720 44,487
Gross profit 8,181 7,451 7,240 29,837 21,930
Operating expenses:
Research and development 3,992 4,022 3,513 15,767 13,753
Selling, general and
administrative 4,210 3,849 3,896 16,011 14,339
Total 8,202 7,871 7,409 31,778 28,092
Income (loss) from
operations (21) (420) (169) (1,941) (6,162)
Other income, net 1,042 913 697 3,761 3,700
Recovery (write down) of
nonmarketable investment (5) (4) (15) (105) (14)
Income (loss) before income
taxes 1,016 489 513 1,715 (2,476)
Income tax (benefit) 111 304 393 354 (1,040)
Minority income in
consolidated subsidiary 26 22 0 58 0
Equity of income (loss) in
unconsolidated subsidiary 242 (73) 228 46 513
Net income (loss) $1,173 $134 $348 $1,465 $(923)
Basic earnings (loss) per
share $0.04 $0.01 $0.01 $0.06 $(0.04)
Diluted earnings (loss) per
share $0.04 $0.00 $0.01 $0.05 $(0.04)
Shares used in computing
basic earnings (loss) 26,371 26,531 26,388 26,476 26,075
per share
Shares used in computing
diluted earnings (loss)
per share 27,076 27,112 27,289 27,187 26,075
Note: The restatement is the result of certain new product research and
development costs (initial wafer production costs) that were incorrectly
capitalized into inventory. As a result of the restatement, engineering
expenses increased in each quarter of fiscal 2005 from amounts previously
reported and inventory and cost of sales decreased from amounts
previously reported.
Pericom Semiconductor Corporation
Reconciliation of Net Income (Loss) In Accordance With GAAP to Pro Forma
Net Income (Loss)
(In thousands)
(unaudited)
Twelve Months
Three Months Ended Ended
Jun 30, Mar 31, Jun 30, Jun 30, Jun 30,
2005 2005 2004 2005 2004
Net income (loss) in accordance
with GAAP $1,173 $100 $663 927 $(2,110)
Workforce reduction (Note 1) 51 243 294 231
Restructuring charge (Note 2) 784
End of life program one time
inventory 1,044
reserve charge (note 3)
SaRonix inventory fair value
adjustment (Note 4) 573
Write off furniture & fixtures
(Note 5) 45
Moving cost (Note 6) 214
Write off of in-process R&D (Note
7) 360
Amortization of customer backlog
(Note 8) 320
Gain on sale of Ireland building
(Note 9) (60) (473)
Income tax (benefit) (Note 10) 9 (209) (315) (327) (1,340)
Net income (loss) on a Pro Forma
basis $1,173 $134 $348 $1,465 $(923)
Notes to pro forma adjustments:
Note 1: In February & June 2005 & November 2003, we reduced our total
workforce by approximately 10% and 12% respectively.
Note 2: In December 2003, we recorded a non-recurring charge related to
an unused leased facility resulting from our move to a new
corporate headquarters.
Note 3: In December 2004, we recorded a non-recurring charge to inventory
reserve related to a product end of life program.
Note 4: In the three months ended December 2003, we sold inventory
acquired from SaRonix that was written up to fair value in
connection with the acquisition.
Note 5: In February 2004 we wrote off the net book value of the furniture
and fixtures no longer in use due to the move. (refer to note 6).
Note 6: In the three months ended March 2004, we recorded a non-recurring
moving charge related to our move to a new corporate
headquarters.
Note 7: In the three months ended December 2003, we wrote off the cost of
acquired in-process R&D from the Saronix acquisition.
Note 8: In the three months ended December 2003, we completely amortized
the cost of acquired customer backlog from the Saronix
acquisition for which we did not incur related selling expense.
Note 9: In November 2004, we sold a building in Ireland that resulted in
a gain with final settlement in June 2005.
Note 10: The tax (benefit) relating to the pro forma adjustments above.
Pericom Semiconductor Corporation
Consolidated Statements of Operations - GAAP
(In thousands, except per share data)
(unaudited)
Three Months Ended Three Months Ended Three Months Ended
Mar 31, Mar 31, Dec 31, Dec 31, Sep 30, Sep 30,
2005 2005 2004 2004 2004 2004
As As As
Previously As Previously As Previously As
Reported Restated Reported Restated Reported Restated
Net revenues $19,433 $19,433 $19,217 $19,217 $19,786 $19,786
Cost of
revenues 12,262 11,982 13,219 13,071 12,806 12,771
Gross profit 7,171 7,451 5,998 6,146 6,980 7,015
Operating
expenses:
Research and
development 3,678 4,022 3,485 3,806 3,716 3,947
Selling,
general and
administrative 3,849 3,849 3,707 3,707 3,832 3,832
Restructuring
charge 243 243 0 0 0 0
Total 7,770 8,114 7,192 7,513 7,548 7,779
Income (loss)
from
operations (599) (663) (1,194) (1,367) (568) (764)
Other income, net 913 913 875 875 931 931
Recovery (write
down) of
nonmarketable
investment (4) (4) (96) (96) 0 0
Income (loss)
before
income taxes 310 246 (415) (588) 363 167
Income tax
(benefit) 125 95 (102) (203) 89 15
Minority income in
consolidated
subsidiary 22 22 10 10 0 0
Equity of income
(loss) in
unconsolidated
subsidiary (73) (73) 0 0 (123) (123)
Net income (loss) $134 $100 $(303) $(375) $151 $29
Basic earnings
(loss) per share $0.01 $0.00 $(0.01) $(0.01) $0.01 $0.00
Diluted earnings
(loss) per share $0.00 $0.00 $(0.01) $(0.01) $0.01 $0.00
Shares used in
computing basic
earnings (loss) 26,531 26,531 26,554 26,554 26,515 26,515
per share
Shares used in
computing
diluted
earnings (loss)
per share 27,112 27,112 26,554 26,554 27,268 27,268
Note: The restatement is the result of certain new product research and
development costs (initial wafer production costs) that were incorrectly
capitalized into inventory. As a result of the restatement, engineering
expenses increased in each quarter of fiscal 2005 from amounts previously
reported and inventory and cost of sales decreased from amounts
previously reported.
Pericom Semiconductor Corporation
Consolidated Statements of Operations - Pro Forma
(In thousands, except per share data)
(unaudited)
Three Months Ended Three Months Ended Three Months Ended
Mar 31, Mar 31, Dec 31, Dec 31, Sep 30, Sep 30,
2005 2005 2004 2004 2004 2004
As As As
Previously As Previously As Previously As
Reported Restated Reported Restated Reported Restated
Net revenues $19,433 $19,433 $19,217 $19,217 $19,786 $19,786
Cost of
revenues 12,262 11,982 12,175 12,027 12,806 12,771
Gross profit 7,171 7,451 7,042 7,190 6,980 7,015
Operating
expenses:
Research and
development 3,678 4,022 3,485 3,806 3,716 3,947
Selling,
general and
administrative 3,849 3,849 4,120 4,120 3,832 3,832
Total 7,527 7,871 7,605 7,926 7,548 7,779
Income (loss)
from
operations (356) (420) (563) (736) (568) (764)
Other income, net 913 913 875 875 931 931
Recovery (write
down) of
nonmarketable
investment (4) (4) (96) (96) 0 0
Income (loss)
before
income taxes 553 489 216 43 363 167
Income tax
(benefit) 335 304 25 (76) 89 15
Minority income in
consolidated
subsidiary 22 22 10 10 0 0
Equity of income
(loss) in
unconsolidated
subsidiary (73) (73) 0 0 (123) (123)
Net income (loss) $167 $134 $201 $129 $151 $29
Basic earnings
(loss) per share $0.01 $0.01 $0.01 $0.00 $0.01 $0.00
Diluted earnings
(loss) per share $0.01 $0.00 $0.01 $0.00 $0.01 $0.00
Shares used in
computing basic
earnings (loss) 26,531 26,531 26,554 26,554 26,515 26,515
per share
Shares used in
computing
diluted
earnings (loss)
per share 27,112 27,112 27,342 27,342 27,268 27,268
Note: The restatement is the result of certain new product research and
development costs (initial wafer production costs) that were incorrectly
capitalized into inventory. As a result of the restatement, engineering
expenses increased in each quarter of fiscal 2005 from amounts previously
reported and inventory and cost of sales decreased from amounts previously
reported.
Pericom Semiconductor Corporation
Condensed Consolidated Balance Sheets
(In thousands)
As of As of
Jun 30,2005 Jun 30, 2004
(unaudited)
Assets
Current Assets:
Cash & cash equivalents $20,902 $13,965
Short-term investments $122,385 $130,412
Accounts receivable 9,442 7,549
Inventories 13,428 15,980
Prepaid expenses and other
current assets 409 664
Deferred income taxes 5,291 5,564
Total current assets 171,857 174,134
Property and equipment, net 5,927 6,442
Investment in and advances to
Pericom Technology, Inc. 7,257 7,019
Deferred income taxes-non current 2,205 1,419
Other assets 6,749 8,438
Total assets $193,995 $197,452
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $6,899 $8,153
Accrued liabilities 5,470 5,972
Current portion of long-term debt 0 1,291
Total current liabilities 12,369 15,416
Other long term liabilities 207 139
Total liabilities 12,576 15,555
Minority interest in consolidated subsidiary 257 0
Total minority Interest 257 0
Shareholders' equity:
Common stock 141,233 142,607
Retained earnings and other 39,929 39,290
Total shareholders' equity 181,162 181,897
Total liabilities and
shareholders' equity $193,995 $197,452
Source: PRNewswire-FirstCall
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