PERICOM SEMICONDUCTOR CORP - FORM 8-K/A - EX-99.1 - EXHIBIT 99.1

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PERICOM SEMICONDUCTOR CORPORATION

January 31, 2012

1:30 P.M. Pacific Standard Time

TRANSCRIPT OF SECOND QUARTER FISCAL 2012 RESULTS CONFERENCE CALL

Operator

Good day, ladies and gentlemen, and welcome to the Pericom Semiconductor second quarter 2012 earning call. At this time, all participants are in a listen-only mode. Later, we'll have a question-and-answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, today's conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Robert Strickland, corporate Treasurer. Sir, you may begin.

Robert Strickland

Thank you. Good afternoon and welcome to Pericom's second quarter fiscal year 2012 conference call. Our speakers today are Alex Hui, President and CEO, and Aaron Tachibana, the CFO. Before we get started, please be aware that we will be presenting several visual slides during management’s discussion of the business. To view these slides, please go to www.pericom.com and click on the “investors” link.

Today, the company will discuss its financial results, comment on the industry and on Pericom's business, and provide guidance for the third quarter of fiscal 2012. Certain matters discussed in the press release and on this conference call may contain forward-looking statements that involve risk and uncertainty. Therefore, we encourage you to review all filings made by the company with the Securities and Exchange Commission, particularly the risk factor sections of such filings. In accordance with regulations of fair disclosure, Pericom will continue to only provide guidance via its earning release and its conference calls. The company will not provide further guidance or updates during the quarter unless it does so via a press release.

Please note that we are reporting non-GAAP financial measures for net income, gross profit, and operating expenses in addition to our GAAP financial results. Due to the PTI acquisition, we have a significant amount of non-cash and non-operating expense items included in the income statement, which are not reflective of the performance for our normal business operations.

Aaron will discuss the financial performance for the quarter, and Alex will give his comments on the industry and on Pericom's business. Then Aaron will provide guidance for the third quarter of fiscal 2012.

Aaron Tachibana

Thank you Bob, and good afternoon everyone.

Our consolidated net revenues for the second quarter were $30.5 million dollars, and decreased by 14% from the $35.3 million reported last quarter, and decreased by 25% from the $40.7 million for the same period last year. Most of the sequential decline in revenue was due to lower PC, notebook, and consumer end market demand, and also lower storage volume due to the Thailand flood which had a negative 3% impact on revenue. On a positive note, our networking and telecom revenue increased by 3% over last quarter.

Sales by Channel were:

- International distribution

63%

- Contract manufacturers

24%

- OEM’s

10%

- US distribution

Consolidated non-GAAP gross profit was $11.4 million dollars for Q2 compared with $13.1 million last quarter, and $14.8 million last year. Non-GAAP gross margin for the second quarter was 37.3%, and was up 40 bps from last quarter’s 36.9% and 100 bps higher than last year’s 36.3%. The sequential quarter gross margin improvement was a result of favorable product mix from less PC, storage, and consumer shipments that have a lower gross margin percentage than our consolidated average. We remain on track to achieve our target gross margin range of 38-40% 4 to 5 quarters out, although there could be some fluctuation along the way due to product or end market mix.

Non-GAAP operating expenses were $11 million dollars for Q2, compared with $11.3 million last quarter. We have been controlling our discretionary spending to reflect current business levels, and for the current quarter of Q3, our OpEx will decline a few hundred thousand dollars or so due to reducing our world-wide headcount by 5 to 7%. Going forward, our non-GAAP operating expenses should remain within this range, aside from fluctuations for variable selling costs.

The non-GAAP effective tax rate was 9% for Q2 compared with 36% last quarter. The Q2 tax rate was unusually low due to the GAAP net loss for the quarter which resulted in some year-to-date true-ups. The tax rate was also affected by the mixture of income between foreign and domestic locations.

Non-GAAP net income was $1.0 million dollars or 4 cents per diluted share for Q2 compared with $1.8 million or 7 cents per share last quarter. Most of the net income decline was a result of the lower revenue volume. Although our net earnings decreased sequentially, we remained profitable, and this has been the case the last 5 plus years.

Exiting Q2, our balance sheet remained in excellent shape and the cash generation of our business remains strong. Cash, including both short and long term investments in marketable securities was $124 million dollars which equated to $5.13 cents per share. During the quarter, we repurchased 302 thousand shares for $2.3 million dollars at an average price of $7.63 per share. Since starting the buy-back program in 2007, we have repurchased over 4.8 million shares for $48 million dollars.

Net inventory was $18.3 million dollars at the end of Q2 which was flat from last quarter and equated to 87 days of supply. Compared with the peak 5 quarters ago, we have reduced in-house inventory by 41% and we are well positioned when an uptick returns. Distributor inventory decreased 9% sequentially, and we had 7.3 weeks of supply at the end of Q2, which was within the normal range of 6-8 weeks.

Capital equipment additions were $1.1 million dollars for Q2 and depreciation expense was $2.0 million.

At this time, I would like to turn the call over to Alex for commentary about our business and the industry.

Alex Hui

Thank you Aaron.

Due to the softness in industry demand and channel partners reducing their inventory, we saw a substantial drop in our revenue in FYQ2. However, we were pleased to see sequential and year-to-year gross margin improvement. This was due to a higher mix of revenue coming from networking and telecom customers and a higher mix of revenue from our Connect product line. While we may see fluctuations in gross margin quarter to quarter, we expect to see further improvement on gross margin over time as we focus on driving revenue mix from higher margin products and market segments.

Bookings were relatively soft in Q2 with book to bill ratio slightly below parity. We saw significant improvements in bookings in the first three weeks of January. We are monitoring to see if the trend would sustain after the Chinese New Year holiday.

Market segment-wise, we saw higher mix of revenue coming from Networking and Telecom, while embedded and others were up slightly. We had lower % mix from PC/notebook, Digital Media, and also ultra-mobility. PTI consumer business was weak due to significant drop in business from South China consumer customers due to weak global economy.

Our top five end customers accounted for 28% of total revenue in Q2.

The revenue mix for our product families was: IC, 63% and Frequency Control products, 37%. IC revenue included 9% from PTI. The remaining 54% of IC products included Analog switches 22%, Digital Switches 5%, Silicon Clocks 8%, Connect 15%, and Interface 4%.

During the quarter we introduced 12 new products in FYQ2, across switching, timing and connect product lines. Besides enhancing our position for next-generation computing platforms, quite a few of these products also have applications in server, networking and embedded applications and this will help expand our growth in these areas. I’ll refer you to our press release for more detailed information.

As of today, Pericom is the only supplier that has USB 3.0 signal integrity products that meet the stringent USB 3.0 industry compliance test. We have many design wins with top-tier customers and we'll ramp up shipment later part of this quarter to support the Intel Ivy Bridge platform. We are also looking at deploying the technology outside the PC/notebook arena over time. We are working closely with key customers on the design in of our PCI Express Gen 3 solution for next generation servers, processing for deployment in second half of calendar '12.

We have spent quite a bit of time last few quarters working closely with top-tier customers on the design in of our serial connectivity solution to support next generation system featuring USB 3.0 and PCI Express Gen 3 connectivity. One observation that came across very clearly is that it is increasingly difficult to achieve good signal integrity and timing margins in this super-high-speed system running at 5 to 8 gigabits a second over copper wire on the PC board.

We knew all along that the increase in serial protocol data transfer rate would drive the adoption of our signal integrity and timing products over time. We believe there will be a significant increase in the adoption of our solution in Gen 3 systems and the rate will go even higher in future generations.

We believe the macro-environment is improving and channel inventory correction is coming to an end. We are driving our future growth with a two-pronged approach. First of all, expanding our product solutions in switching, signal integrity and timing for serial connectivity systems. Second, increase our penetration into networking, server, storage and embedded markets to get better leverage of our products and technologies.

We are making good progress and uncovering new opportunities for our products in wireless headsets, base stations, IP phones, medical instrumentation and automobile and with other relevant applications. Our goal is to increase the revenue contribution from these areas to help drive revenue growth and margin expansion.

I'll now turn it over to Aaron to give the guidance.

Aaron Tachibana

Thank you, Alex.

We currently expect Q3 revenue to be in the range of down 1.6% to up 11.5% sequentially. The booking rate had improved during the first few weeks of January compared with the beginning of last quarter, however, it’s not clear if the same rate will continue subsequent to the Chinese New Year holiday, therefore, we have provided a wider range for our revenue estimate. Also, we don’t expect any significant adjustments to the distributor inventory levels, but it could still vary plus or minus a few percentage points.

We currently expect the Q3 Non-GAAP results to be as follows:

·	Revenues in the range of $30.0 to $34.0 million.

·	Gross margin in the range of 35 to 37%.

·	Operating expenses are expected to be in the range of $10.5 to $10.9 million.

·	Other income is expected to be approximately $0.5 to $0.7 million, and

·	Effective tax rate will be in the range of 32 -34%.

This concludes our formal comments, and now we can open up the session for questions and answers. Operator?

Question-and-Answer-Session

Operator

Certainly. Ladies and gentlemen, if you have a question at this time please press star then one on your touchtone telephone. If you question has been answered or you wish to remove yourself from the queue then, at any time, press the pound key. Once again, if you have a question please press star then one. A moment while we wait for questions to queue. Once again, if you have a question, please press star then one.

We have a question from Krishna Shankar from Roth Capital. Your line is open.