Pericom Semiconductor (PSEM) 8-K Fiscal Third Quarter 2010 Financial Results

PERICOM SEMICONDUCTOR REPORTS

FISCAL THIRD QUARTER 2010 FINANCIAL RESULTS

§ Fiscal third quarter results exceeded guidance.

§ Net revenues increased 2.4% sequentially, and 50% year-over-year.

§ Gross margin increased 166 basis points sequentially.

§ GAAP net income attributable to Pericom shareholders increased 23% sequentially and 1,093% year-over-year.

San Jose, Calif. – May 3, 2010 - Pericom Semiconductor Corporation (NASDAQ: PSEM), a worldwide supplier of high-speed integrated circuits and frequency control products, today announced results for its fiscal third quarter ended March 27, 2010.

Net revenues for the third quarter were $36.7 million, an increase of  2.4% from the $35.8 million reported in the second quarter, and up 50% from the $24.4 million reported in the comparable period last year.

Gross margin was 35.3%, up from 33.6% last quarter, and down slightly from 35.5% in the comparable period last year.

GAAP net incomeattributable to Pericom shareholders for the third quarter was $3.1 million, or $0.12 per diluted share, compared with net income of $2.5 million, or $0.10 per diluted share in the second quarter, and net income of $256,000, or $0.01 per diluted share in the comparable period last year.

“We are pleased to report a sequential revenue increase, driven by increased demand from computing and networking/telecom market segments” said Alex Hui, President and CEO of Pericom.   “We continued to expand gross margin and control operating expenses, which led to a 49% improvement in operating results compared with last quarter.”

“The book to bill ratio was significantly higher than one for the quarter just concluded and the strong booking trend has continued during the first month of our Q4.   We continue to expand our end market solutions for high speed serial connectivity with an ongoing stream of new products.  With improved end market demand and a robust pipeline of new design wins going into production during the next few quarters, we believe Pericom is well positioned to continue delivering both revenue growth and better operating results.”

New Products

In the March quarter, we continued to expand our serial connectivity solution with the introduction of 14 new products that work across the Signal Integrity, Timing and Connectivity product areas:

· Expanding its solutions for high speed serial protocol signal integrity, Pericom introduced 2 new ReDriverTM products addressing SATA3, SAS2 and DisplayPort protocols. These products address server, storage and computing market segments.

· Adding to high speed Connectivity solutions, Pericom introduced 6 new charger management, switching and connectivity products targeted across PCIe, HDMI, VGA, and USB 2.0/3.0 protocols. The USB 2.0/3.0 charger management products offer high level integration for notebook applications. These products target the computing, server, networking and embedded market segments.

· Expanding its timing solutions for next generation platforms, Pericom introduced 6 new products in the past quarter—3 advanced crystal oscillators (XO) and 3 clock generator/buffers—all targeting next generation networking, server, storage and ultra-mobility market segments.

NEWS RELEASE May 3, 2010

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 337,586 shares in the three months ended March 27, 2010 for an aggregate cost of $3,194,220 and an average per share purchase price of $9.46.  The remaining balance of potential share repurchases under the 2008 authority is approximately $22.2 million.

Fiscal Q4 Outlook

The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially. Our fourth fiscal quarter is a 14-week period this year, and the outlook reflects the additional week.

· Revenues in the fourth fiscal quarter are expected to be in the range of $40.0 million to $42.0 million.

· Gross margins are expected to be in the 35% to 36% range.

· Operating expenses are expected to be in the range of $11.2 to $11.7 million, which include stock-based compensation expense of approximately $1.1 million.

· Other income is expected to be approximately $1.1 million.

· Net income from unconsolidated affiliates PTI and JCP is expected to be approximately $0.6 million.

· The effective tax rate is expected to be approximately 34%.

Conference Call

The press release will be followed by a conference call beginning at 1:30 p.m. Pacific time. 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 five business days. To listen to the replay, dial (800) 642-1687 and reference conference number 71620896.

3545 North First Street     San Jose, CA   95134     (408) 435-0800

NEWS RELEASE May 3, 2010

About Pericom

Pericom Semiconductor Corporation (NASDAQ: PSEM) enables serial connectivity with the industry's most complete solutions for the computing, communications and consumer market segments. Pericom's analog, digital and mixed-signal integrated circuits, along with its SaRonix-eCERA frequency control products are essential in the timing, switching, bridging and conditioning of high-speed signals required by today's ever-increasing speed and bandwidth demanding applications. Company headquarters is in San Jose, California, with design centers and technical sales and support offices 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 caption ‘Fiscal Q4 Outlook’, which regard the anticipated revenues, gross margin, operating expenses, other income and tax rate in the fourth fiscal quarter, and statements regarding continuing to drive improvements in gross margin and operating overhead, an increasing need for our products, Pericom being well positioned for the next phase of growth, continuing revenue growth and delivering better operating results for the rest of 2010. 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 December 26, 2009, our annual report on Form 10-K for the year ended June 27, 2009, and, in particular, the risk factors sections contained in those reports.

Contact: Robert Strickland

Pericom Semiconductor

Tel: 408 435-0800

rstrickland@pericom.com

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3545 North First Street     San Jose, CA   95134     (408) 435-0800

NEWS RELEASE, May 3, 2010

Pericom Semiconductor Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(unaudited)

	Three Months Ended								Nine Months Ended
	Mar 27		Dec 26			Mar 28			Mar 27			Mar 28
	2010		2009			2009			2010			2009
Net revenues	$	36,661	$	35,805		$	24,394		$	105,418		$	98,924
Cost of revenues		23,723		23,762			15,731			69,900			64,321
Gross profit		12,938		12,043			8,663			35,518			34,603
Operating expenses:
Research and development		4,251		4,336			3,996			12,633			12,580
Selling, general and administrative		6,201		6,035			5,136			19,065			17,490
Restructuring charge		-		-			293			-			510
Total operating expenses		10,452		10,371			9,425			31,698			30,580
Income from operations		2,486		1,672			(762	)		3,820			4,023
Interest and other income		1,219		1,288			1,501			4,150			3,871
Other than temporary decline in value of investment		-		-			(48	)		-			(506	)
Income before income taxes		3,705		2,960			691			7,970			7,388
Income tax expense		1,260		1,002			460			2,737			2,344
Net income from consolidated companies		2,445		1,958			231			5,233			5,044
Equity in net income of unconsolidated affiliates		608		536			49			1,671			95
Net income		3,053		2,494			280			6,904			5,139
Net income attributable to noncontrolling interests		-		(6	)		(24	)		(28	)		(92	)
Net income attributable to Pericom shareholders	$	3,053	$	2,488		$	256		$	6,876		$	5,047
Basic income per share to Pericom shareholders	$	0.12	$	0.10		$	0.01		$	0.27		$	0.20
Diluted income per share to Pericom shareholders	$	0.12	$	0.10		$	0.01		$	0.27		$	0.20
Shares used in computing basic income per share		25,386		25,543			25,218			25,479			25,438
Shares used in computing diluted income per share		25,697		25,911			25,282			25,762			25,673

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3545 North First Street San Jose, CA  95134 (408) 435-0800

NEWS RELEASE, May 3, 2010

Pericom Semiconductor Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)

	As of		As of
	Mar 27, 2010		Jun 27, 2009
Assets
Current Assets:
Cash & cash equivalents	$	34,528	$	37,321
Restricted cash		-		3,200
Short-term investments		74,933		75,471
Accounts receivable – trade		22,458		22,875
Inventories		18,605		16,340
Prepaid expenses and other current assets		4,147		3,738
Deferred income taxes		2,674		2,433
Total current assets		157,345		161,378
Property, plant and equipment-net		49,274		47,238
Investments in unconsolidated affiliates		12,495		10,826
Deferred income taxes non current		3,767		4,657
Long-term investments in marketable securities		16,898		11,780
Goodwill		1,685		1,673
Intangible assets		1,543		1,764
Other assets		7,440		6,742
Total assets		250,447	$	246,058
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	11,140	$	10,824
Accrued liabilities and other		10,555		15,118
Current portion of long-term debt		123		60
Total current liabilities		21,818		26,002
Long-term debt		1,570		1,610
Industrial development subsidy		4,822		3,718
Other long-term liabilities		1,522		1,287
Total liabilities		29,732		32,617
Shareholders' equity:
Common stock and paid in capital		133,297		133,162
Retained earnings and other comprehensive income		87,418		79,046
Total Pericom shareholders' equity		220,715		212,208
Noncontrolling interests in consolidated subsidiaries		-		1,233
Total shareholders' equity		220,715		213,441
Total liabilities and shareholders' equity	$	250,447	$	246,058

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3545 North First Street San Jose, CA  95134 (408) 435-0800

NEWS RELEASE, May 3, 2010

Pericom Semiconductor Corporation

Share-Based Compensation

(In thousands)

(unaudited)

	Three Months Ended						Nine Months Ended
	Mar 27		Dec 26		Mar 28		Mar 27		Mar 28
	2010		2009		2009		2010		2009
Manufacturing	$	70	$	65	$	72	$	198	$	192
Research & development		371		342		393		1,065		1,048
Selling, general & administrative		557		526		533		1,598		1,458
	$	998	$	933	$	998	$	2,861	$	2,698

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3545 North First Street San Jose, CA  95134 (408) 435-0800