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, restructuring charges, lease restructuring and moving costs, asset write-offs, tax provision on intercompany transactions, the corresponding tax effects 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, restructuring charges, lease restructuring and moving costs, asset write-offs, 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 continued improvement in profitability and the statements under the captions "Fiscal Q4 2015 Outlook", which regard the anticipated revenues, gross margin, operating expenses, other income, and effective tax rate in the fourth fiscal quarter of 2015. 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 28, 2014, the quarterly report on Form 10-Q for the quarter ended December 27, 2014, and in particular, the risk factors section 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
---------------------------------- -----------------------
March 28, December 27, March 29, December 27, March 29,
2015 2014 2014 2014 2014
---------- ------------ ---------- ------------ ----------
Net revenues $ 31,757 $ 33,255 $ 30,681 $ 98,271 $ 95,329
Cost of revenues 17,054 18,427 18,175 54,660 57,795
---------- ------------ ---------- ------------ ----------
Gross profit 14,703 14,828 12,506 43,611 37,534
Operating
expenses:
Research and
development 4,614 4,390 4,694 13,592 15,013
Selling,
general and
administrative 7,573 7,682 7,407 22,555 22,220
---------- ------------ ---------- ------------ ----------
Total
operating
expenses 12,187 12,072 12,101 36,147 37,233
---------- ------------ ---------- ------------ ----------
Income (loss)
from operations 2,516 2,756 405 7,464 301
Interest and
other income,
net 1,039 745 696 2,476 2,060
Foreign exchange
gain (492) 1,190 106 1,281 276
---------- ------------ ---------- ------------ ----------
Income before
income taxes 3,063 4,691 1,207 11,221 2,637
Income tax
expense
(benefit) 635 1,113 (421) 2,758 (521)
---------- ------------ ---------- ------------ ----------
Net income from
consolidated
companies 2,428 3,578 1,628 8,463 3,158
Equity in net
income of
unconsolidated
affiliates 35 74 13 148 82
---------- ------------ ---------- ------------ ----------
Net income $ 2,463 $ 3,652 $ 1,641 $ 8,611 $ 3,240
========== ============ ========== ============ ==========
Basic income per
share $ 0.11 $ 0.17 $ 0.07 $ 0.39 $ 0.14
========== ============ ========== ============ ==========
Diluted income
per share $ 0.11 $ 0.16 $ 0.07 $ 0.38 $ 0.14
========== ============ ========== ============ ==========
Shares used in
computing basic
income per share 22,436 22,110 22,659 22,161 22,751
========== ============ ========== ============ ==========
Shares used in
computing
diluted income
per share 23,049 22,624 22,880 22,645 22,950
========== ============ ========== ============ ==========
Pericom Semiconductor Corporation
Supplemental Information
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
---------------------------------- -----------------------
March 28, December 27, March 29, March 28, March 29,
2015 2014 2014 2015 2014
---------- ------------ ---------- ------------ ----------
Share-based
compensation
Cost of
revenues $ 41 $ 56 $ 40 $ 130 $ 126
Research and
development 365 299 257 882 867
Selling,
general and
administrative 804 595 420 1,857 1,204
---------- ------------ ---------- ------------ ----------
Share-based
compensation
expense $ 1,210 $ 950 $ 717 $ 2,869 $ 2,197
========== ============ ========== ============ ==========
Amortization of
intangible
assets
Cost of
revenues $ 473 $ 473 $ 483 $ 1,424 $ 1,452
Research and
development - - - - 67
Selling,
general and
administrative 244 248 249 739 745
---------- ------------ ---------- ------------ ----------
Amortization
of
intangible
assets $ 717 $ 721 $ 732 $ 2,163 $ 2,264
========== ============ ========== ============ ==========
Pericom Semiconductor Corporation
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
----------------------------------- ---------------------
March 28, December 27, March 29, March 28, March 29,
2015 2014 2014 2015 2014
---------- ------------- ---------- ---------- ----------
GAAP net income $ 2,463 $ 3,652 $ 1,641 $ 8,611 $ 3,240
Reconciling items:
Share-based
compensation
expense 1,210 950 717 2,869 2,197
Amortization of
intangible
assets 717 721 732 2,163 2,264
Fair value
adjustment to
depreciation
expense on
acquired fixed
assets 50 51 51 152 153
Restructuring
charge - - 95 112 190
Write-off of
assets - 109 - 109 210
Release of tax
reserves - - (1,035) - (1,776)
Tax on
intercompany
transaction - - - - 15
Lease
restructuring
and moving
costs - - - - 522
Tax effect of
adjustments (521) (461) (383) (1,359) (1,378)
---------- ------------- ---------- ---------- ----------
Total
reconciling
items 1,456 1,370 177 4,046 2,397
---------- ------------- ---------- ---------- ----------
Non-GAAP net
income $ 3,919 $ 5,022 $ 1,818 $ 12,657 $ 5,637
========== ============= ========== ========== ==========
Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS
(unaudited)
Diluted net income
per share:
GAAP diluted
income per
share $ 0.11 $ 0.16 $ 0.07 $ 0.38 $ 0.14
Adjustments:
Share-based
compensation
expense 0.05 0.04 0.03 0.12 0.09
Amortization of
intangible
assets 0.03 0.03 0.03 0.09 0.10
Fair value
adjustment to
depreciation
expense on
acquired fixed
assets - - - - 0.01
Restructuring
charge - 0.01 0.01 0.01 0.01
Write-off of
assets - - - - 0.01
Release of tax
reserves - - (0.04) - (0.08)
Tax on
intercompany
transaction - - - - -
Lease
restructuring
and moving
costs - - - - 0.02
Tax effect of
adjustments (0.02) (0.02) (0.02) (0.06) (0.06)
---------- ------------- ---------- ---------- ----------
Total
adjustments 0.06 0.06 0.01 0.16 0.10
---------- ------------- ---------- ---------- ----------
Non-GAAP diluted
income per share $ 0.17 $ 0.22 $ 0.08 $ 0.54 $ 0.24
========== ============= ========== ========== ==========
Shares used in
diluted net
income per share
calculation:
GAAP 23,049 22,624 22,880 22,645 22,950
Exclude the
benefit of
share-based
compensation
expense (1) 441 412 526 446 447
---------- ------------- ---------- ---------- ----------
Non-GAAP 23,490 23,036 23,406 23,091 23,397
========== ============= ========== ========== ==========
(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 Profit to Non-GAAP Gross Profit
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
----------------------------------- ---------------------
March 28, December 27, March 29, March 28, March 29,
2015 2014 2014 2015 2014
---------- ------------- ---------- ---------- ----------
GAAP gross profit $ 14,703 $ 14,828 $ 12,506 $ 43,611 $ 37,534
- % of revenues 46.3% 44.6% 40.8% 44.4% 39.4%
Reconciling items:
Share-based
compensation 41 56 40 130 126
Amortization of
intangible
assets 473 473 483 1,424 1,452
Fair value
adjustment to
depreciation
expense on
acquired fixed
assets 10 10 10 30 30
Restructuring
charge - - - 84 -
---------- ------------- ---------- ---------- ----------
Total
reconciling
items 524 539 533 1,668 1,608
---------- ------------- ---------- ---------- ----------
Non-GAAP gross
profit $ 15,227 $ 15,367 $ 13,039 $ 45,279 $ 39,142
========== ============= ========== ========== ==========
- % of revenues 47.9% 46.2% 42.5% 46.1% 41.1%
Reconciliation of GAAP R&D Expenses to Non-GAAP R&D Expenses
(unaudited)
GAAP research and
development
expenses $ 4,614 $ 4,390 $ 4,694 $ 13,592 $ 15,013
- % of revenues 14.5% 13.2% 15.3% 13.8% 15.7%
Reconciling items:
Share-based
compensation (365) (299) (257) (882) (867)
Amortization of
intangible
assets - - - - (67)
Fair value
adjustment to
depreciation
expense on
acquired fixed
assets (10) (10) (10) (30) (30)
Restructuring
charge - - (59) (28) (137)
Write-off of
assets - - - - (210)
---------- ------------- ---------- ---------- ----------
Total
reconciling
items (375) (309) (326) (940) (1,311)
---------- ------------- ---------- ---------- ----------
Non-GAAP research
and development
expenses $ 4,239 $ 4,081 $ 4,368 $ 12,652 $ 13,702
========== ============= ========== ========== ==========
- % of revenues 13.3% 12.3% 14.2% 12.9% 14.4%
Reconciliation of GAAP SG&A Expenses to Non-GAAP SG&A Expenses
(unaudited)
GAAP selling,
general and
administrative
expenses $ 7,573 $ 7,682 $ 7,407 $ 22,555 $ 22,220
- % of revenues 23.8% 23.1% 24.1% 23.0% 23.3%
Reconciling items:
Share-based
compensation (804) (595) (420) (1,857) (1,204)
Amortization of
intangible
assets (244) (248) (249) (739) (745)
Fair value
adjustment to
depreciation
expense on
acquired fixed
assets (30) (31) (31) (92) (93)
Restructuring
charge - - (36) - (53)
Lease
restructuring
and moving
costs - - - - (522)
---------- ------------- ---------- ---------- ----------
Total
reconciling
items (1,078) (874) (736) (2,688) (2,617)
---------- ------------- ---------- ---------- ----------
Non-GAAP selling,
general and
administrative
expenses $ 6,495 $ 6,808 $ 6,671 $ 19,867 $ 19,603
========== ============= ========== ========== ==========
- % of revenues 20.5% 20.5% 21.7% 20.2% 20.6%
Pericom Semiconductor Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
As of As of
March 28, 2015 June 28, 2014
--------------- ---------------
Assets
Current assets:
Cash and cash equivalents $ 39,208 $ 33,020
Short-term investments 99,824 86,104
Accounts receivable - trade 22,918 24,036
Inventories 14,078 12,288
Prepaid expenses and other current assets 4,719 5,336
Deferred income taxes 764 726
--------------- ---------------
Total current assets 181,511 161,510
Property, plant and equipment - net 56,865 58,537
Investments in unconsolidated affiliates 2,413 2,445
Deferred income taxes non-current 2,518 2,460
Intangible assets 4,772 7,009
Other assets 7,964 8,118
--------------- ---------------
Total assets $ 256,043 $ 240,079
=============== ===============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 13,752 $ 8,927
Accrued liabilities 11,896 9,934
--------------- ---------------
Total current liabilities 25,648 18,861
Industrial development subsidy 5,606 6,354
Deferred tax liabilities 4,820 5,460
Other long-term liabilities 1,961 1,912
--------------- ---------------
Total liabilities 38,035 32,587
Shareholders' equity:
Common stock and paid in capital 118,618 113,118
Retained earnings and other comprehensive
income 99,390 94,374
--------------- ---------------
Total shareholders' equity 218,008 207,492
--------------- ---------------
Total liabilities and shareholders' equity $ 256,043 $ 240,079
=============== ===============
