<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 1, 2000
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _______ to _______
Commission File Number 0-27026
Pericom Semiconductor Corporation
(Exact Name of Registrant as Specified in Its Charter)
California 77-0254621
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2380 Bering Drive
San Jose, California 95131
(408) 435-0800
(Address of Principal Executive Offices and
Issuer's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
The number of outstanding shares of the Registrant's Common Stock as of January
31, 2000 was 9,680,175.
<PAGE>
Pericom Semiconductor Corporation
Form 10-Q for the Quarter Ended January 1, 2000
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
----
<S> <C>
Item 1: Financial Statements
Condensed Balance Sheets as of
December 31, 1999 and June 30, 1999 3
Condensed Statements of Income
for the three months and six months ended
December 31, 1999 and December 31, 1998 4
Condensed Statements of Cash Flows
for the six months ended
December 31, 1999 and December 31, 1998 5
Notes to Condensed Financial Statements 6
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3: Quantitative and Qualitative Disclosures about
Market Risk 21
PART II. OTHER INFORMATION
Item 4: Submission of Matters to Vote of Security Holders 22
Item 6: Exhibits and Reports on Form 8-K 22
Signatures 23
</TABLE>
2
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PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
Pericom Semiconductor Corporation
Condensed Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999 (1)
------------ ---------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and equivalents $ 8,810 $ 8,328
Short-term investments 18,239 17,397
Accounts receivable:
Trade (net of allowances of $3,730, and $2,570) 11,519 9,719
Other receivables 337 346
Inventories 13,340 9,835
Prepaid expenses and other current assets 332 582
Deferred income taxes 356 356
-------- --------
Total current assets 52,933 46,563
Property and equipment - net 7,585 6,509
Investment in and advances to investee 3,219 2,611
Other assets 340 242
-------- --------
Total $ 64,077 $ 55,925
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,667 $ 7,295
Accrued liabilities 1,779 1,604
Income taxes payable 1,090 22
-------- --------
Total current liabilities 11,536 8,921
Deferred income taxes 624 624
Shareholders' equity:
Common stock 26,449 25,600
Accumulated other comprehensive loss (88) (33)
Retained earnings 25,556 20,813
-------- --------
Total shareholders' equity 51,917 46,380
-------- --------
Total $ 64,077 $ 55,925
======== ========
</TABLE>
(1) Derived from the June 30, 1999 audited balance sheet included in the
Company's Annual Report on Form 10-K.
See notes to condensed financial statements.
3
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Pericom Semiconductor Corporation
Condensed Statements of Income
(Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues $ 20,009 $ 14,510 $ 37,634 $ 29,057
Cost of revenues 11,581 8,634 21,814 17,602
-------- -------- -------- --------
Gross profit 8,428 5,876 15,820 11,455
-------- -------- -------- --------
Operating expenses:
Research and development 1,874 1,455 3,493 2,810
Selling, general and administrative 2,768 2,292 5,272 4,387
-------- -------- -------- --------
Total 4,642 3,747 8,765 7,197
-------- -------- -------- --------
Income from operations 3,786 2,129 7,055 4,258
Equity in net loss of investee (84) (78) (168) (153)
Interest income 387 376 748 719
-------- -------- -------- --------
Income before income taxes 4,089 2,427 7,635 4,824
Provision for income taxes 1,472 825 2,891 1,640
Net income $ 2,617 $ 1,602 $ 4,744 $ 3,184
======== ======== ======== ========
Basic earnings per share $ 0.27 $ 0.17 $ 0.49 $ 0.34
======== ======== ======== ========
Diluted earnings per share $ 0.24 $ 0.16 $ 0.43 $ 0.32
======== ======== ======== ========
Shares used in computing basic earnings per share 9,715 9,355 9,663 9,333
======== ======== ======== ========
Shares used in computing diluted earnings per share 11,028 10,193 10,294 10,080
======== ======== ======== ========
</TABLE>
See notes to condensed financial statements.
4
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Pericom Semiconductor Corporation
Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
----------------------
1999 1998
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,744 $ 3,184
Adjustments to reconcile net income to net cash
Provided by (used for) operating activities:
Depreciation and amortization 1,097 724
Equity in net loss of joint venture 168 153
Changes in assets and liabilities:
Accounts receivable (1,791) (1,903)
Inventories (3,505) 273
Prepaid expenses and other current assets 251 (341)
Accounts payable 1,373 (574)
Accrued liabilities 174 (233)
Income taxes payable 1,068 142
-------- --------
Net cash provided by (used in) operating activities 3,579 1,425
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (2,173) (930)
Purchase of short-term investments (5,299) (11,507)
Maturities of short-term investments 4,400 11,532
Increase in other assets (98) (8)
Advances to investee (776) (777)
-------- --------
Net cash used for investing activities (3,946) (1,690)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 849 316
-------- --------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 482 51
CASH AND EQUIVALENTS:
Beginning of period 8,328 8,773
-------- --------
End of period $ 8,810 $ 8,824
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income taxes $ 870 $ 1,498
======== ========
</TABLE>
See notes to condensed financial statements.
5
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Pericom Semiconductor Corporation
Notes To Condensed Financial Statements
(Unaudited)
1. Basis of Presentation
The financial statements have been prepared by Pericom Semiconductor Corporation
("Pericom" or the "Company"), pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, these
unaudited financial statements include all adjustments, consisting only of
normal recurring adjustments and accruals, necessary for a fair presentation of
the Company's financial position as of December 31, 1999 and the results of
operations and cash flows for the three and six-month periods ended December 31,
1999 and 1998. This unaudited quarterly information should be read in
conjunction with the audited financial statements of Pericom and the notes
thereto incorporated by reference in the Company's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission.
The preparation of the interim condensed financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the interim
condensed financial statements and the reported amounts of revenue and expenses
during the period. Actual amounts could differ from these estimates. The results
of operations for the three and six-month period ended December 31, 1999 are not
necessarily indicative of the results to be expected for the entire year.
The Company's fiscal periods in the accompanying financial statements have been
shown as ending on June 30 and December 31. Fiscal year 1999 ended on July 3,
1999. The three and six-month periods in fiscal years 2000 and 1999 ended on
January 1, 2000 and December 26, 1998, respectively.
The Company participates in a dynamic high technology industry and believes that
changes in any of the following areas could have a material adverse effect on
the Company's future financial position or results of operations: advances and
trends in new technologies; competitive pressures in the form of new products or
price reductions on current products; changes in the overall demand for products
and services offered by the Company; changes in customer relationships;
litigation or claims against the Company based on intellectual property, patent,
product, regulatory or other factors; risks associated with changes in domestic
and international economic and/or political conditions or regulations;
availability of necessary components; and the Company's ability to attract and
retain employees necessary to support its growth.
2. Earnings Per Share
The Company has computed earnings per share in accordance with SFAS No. 128,
"Earnings Per Share," (SFAS 128). Basic earnings per share is based upon the
weighted average number of common shares outstanding. Diluted earnings per share
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
6
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Basic and diluted earnings per share for the three and six-month periods ended
December 31, 1999 and December 31, 1998 are computed as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $ 2,617 $ 1,602 $ 4,744 $,3,184
======= ======= ======= =======
Computation of common shares outstanding - basic earnings per share:
Weighted average shares of common stock 9,715 9,355 9,663 9,333
------- ------- ------- -------
Shares used in computing basic earnings per share 9,715 9,355 9,663 9,333
======= ======= ======= =======
Basic earnings per share $ 0.27 $ 0.17 $ 0.49 $ 0.34
======= ======= ======= =======
Computation of common shares outstanding - diluted earnings per share:
Weighted average shares of common stock 9,715 9,355 9,663 9,333
Dilutive options using the treasury stock method 1,313 838 1,261 747
------- ------- ------- -------
Shares used in computing diluted earnings per share 11,028 10,193 10,924 10,080
======= ======= ======= =======
Diluted earnings per share $ 0.24 $ 0.16 $ 0.43 $ 0.32
======= ======= ======= =======
</TABLE>
3. Inventories
Inventories consist of (in thousands):
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
------------ ---------
<S> <C> <C>
Finished goods $ 3,078 $ 2,620
Work in process 7,688 5,972
Raw materials 2,574 1,243
------- -------
$13,340 $ 9,835
======= =======
</TABLE>
7
<PAGE>
4. Accrued Liabilities
Accrued liabilities consist of (in thousands):
<TABLE>
<CAPTION>
December 31, June 30,
1999 1999
---- ----
<S> <C> <C>
Accrued compensation $1,036 $ 908
External sales representative commissions 580 572
Other accrued expenses 163 124
------ ------
$1,779 $1,604
====== ======
</TABLE>
5. Industry and Segment Information
In fiscal 1999, the Company adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 establishes standards for
reporting information about operating segments in annual and financial
statements and requires that certain selected information about operating
segments be reported in interim financial reports. It also establishes standards
for related disclosures about products and services and geographic areas.
Operating segments are defined as components of an enterprise about which
separate financial information is evaluated regularly by the chief operating
decision maker, or decision making group in deciding how to allocate resources
and in assessing performance. SFAS no. 131 differs from accounting standard SFAS
No. 14, which required companies to disclose certain financial information about
an industry segment in which they operate. Under both SFAS No. 14 and SFAS No.
131, the Company operates in one reportable segment: The Company designs,
manufactures and markets high performance digital, analog and mixed-signal
integrated circuits used for the transfer, routing, and timing of digital and
analog signals within and between computer, networking, datacom and telecom
systems.
6. Comprehensive Income
SFAS No. 130 requires an enterprise to report, by major components and as a
single total, the change in net assets during the period from nonowner sources.
For the three and six-month periods ended December 31, 1999 and 1998,
comprehensive income, which was comprised of the Company's net income for the
periods and changes in cumulative unrealized gain/(loss) on short-term
investments was as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
--------------------- ---------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $ 2,617 $ 1,602 $ 4,744 $ 3,184
Unrealized loss on investment (52) -- (55)
------- ------- ------- -------
Comprehensive income $ 2,565 $ 1,602 $ 4,689 $ 3,184
======= ======= ======= =======
</TABLE>
8
<PAGE>
Item 2: Management's Discussion and Analysis
of Financial Condition and Results of Operations
Pericom Semiconductor Corporation
The following information should be read in conjunction with the unaudited
financial statements and notes thereto included in Part 1 - Item 1 of this
Quarterly Report and the audited financial statements and notes thereto and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's Annual Report on Form 10-K (the "Form
10-K").
This Quarterly Report to Shareholders includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. All statements other than statements of historical fact are
"forward-looking statements" for purposes of these provisions, including any
statements regarding: projections of revenues, expenses or other financial
items; the plans and objectives of management for future operations; the
Company's tax rate; the adequacy of allowances for returns, price protection and
other concessions; proposed new products or services; the sufficiency of cash
generated from operations and cash balances; the Company's exposure to interest
rate risk; the potential for ongoing costs, liabilities, and exposure related to
the Year 2000 problem; future economic conditions or performance; and
assumptions underlying any of the foregoing. In some cases, forward-looking
statements can be identified by the use of terminology such as "may," "will,"
"expects," "plans," "anticipates," "estimates," "potential," or "continue," or
the negative thereof or other comparable terminology. Although the Company
believes that the expectations reflected in the forward-looking statements
contained herein are reasonable, there can be no assurance that such
expectations or any of the forward-looking statements will prove to be correct,
and actual results could differ materially from those projected or assumed in
the forward-looking statements. The Company's future financial condition and
results of operations, as well as any forward-looking statements, are subject to
risks and uncertainties, including but not limited to the factors set forth in
the Company's Form 10-K under the heading "Factors That May Affect Future
Results", in (i) this Management's Discussion and Analysis of Financial
Condition and Results of Operations, particularly under the subheading
"Additional Factors that May Affect Operating Results", and (ii) Note 1 to the
Notes to Condensed Financial Statements. All forward-looking statements and
reasons why results may differ included in this Quarterly Report are made as of
the date hereof, and the Company assumes no obligation to update any such
forward-looking statement or reason why actual results may differ.
9
<PAGE>
Results of Operations
The following table sets forth certain statement of operations data as a
percentage of net revenues for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------ -----------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues 57.9% 59.5% 58.0% 60.6%
----- ----- ----- -----
Gross profit 42.1% 40.5% 42.0% 39.4%
----- ----- ----- -----
Operating expenses:
Research and development 9.4% 10.0% 9.3% 9.7%
Selling, general and administrative 13.8% 15.8% 14.0% 15.1%
----- ----- ----- -----
Total 23.2% 25.8% 23.3% 24.8%
----- ----- ----- -----
Income from operations 18.9% 14.7% 18.7% 14.7%
Other income, net 1.5% 2.0% 1.5% 1.9%
----- ----- ----- -----
Income before income taxes 20.4% 16.7% 20.3% 16.6%
Provision for income taxes 7.3% 5.7% 7.7% 5.6%
----- ----- ----- -----
Net income 13.1% 11.0% 12.6% 11.0%
===== ===== ===== =====
</TABLE>
Net Revenues
Net revenues consist primarily of product sales, which are recognized upon
shipment, less an estimate for returns and allowances. Net revenues increased
38% from $14.5 million for the quarter ended December 31, 1998 to $20.0 million
for the quarter ended December 31, 1999. The increase in net revenues resulted
from overall strength in the semiconductor industry, continued market acceptance
of the Company's existing products and sales of new products in the Company's
SiliconInterface, SiliconSwitch and SiliconClock product lines, offset in part
by a decline in the weighted average selling price of all products. Sales to
domestic and international distributors as a percent of total revenues rose from
59% for the second quarter of fiscal 1999 to 64% for the second quarter of
fiscal 2000. Sales to Techmosa, an international distributor, accounted for
approximately 16% of net revenues in the first quarter of fiscal 2000 and 13% of
net revenues for the same customer in the comparable quarter in fiscal 1999.
Net revenues increased 29.5% from $29.1 million for the six-month period ended
December 31, 1998 to $37.6 million for the six-month period ended December 31,
1999. The increase in net revenues is attributable to the overall strength in
the semiconductor industry, continued market acceptance of the Company's
existing products and sales of new products in the Company's SiliconInterface,
SiliconSwitch and SiliconClock product lines, partially offset by a decline in
the weighted average selling price of all products. Sales to domestic and
international distributors as a percent of total revenues increased to 61.4% in
the first half of fiscal 2000 from 55.2% in the comparable period in fiscal
1999. Sales to Techmosa, an international distributor, accounted for
approximately 15% of net revenues in the first half of both fiscal 1999 and
fiscal 2000.
Gross Profit
Gross profit increased 43% from $5.9 million for the quarter ended December 31,
1998 to $8.4 million for the corresponding quarter ended December 31, 1999.
Gross profit as a percentage of net revenues, or gross margin, increased from
40.5% in the second quarter of fiscal 1999 to 42.1% in the second quarter of
fiscal 2000. The increase in gross margin resulted from the introduction and
sale of new products at higher gross
10
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margins, a shift in mix towards a higher margin product line, and cost
reductions achieved through reduced wafer, assembly and test costs. These margin
increases were partially offset by decreases in average selling prices in the
Company's various product lines.
Gross profit increased 38.1% from $11.5 million for the six-month period ended
December 31, 1998 to $15.8 million for the six-month period ended December 31,
1999. Gross margin for the same six-month periods increased from 39.4% last year
to 42.0% this year. These increases are for the same reasons cited in the above
analysis of the three-month periods ended December 31, 1999 and 1998.
Research and Development
Research and development expenses increased 28.8% from $1.5 million for the
quarter ended December 31, 1998 to $1.9 million for the corresponding quarter
ended December 31, 1999, but decreased as a percentage of net revenues from
10.0% to 9.4%. Research and development expenses increased from $2.8 million for
the six-month period ended December 31, 1998, to $3.5 million for the six-month
period ended December 31, 1999, an increase of 24.3%, but also decreased as a
percent of sales from 9.7% to 9.3% for those periods. The increase in expense in
each period was attributable to development costs for new products in each of
the Company's product lines and expansion of the Company's engineering staff and
related infrastructure as the Company continued its commitment to new product
development.
The Company believes that continued spending on research and development to
develop new products and improve manufacturing processes is critical to the
Company's success and, consequently, expects to increase research and
development expenses in future periods.
Selling, General and Administrative
Selling, general and administrative expenses consist primarily of personnel and
related overhead costs for sales, marketing, finance, human resources and
general management. Such costs include advertising, sales materials, sales
commissions and other marketing and promotional expenses. Selling, general and
administrative expenses increased 20.8% from $2.3 million for the quarter ended
December 31, 1998 to $2.8 million for the corresponding quarter ended December
31, 1999, but decreased as a percentage of net revenues from 15.8% to 13.8%.
Selling, general and administrative expenses increased from $4.4 million for the
six-month period ended December 31, 1998, to $5.3 million for the six-month
period ended December 31, 1999, an increase of 20.2%, but also decreased as a
percent of sales from 15.1% to 14.0% for those periods. The increase in expense
in each period was primarily attributable to increased staffing levels,
particularly in sales and marketing and increases in commissions due to sales
growth.
The Company anticipates that selling, general and administrative expenses will
increase in future periods due to increased staffing levels, particularly in
sales and marketing, as well as increased commission expense to the extent the
Company achieves higher sales levels.
Other Income, Net
Other income, net includes interest income and the Company's allocated portion
of net losses of Pericom Technology, Inc. ("PTI"). Other income, net remained
relatively flat, increasing from $298,000 for the quarter ended December 31,
1998 to $303,000 for the corresponding quarter ended December 31, 1999. The
Company's share of the net losses of PTI increased from $78,000 to $84,000 and
interest income rose from $376,000 to $387,000 for the quarters ending December
31, 1998 and December 31, 1999, respectively. For the six-month period ending
December 31, 1998 and December 31, 1999, respectively, other income, net rose
slightly from $566,000 to $580,000 as the Company's share of the net losses of
PTI increased from $153,000 to $168,000 and interest income rose from $719,000
to $748,000.
11
<PAGE>
Provision for Income Taxes
The provision for income taxes increased from $825,000 for the quarter ended
December 31, 1998 to $1,472,000 for the corresponding quarter ended December 31,
1999. The effective tax rate of 36% in the current years second quarter is up
from 34% used in the comparable period last year. This is due primarily to the
increase in taxable income. For the six-months ending December 31, 1999 and
December 31, 1998 the provision for income taxes was $2,891,000 and $1,640,000
and the effective tax rates were 37.9% and 34%, respectively. The effective rate
for the six-month period ended December 31, 1999 is higher than the three-month
period ended December 31, 1999 because a 40% effective tax rate was used in the
first quarter ended September 30, 1999 due to the expiration of the research and
development tax credit which caused the effective rate to rise. The research and
development tax credit has since been extended and the Company will be using the
lower tax rate in future periods to an expected overall 36-37% rate for the
current year. The provision for income taxes also differed from the federal
statutory rate due to state income taxes.
Liquidity and Capital Resources
Prior to the Company's initial public offering in October 1997, the Company used
proceeds from the private sale of equity securities, bank borrowings and
internal cash flow to support the Company's operations, acquire capital
equipment and finance inventory and accounts receivable growth. Operating
activities generated $1.4 million of cash during the first half of fiscal 1999
and $3.6 million of cash during the first half of fiscal 2000.
Net cash used for investing activities increased from $1.7 million for the six
months ended December 31, 1998 to $3.9 million for the six months ended December
31, 1999. The Company made capital expenditures of approximately $930,000 during
the first six months of fiscal 1999 compared with $2.2 million in the comparable
period of fiscal 2000, and also increased net purchases of short-term
investments by $924,000 during the first half of the current fiscal year
compared to the same period last year.
As of December 31, 1999, the Company's principal sources of liquidity included
cash, cash equivalents and short-term investments of approximately $27.0
million. The Company believes that existing cash balances and cash generated
from operations, will be sufficient to fund necessary purchases of capital
equipment and to provide working capital at least through the next 12 months.
However, future events may require the Company to seek additional capital
sooner. If the Company determines that it needs to seek additional capital, the
Company may not be able to obtain adequate capital on terms acceptable to it.
Year 2000 Disclosure
The date is now past January 1, 2000 and the Company has not experienced any
immediate adverse impact from the transition to the year 2000. However, the
Company cannot provide assurance that its suppliers and customers have not or
will not be affected in a manner that is not yet apparent. The Company uses
software, computer technology and other services internally developed and
provided by third-party vendors that may fail due to the year 2000 phenomenon.
This failure may involve significant time and expense, and uncorrected problems
could seriously harm the Company's business. In addition, the potential failure
of the Company's customers to ensure that their operations are year 2000
compliant could have an adverse effect on them, which in turn could limit their
ability to use the Company's products and services or process the Company's
invoices in a timely manner. Furthermore, customers or potential customers may
delay purchasing the Company's products and services to the extent such
customers or potential customers are required to devote resources to resolving
the year 2000 problem. Therefore, the Company will continue to monitor year 2000
compliance and the year 2000 compliance of the Company's suppliers and
customers.
12
<PAGE>
Additional Factors That May Affect Operating Results
If the Company does not develop products that its customers and end-users design
into their products, or if their products do not sell successfully, the
Company's business and operating results would be harmed.
The Company has relied in the past and continues to rely upon its relationships
with its customers and end-users for insights into product development
strategies for emerging system requirements. The Company generally incorporates
new products into a customer's or end-user's product or system at the design
stage. However, these design efforts, which can often require significant
expenditures by the Company, may precede product sales, if any, by a year or
more. Moreover, the value to the Company of any design win will depend in large
part on the ultimate success of the customer's or end-user's product and on the
extent to which the system's design accommodates components manufactured by the
Company's competitors. If the Company fails to achieve design wins or if the
design wins fail to result in significant future revenues, the Company's
operating results would be harmed. If the Company has problems developing or
maintaining its relationships with its customers and end-users, the Company's
ability to develop well-accepted new products may be impaired. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations," "The
demand for the Company's products depends on the growth of the Company's end
users' markets" and "A large portion of the Company's revenues are derived from
sales to a few customers, who may cease purchasing from the Company at any
time."
The Company expects that its operating results and the price of its common stock
may fluctuate substantially due to factors not within the Company's control.
The trading price of the Company's common stock has been and is likely to
continue to be highly volatile. The Company's stock price could fluctuate widely
in response to factors not within the Company's control, including:
. quarter-to-quarter variations in operating results;
. announcements of technological innovations or new products by the
Company or its competitors;
. general conditions in the semiconductor and electronic systems
industries;
. changes in earnings estimates by analysts; and
. price and volume fluctuations in the overall stock market, which have
particularly affected the market prices of many high technology
companies.
In the past, the Company's quarterly operating results have varied significantly
and are likely to fluctuate in the future. A wide variety of factors affect the
Company's operating results. These factors might include the following:
. the timing of new product introductions and announcements by the
Company and by its competitors;
. customer acceptance of new products introduced by the Company;
. growth or reduction in the size of the market for interface ICs;
. a decline in the gross margins of the Company's products;
. general conditions in the semiconductor industry;
. changes in the Company's product mix;
13
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. delay or decline in orders received from distributors;
. the availability of manufacturing capacity with the Company's wafer
suppliers;
. changes in manufacturing costs;
. fluctuations in manufacturing yields;
. the ability of customers to pay the Company;
. expenses incurred in obtaining, enforcing, and defending intellectual
property rights; and
. increased research and development expenses associated with new
product introductions or process changes.
All of these factors are difficult to forecast and could seriously harm the
Company's operating results. The Company's expense levels are based in part on
the Company's expectations regarding future sales and are largely fixed in the
short term. Therefore, the Company may be unable to reduce its expenses fast
enough to compensate for any unexpected shortfall in sales. Any significant
decline in demand relative to management's expectations or any material delay of
customer orders could harm the Company's operating results. In addition, if the
Company's operating results in future quarters fall below public market
analysts' and investors' expectations, the market price of the Company's common
stock would likely decrease. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Product price declines and
fluctuations may cause the Company's future financial results to vary."
The markets for the Company's products are characterized by rapidly changing
technology, and the Company's financial results could be harmed if the Company
does not successfully develop and implement new manufacturing technologies or
develop, introduce and sell new products.
The markets for the Company's products are characterized by rapidly changing
technology, frequent new product introductions and declining selling prices over
product life cycles. The Company currently offers over 400 products. The
Company's future success depends upon the timely completion and introduction of
new products, across all of the Company's product lines, at competitive price
and performance levels. The success of new products depends on a variety of
factors, including the following:
. product performance and functionality;
. customer acceptance;
. competitive pricing;
. successful and timely completion of product development;
. sufficient wafer fabrication capacity; and
. achievement of acceptable manufacturing yields by the Company's wafer
suppliers.
The Company may also experience delays, difficulty in procuring adequate
fabrication capacity for the development and manufacture of new products or
other difficulties in achieving volume production of these products. Even
relatively minor errors may significantly affect the development and manufacture
of new products. If the Company fails to complete and introduce new products in
a timely manner at competitive price and performance levels, the Company's
business would be significantly harmed. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Intense competition in the semiconductor industry may reduce the demand for the
Company's products or the prices of its products, which could reduce the
Company's revenues.
The semiconductor industry is intensely competitive. The Company's competitors
include Cypress Semiconductor Corporation, Integrated Circuit Systems, Inc.,
Integrated Device Technology, Inc., Maxim Integrated Products, Inc., and Texas
Instruments, Inc. Most of those competitors have substantially greater
financial, technical, marketing, distribution and other resources, broader
product lines and longer-standing
14
<PAGE>
customer relationships than the Company does. The Company also competes with
other major or emerging companies that sell products to certain segments of the
Company's markets. Competitors with greater financial resources or broader
product lines may have a greater ability to sustain price reductions in the
Company's primary markets in order to gain or maintain market share.
Management believes that Pericom's future success will depend on its ability to
continue to improve and develop its products and processes. Unlike Pericom, many
of Pericom's competitors maintain internal manufacturing capacity for the
fabrication and assembly of semiconductor products. This ability may provide
them with more reliable manufacturing capability, shorter development and
manufacturing cycles and time-to-market advantages. In addition, competitors
with their own wafer fabrication facilities that are capable of producing
products with the same design geometries as Pericom's may be able to manufacture
and sell competitive products at lower prices. Any introduction of products by
Pericom's competitors that are manufactured with improved process technology
could seriously harm Pericom's business. As is typical in the semiconductor
industry, Pericom's competitors have developed and marketed products that
function similarly or identically to Pericom's. If Pericom's products do not
achieve performance, price, size or other advantages over products offered by
Pericom's competitors, Pericom's products may lose market share. Competitive
pressures could also reduce market acceptance of Pericom's products, reduce
Pericom's prices and increase Pericom's expenses. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
The Company also faces competition from the makers of ASICs and other system
devices. These devices may include interface logic functions, which may
eliminate the need or sharply reduce the demand for Pericom's products in
particular applications.
Product price declines and fluctuations may cause the Company's future financial
results to vary.
Historically, selling prices in the semiconductor industry generally, as well as
for the Company's products, have decreased significantly over the life of each
product. Management expects that selling prices for the Company's existing
products will continue to decline over time and that average selling prices for
the Company's new products will decline significantly over the lives of these
products. Declines in selling prices for the Company's products, if not offset
by reductions in the costs of producing these products or by sales of new
products with higher gross margins, would reduce the Company's overall gross
margins and could seriously harm the Company's business. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
The demand for the Company's products depends on the growth of the Company's end
users' markets.
The Company's continued success depends in large part on the continued growth of
markets for the products into which the Company's semiconductor products are
incorporated. These markets include the following:
. computers and computer related peripherals;
. data communications and telecommunications equipment;
. electronic commerce and the Internet; and
. consumer electronics equipment.
Any decline in the demand for products in these markets could seriously harm the
Company's business, financial condition and operating results. These markets
have also historically experienced significant fluctuations in demand. The
Company may also be seriously harmed by slower growth in the other markets in
which the Company sells its products. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "A large portion of the
Company's revenues are derived from sales to a few customers, who may cease
purchasing from the Company at any time."
15
<PAGE>
Downturns in the semiconductor industry, rapidly changing technology and
evolving industry standards can harm the Company's operating results.
The semiconductor industry has historically been cyclical and periodically
subject to significant economic downturns--characterized by diminished product
demand, accelerated erosion of selling prices and overcapacity--as well as
rapidly changing technology and evolving industry standards. In the past, the
Company's operating results have been harmed by excess supply in the
semiconductor industry. For example, management believes that the Company's net
revenues fell from $41.2 million in fiscal 1996 to $33.2 million in fiscal 1997
primarily due to a cyclical downturn in the semiconductor industry. Accordingly,
the Company may in the future experience substantial period-to-period
fluctuations in the Company's business and operating results due to general
semiconductor industry conditions, overall economic conditions or other factors.
The Company's business is also subject to the risks associated with the effects
of legislation and regulations relating to the import or export of semiconductor
products. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Product price declines and fluctuations may cause
the Company's future financial results to vary."
The Company's contracts with its wafer suppliers do not obligate the wafer
suppliers to a minimum supply or set prices. Any inability or unwillingness of
the Company's wafer suppliers generally, and Chartered Semiconductor
Manufacturing Ltd. in particular, to meet the Company's manufacturing
requirements would delay the Company's production and product shipments and harm
the Company's business.
In fiscal 1999, the Company purchased approximately 85% of its wafers from
Chartered Semiconductor Manufacturing Ltd. In the second quarter of fiscal 2000,
Chartered accounted for approximately 77% of the Company's wafer manufacturing.
In both fiscal years, only four other suppliers manufactured the remainder of
the Company's wafers. The Company's reliance on independent wafer suppliers to
fabricate the Company's wafers at their production facilities subjects the
Company to possible risks such as:
. lack of adequate capacity;
. lack of available manufactured products;
. lack of control over delivery schedules; and
. fires, earthquakes, damage to production facilities or technical
difficulties limiting production and reducing yields.
Any inability or unwillingness of the Company's wafer suppliers generally, and
Chartered in particular, to provide adequate quantities of finished wafers to
meet the Company's needs in a timely manner would delay the Company's production
and product shipments and seriously harm the Company's business.
At present, the Company purchases wafers from its suppliers through the issuance
of purchase orders based on the Company's rolling six-month forecasts. The
purchase orders are subject to acceptance by each wafer supplier. The Company
does not have long-term supply contracts which obligate the Company's suppliers
to a minimum supply or set prices. The Company also depends upon its wafer
suppliers to participate in process improvement efforts, such as the transition
to finer geometries. If the Company's suppliers are unable or unwilling to do
so, the Company's development and introduction of new products could be delayed.
Furthermore, sudden shortages of raw materials or production capacity
constraints can lead wafer suppliers to allocate available capacity to customers
other than the Company or for the suppliers' internal uses, interrupting the
Company's ability to meet its product delivery obligations. Any significant
interruption in the Company's wafer supply would seriously harm the Company's
operating results and the Company's customer relations. The Company's reliance
on independent wafer suppliers may also lengthen the development cycle for the
Company's products, providing time-to-market advantages to the Company's
competitors that have in-house fabrication capacity. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations," "The
Company depends on single or limited source assembly subcontractors with whom
the Company does not have written contracts" and "The complexity of
16
<PAGE>
the Company's products makes the Company highly susceptible to manufacturing
problems, which could increase the Company's costs and delay its product
shipments."
In the event that the Company's suppliers are unable or unwilling to manufacture
the Company's key products in required volumes, the Company will have to
identify and qualify additional wafer foundries. The qualification process can
take up to six months or longer. Furthermore, the Company is unable to predict
whether additional wafer foundries will become available to the Company or will
be in a position to satisfy any of the Company's requirements on a timely basis.
The Company depends on single or limited source assembly subcontractors with
whom the Company does not have written contracts. Any inability or unwillingness
of the Company's assembly subcontractors to meet the Company's assembly
requirements would delay its product shipments and harm its business.
The Company primarily relies on foreign subcontractors for the assembly and
packaging of the Company's products and, to a lesser extent, for the testing of
finished products. Some of these subcontractors are the Company's single source
supplier for some of the Company's new packages. In addition, changes in the
Company's or a subcontractor's business could cause the Company to become
materially dependent on a single subcontractor. The Company has, from time to
time, experienced difficulties in the timeliness and quality of product
deliveries from its subcontractors and may experience similar or more severe
difficulties in the future. The Company generally purchases these single or
limited source components or services pursuant to purchase orders and have no
guaranteed arrangements with these subcontractors. These subcontractors could
cease to meet the Company's requirements for components or services, or there
could be a significant disruption in supplies from them, or degradation in the
quality of components or services supplied by them. Any circumstance that would
require the Company to qualify alternative supply sources could delay shipments,
result in the loss of customers and limit or reduce the Company's revenues. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The Company may have difficulty accurately predicting revenues for future
periods.
The Company's expense levels are based in part on anticipated future revenue
levels, which can be difficult to predict. The Company's business is
characterized by short-term orders and shipment schedules. The Company does not
have long-term purchase agreements with any of its customers, and customers can
typically cancel or reschedule their orders without significant penalty. The
Company typically plans production and inventory levels based on forecasts of
customer demand generated with input from customers and sales representatives.
Customer demand is highly unpredictable and can fluctuate substantially. If
customer demand falls significantly below anticipated levels, the Company's
gross profit would be reduced. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "The Company may not provide
adequate allowances for exchanges, returns and concessions."
The Company competes with others to attract and retain key personnel, and any
loss of, or inability to attract, key personnel would harm the Company.
To a greater degree than non-technology companies, the Company's future success
will depend on the continued contributions of its executive officers and other
key management and technical personnel. None of these individuals has an
employment agreement with the Company and each one would be difficult to
replace. The Company does not maintain any key person life insurance policies on
any of these individuals. The loss of the services of one or more of the
Company's executive officers or key personnel or the inability to continue to
attract qualified personnel could delay product development cycles or otherwise
harm the Company's business, financial condition and results of operations.
The Company's future success also will depend on its ability to attract and
retain qualified technical, marketing and management personnel, particularly
highly skilled design, process and test engineers, for whom competition is
intense. In particular, the current availability of qualified engineers is
limited and competition among companies for skilled and experienced engineering
personnel is very strong. During
17
<PAGE>
strong business cycles, the Company expects to experience continued difficulty
in filling its needs for qualified engineers and other personnel.
The Company's limited ability to protect its intellectual property and
proprietary rights could harm the Company's competitive position.
The Company's success depends in part on its ability to obtain patents and
licenses and preserve other intellectual property rights covering the Company's
products and development and testing tools. In the United States, the Company
holds 17 patents covering certain aspects of the Company's product designs and
has ten additional patent applications pending. Copyrights, mask work
protection, trade secrets and confidential technological know-how are also key
to the Company's business. Additional patents may not be issued to the Company
or the Company's patents or other intellectual property may not provide
meaningful protection. The Company may be subject to, or initiate, interference
proceedings in the U.S. Patent and Trademark Office. These proceedings can
consume significant financial and management resources. The Company may become
involved in litigation relating to alleged infringement by the Company of
others' patents or other intellectual property rights. This type of litigation
is frequently expensive to both the winning party and the losing party and takes
up significant amounts of management's time and attention. In addition, if the
Company loses such a lawsuit, a court could require the Company to pay
substantial damages and/or royalties or prohibit the Company from using
essential technologies. For these and other reasons, this type of litigation
could seriously harm the Company's business. Also, although the Company may seek
to obtain a license under a third party's intellectual property rights in order
to bring an end to certain claims or actions asserted against the Company, the
Company may not be able to obtain such a license on reasonable terms or at all.
Because it is important to the Company's success that the Company be able to
prevent competitors from copying the Company's innovations, management intends
to continue to seek patent, trade secret and mask work protection for the
Company's technologies. The process of seeking patent protection can be long and
expensive, and management cannot be certain that any currently pending or future
applications will actually result in issued patents, or that, even if patents
are issued, they will be of sufficient scope or strength to provide meaningful
protection or any commercial advantage to the Company. Furthermore, others may
develop technologies that are similar or superior to the Company's technology or
design around the patents the Company owns.
The Company also relies on trade secret protection for its technology, in part
through confidentiality agreements with the Company's employees, consultants and
third parties. However, these parties may breach these agreements. In addition,
the laws of some territories in which the Company develops, manufactures or
sells the Company's products may not protect the Company's intellectual property
rights to the same extent as do the laws of the United States.
The process technology used by the Company's independent foundries, including
process technology that the Company developed with its foundries, can generally
be used by them to produce their own products or to manufacture products for
other companies, including the Company's competitors. In addition, the Company
does not generally have the right to implement the process technology used to
manufacture the Company's products with foundries other than the foundry with
which the Company developed the process technology.
The Company may not provide adequate allowances for exchanges, returns and
concessions.
The Company recognizes revenue from the sale of products when shipped, less an
allowance based on future authorized and historical patterns of returns, price
protection, exchanges and other concessions. Management believes that the
Company's methodology and approach are appropriate. However, if the actual
amounts the Company incurs exceed the allowances, it could decrease the
Company's revenue and corresponding gross profit. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
18
<PAGE>
The complexity of the Company's products makes the Company highly susceptible to
manufacturing problems, which could increase the Company's costs and delay its
product shipments.
The manufacture and assembly of the Company's more than 400 products are highly
complex and sensitive to a wide variety of factors, including:
. the level of contaminants in the manufacturing environment;
. impurities in the materials used; and
. the performance of manufacturing personnel and production equipment.
In a typical semiconductor manufacturing process, silicon wafers produced by a
foundry are cut into individual die. These die are assembled into individual
packages and tested for performance. The Company's wafer fabrication suppliers
have from time to time experienced lower than anticipated yields of good die. In
the event of such decreased yields, the Company would incur additional costs to
sort wafers, an increase in average cost per useable die and an increase in the
time to market for the Company's products. These conditions could reduce the
Company's net revenues and gross margin and harm the Company's customer
relations.
The Company does not manufacture any of its products. Therefore, the Company is
referred to in the semiconductor industry as a "fabless" producer. Consequently,
the Company depends upon third party manufacturers to produce semiconductors
that meet the Company's specifications. The Company currently has third party
manufacturers that can produce semiconductors that meet the Company's needs.
However, as the industry continues to progress to smaller manufacturing and
design geometries, the complexities of producing semiconductors will increase.
Decreasing geometries may introduce new problems and delays that may affect
product development and deliveries. Due to the nature of the industry and the
Company's status as a "fabless" semiconductor company, the Company could
encounter fabrication-related problems that may affect the availability of the
Company's products, delay its shipments or increase its costs. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Almost all of the Company's wafer suppliers and assembly subcontractors are
located in southeast Asia, which exposes the Company to the problems associated
with international operations."
A large portion of the Company's revenues are derived from sales to a few
customers, who may cease purchasing from the Company at any time.
A relatively small number of customers have accounted for a significant portion
of the Company's net revenues in each of the past several fiscal years. The
Company expects this trend to continue for the foreseeable future. Techmosa, an
international distributor that in turn ships to many end users, accounted for
approximately 15% of net revenues during the first six months of fiscal 2000.
Sales to the Company's top five customers accounted for approximately 40% of net
revenues for the first six months of fiscal 2000.
The Company does not have long-term sales agreements with any of its customers.
The Company's customers are not subject to minimum purchase requirements, may
reduce or delay orders periodically due to excess inventory and may discontinue
selling the Company's products at any time. The Company's distributors typically
offer competing products in addition to the Company's products. During
the first six months of fiscal 2000, sales to domestic and international
distributors represented 61.4% of net revenues. The loss of one or more
significant customers, or the decision by a significant distributor to carry the
product lines of the Company's competitors, could decrease the Company's
revenues. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
19
<PAGE>
Almost all of the Company's wafer suppliers and assembly subcontractors are
located in southeast Asia, which exposes the Company to the problems associated
with international operations.
Almost all of the Company's wafer suppliers and assembly subcontractors are
located in southeast Asia, which exposes the Company to risks associated with
international business operations, including the following:
. disruptions or delays in shipments;
. changes in economic conditions in the countries where these
subcontractors are located;
. currency fluctuations;
. changes in political conditions;
. potentially reduced protection for intellectual property;
. foreign governmental regulations;
. import and export controls; and
. changes in tax laws, tariffs and freight rates.
In particular, there is a potential risk of conflict and further instability in
the relationship between Taiwan and the People's Republic of China. Conflict or
instability could disrupt the operations of several of the Company's assembly
subcontractors located in Taiwan. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "The Company depends on single
or limited source assembly subcontractors with whom the Company does not have
written contracts" and "Because the Company sells its products to customers
outside of the United States, the Company faces foreign business, political and
economic risks that could seriously harm it."
Because the Company sells its products to customers outside of the United
States, the Company faces foreign business, political and economic risks that
could seriously harm it.
Sales outside the United States accounted for approximately 48% of the Company's
net revenues in the first six months of fiscal 2000. In the first six months of
fiscal 2000, approximately 32% of the Company's net revenues were derived from
sales in Asia excluding Japan, approximately 6% from sales in Europe and
approximately 10% from sales in Japan. Management expects that export sales will
continue to represent a significant portion of net revenues. Management intends
to expand the Company's sales efforts outside the United States. This expansion
will require significant management attention and financial resources and
further subject the Company to international operating risks. These risks
include:
. tariffs and other barriers and restrictions;
. unexpected changes in regulatory requirements;
. the burdens of complying with a variety of foreign laws; and
. delays resulting from difficulty in obtaining export licenses for
technology.
The Company is also subject to general geopolitical risks in connection with its
international operations, such as political and economic instability and changes
in diplomatic and trade relationships. In addition, because the Company's
international sales are denominated in U.S. dollars, increases in the value of
the U.S. dollar could increase the price in local currencies of the Company's
products in foreign markets and make the Company's products relatively more
expensive than competitors' products that are denominated in local currencies.
Regulatory, geopolitical and other factors could seriously harm the Company's
business or require the Company to modify its current business practices. See
"The Company depends on single or limited source assembly subcontractors with
whom the Company does not have written contracts," and "Almost all of the
Company's wafer suppliers and assembly subcontractors are located in southeast
Asia, which exposes the Company to the problems associated with international
operations."
20
<PAGE>
The Company's potential future acquisitions man not be successful because the
Company has not made acquisitions in the past.
The Company has depended on internal growth in the past and has not made any
acquisitions. As part of the Company's business strategy, management expects to
seek acquisition prospects that would complement the Company's existing product
offerings, improve market coverage or enhance the Company's technological
capabilities. The Company has no current agreements or negotiations underway
with respect to any acquisitions, and the Company may not be able to locate
suitable acquisition opportunities. Future acquisitions could result in the
following:
. potentially dilutive issuances of equity securities;
. large one-time write-offs;
. the incurrence of debt and contingent liabilities or amortization
expenses related to goodwill and other intangible assets;
. difficulties in the assimilation of operations, personnel,
technologies, products and the information systems of the acquired
companies;
. diversion of management's attention from other business concerns; and
. risks of entering geographic and business markets in which the Company
has no or limited prior experience and potential loss of key employees
of acquired organizations.
Management is not certain that the Company will be able to successfully
integrate any businesses, products, technologies or personnel that may be
acquired in the future. The Company's failure to do so could seriously harm its
business. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
The Company's operations and financial results could be severely harmed by
natural disasters.
The Company's headquarters and some of its major suppliers' manufacturing
facilities are located near major earthquake faults. One of the foundries the
Company uses is located in Taiwan, which recently suffered a severe earthquake.
The Company did not experience significant disruption to its operations as a
result of that earthquake. However, if a major earthquake or other natural
disaster were to affect the Company's suppliers, the Company's sources of supply
could be interrupted, which would seriously harm the Company's business.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
At December 31, 1999, the Company's investment portfolio consisted of
investment-grade fixed income securities, excluding those classified as cash
equivalents, of $18.2 million. These securities are subject to interest rate
risk and will decline in value if market interest rates increase. For example,
if market interest rates were to increase immediately and uniformly by 10% per
annum from levels as of December 31, 1999, the fair market value of the
portfolio would decrease. However, the Company does not believe that such a
decrease would have a material effect on its results of operations over the next
fiscal year. Due to the short duration and conservative nature of these
instruments, the Company does not believe that it has a material exposure to
interest rate risk.
21
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
The Annual Meeting of Shareholders was held on December 14, 1999 in San
Jose, California. The results of proposals approved by the Company's
shareholders are as follows:
1. Election of six directors of the Company to
serve for the ensuing year and until their
successors are elected and qualified.
<TABLE>
<CAPTION>
Votes Votes
Name of Director For Withheld
---------------- --------- ---------
<S> <C> <C>
Alex Chi-Ming Hui 8,734,944 22,175
Chi-Hung (John) Hui, Ph.D. 8,734,944 22,175
Hau L. Lee, Ph.D. 8,740,744 16,375
Millard (Mel) Phelps 8,731,644 25,475
Tay Thiam Song 8,740,619 16,500
Jeffrey Young 8,734,969 22,150
<CAPTION>
Votes
Abstained/
Votes Votes Broker
For Against Non-vote
--------- ------- ----------
<S> <C> <C> <C>
2. Approval of the Company's 2000 Employee 5,111,559 853,385 11,569/
Stock Purchase Plan. 2,780,606
<CAPTION>
3. To ratify and approve the appointment of Votes Votes Votes
Deloitte & Touche LLP as the independent For Against Abstained
--- ------- ---------
<S> <C> <C> <C>
auditors for the Company for the fiscal year
ending June 30, 2000. 8,056,103 1,400 1,870
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits
Exhibit 27.1 - Financial Data Schedule
b. Reports on Form 8-K.
No reports on Form 8-K were filed with the Securities and
Exchange Commission during the quarter ended December 31,
1999.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Pericom Semiconductor Corporation
(Registrant)
Date: February 9, 2000 By: /s/ Alex Hui
------------------------------
Alex Hui
Chief Executive Officer
Date: February 9, 2000 By: /s/ Patrick B. Brennan
------------------------------
Patrick B. Brennan
Chief Financial Officer
(Chief Accounting Officer)
23
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 8,810
<SECURITIES> 18,239
<RECEIVABLES> 15,586
<ALLOWANCES> 3,730
<INVENTORY> 13,340
<CURRENT-ASSETS> 52,933
<PP&E> 13,645
<DEPRECIATION> 6,060
<TOTAL-ASSETS> 64,077
<CURRENT-LIABILITIES> 11,536
<BONDS> 0
0
0
<COMMON> 26,448
<OTHER-SE> 25,469
<TOTAL-LIABILITY-AND-EQUITY> 64,077
<SALES> 37,634
<TOTAL-REVENUES> 37,634
<CGS> 21,814
<TOTAL-COSTS> 30,579
<OTHER-EXPENSES> 168
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,635
<INCOME-TAX> 2,891
<INCOME-CONTINUING> 4,744
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,744
<EPS-BASIC> 0.49
<EPS-DILUTED> 0.43
</TABLE>
