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Peregrine Semiconductor Announces Third Quarter 2012 Financial Results

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SAN DIEGO--(BUSINESS WIRE)--

Peregrine Semiconductor Corporation (Peregrine Semiconductor) (NASDAQ: PSMI), a fabless provider of high-performance radio frequency integrated circuits (RFICs), today announced its third quarter 2012 financial results.

Revenue for the third quarter of 2012 was $60.6 million, compared with $26.5 million for the same period in 2011. As reported under U.S. generally accepted accounting principles (GAAP), third quarter 2012 net income was $4.7 million, compared with a GAAP net loss of $4.7 million in the same period in 2011. Diluted net income per share attributable to common stockholders* for the third quarter of 2012 was $0.10 per share compared to a net loss per share of $1.72 for the same period in 2011.

Non-GAAP net income for the third quarter of 2012 was $5.9 million, or $0.17 per diluted share** based on weighted average shares outstanding of 33.7 million giving effect to the conversion of the preferred stock at the beginning of the quarter. This compares with non-GAAP net loss of $4.0 million or $0.16 per diluted share based on weighted average shares outstanding of 25.1 million for the same period in 2011.

Gross margin on a GAAP basis for the third quarter of 2012 was 41.3% of revenue, compared to 26.9% of revenue for the same period in 2011. Gross margin on a non-GAAP basis for the third quarter of 2012 was 41.5% of revenue, compared to 27.2% of revenue for the same period in 2011.

“In our first quarter as a public company, we achieved significant revenue growth due to strong demand for our radio frequency integrated circuits that are designed into the latest and most popular smartphones,” commented Jim Cable, Chief Executive Officer. “Our products deliver an industry leading combination of performance and monolithic integration, and we believe we are well-positioned for future growth in both our mobile wireless and high performance solutions business units.”

*Diluted net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders, calculated as net income (loss) less income allocable to preferred stockholders for the period prior to their conversion upon our initial public offering, by the weighted average number of common shares outstanding, including unvested shares subject to repurchase, and potential dilutive securities assuming the dilutive effect of outstanding stock options and warrants using the treasury stock method.

**Non-GAAP diluted net income (loss) per share was computed to give effect to the conversion of our preferred stock using the as-if converted method into common shares as if the conversion had occurred as of the beginning of each period presented.

Business Outlook

For the fourth quarter of 2012, the company expects revenue to be in the range of $60 million to $63 million. Fourth quarter GAAP gross margin is expected to be in the range of 43.0% to 44.5%.

Quarterly Conference Call Today

Jim Cable, President and Chief Executive Officer, and Jay Biskupski, Chief Financial Officer, will host a third quarter 2012 financial results conference call today at 2:00 pm (Pacific) / 5:00 pm (Eastern). Attendees are asked to join the conference call at least ten minutes prior to the scheduled conference call time. The call may be accessed by dialing 1-877-303-8027 (toll free) or 1-760-536-5165 (international). The passcode is 38937402. A live and archived webcast of the call will be available on Peregrine's website at http://investors.psemi.com/ for one week following the live call.

Use of GAAP and Non-GAAP Financial Measures

Peregrine Semiconductor prepares its financial statements in accordance with generally accepted accounting principles for the United States (GAAP). The non-GAAP financial measures such as gross margin, net income and loss per share information for the three and nine months ended September 29, 2012, and similar periods from the prior year included in this press release are different from those otherwise presented under GAAP. The non-GAAP financial measures exclude non-cash compensation expense for stock options. When evaluating the performance of our business and developing short and long-term plans, we do not consider share-based compensation charges. Although share-based compensation is necessary to attract and retain quality employees, our consideration of share-based compensation places its primary emphasis on overall shareholder dilution rather than the accounting charges associated with such grants. Because of the varying availability of valuation methodologies and subjective assumptions, we believe that the exclusion of share-based compensation allows for more accurate comparison of our financial results to previous periods. In addition, we believe it useful to investors to understand the specific impact of the application of the fair value method of accounting for share-based compensation on our operating results. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business. However, investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. These measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

For more information on our non-GAAP financial measures and a reconciliation of such measures to the nearest GAAP measure, please see the “Condensed Consolidated Reconciliation of GAAP to Non-GAAP Results” table in this press release.

Use of Forward-Looking Statements

This press release contains forward-looking statements regarding our management's future expectations, beliefs, intentions, goals, strategies, plans and prospects. Such statements constitute “forward-looking” statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The achievement of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, our actual results, performance or achievements could be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, but are not limited to, our dependence on a limited number of customers for a substantial portion of our revenues; intellectual property risks; intense competition in our industry; our ability to develop and introduce new and enhanced products on a timely basis and achieve market acceptance of those products; consumer acceptance of our customers' products that incorporate our solutions; our lack of long-term supply contracts and dependence on limited sources of supply; and potential decreases in average selling prices for our products.

For further information regarding risks and uncertainties associated with Peregrine's business, please refer to the filings that we make with the Securities and Exchange Commission from time to time, including those set forth in the section entitled “Risk Factors” in the company's Prospectus filed on August 8, 2012 and additional information that will be set forth in our Form 10-Q that will be filed for the quarter ended September 29, 2012, which should be read in conjunction with these financial results. These documents are available on the SEC Filings section of the Investor Relations section of our website at http://investors.psemi.com/. Please also note that forward-looking statements represent our management's beliefs and assumptions only as of the date of this press release. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information, becomes available in the future.

About Peregrine Semiconductor

Peregrine Semiconductor (NASDAQ: PSMI) is a fabless provider of high-performance radio frequency integrated circuits (RFICs). Our solutions leverage our proprietary UltraCMOS® technology, an advanced RF Silicon-On-Insulator process. Our products deliver what we believe is an industry-leading combination of performance and monolithic integration, and target a broad range of applications in the aerospace and defense, broadband, industrial, mobile wireless device, test and measurement equipment, and wireless infrastructure markets. Additional information is available on the Company's website at http://www.psemi.com.

The Peregrine Semiconductor name, logo and UltraCMOS are registered trademarks, and DuNE, and HaRP are trademarks of Peregrine Semiconductor Corporation in the U.S.A., and other countries. All other trademarks are the property of their respective owners.

(Tables Follow)

 
Peregrine Semiconductor Corporation
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
       
Three Months Ended Nine Months Ended
September 29, September 24, September 29, September 24,
2012 2011 2012 2011
 
Net revenue $ 60,575 $ 26,495 $ 140,909 $ 72,224
Cost of net revenue   35,560       19,370     88,418       46,090  
 
Gross profit 25,015 7,125 52,491 26,134
Operating expense:
Research and development 9,355 6,044 23,518 16,292
Selling, general and administrative   10,990       5,733     26,183       16,545  
 
Total operating expense   20,345       11,777     49,701       32,837  
 
Income (loss) from operations 4,670 (4,652 ) 2,790 (6,703 )
Interest income (expense), net (213 ) 73 (1,247 ) (107 )
Other income (expense), net   (52 )     (27 )   (132 )     34  
 
Income (loss) before income taxes 4,405 (4,606 ) 1,411 (6,776 )
Provision (benefit) for income taxes   (308 )     69     (234 )     194  
 
Net income (loss) 4,713 (4,675 ) 1,645 (6,970 )
Net income allocable to preferred stockholders   (2,279 )     -     (1,362 )     -  
 
Net income (loss) attributable to common stockholders $ 2,434     $ (4,675 ) $ 283     $ (6,970 )
 
Net income (loss) per share:
Basic $ 0.12     $ (1.72 ) $ 0.03     $ (2.58 )
Diluted $ 0.10     $ (1.72 ) $ 0.02     $ (2.58 )
 
Shares used to compute net income (loss) per share:
Basic   19,748       2,725     8,442       2,704  
Diluted   24,351       2,725     12,692       2,704  
 
Peregrine Semiconductor Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
   
September 29, December 31,
  2012     2011  
 
Assets
Current assets:
Cash and cash equivalents $ 58,007 $ 12,119
Short-term marketable securities 28,097 -
Accounts receivable, net 21,806 13,082
Inventories 56,526 29,822
Prepaids and other current assets   7,998     2,644  
 
Total current assets 172,434 57,667
Property and equipment, net 20,299 10,272
Long-term marketable securities 20,152 -
Other assets 1,110 2,919
   
Total assets $ 213,995   $ 70,858  
 
Liabilities and stockholders' equity (deficit)
Current liabilities:
Accounts payable $ 30,109 $ 9,390
Accrued liabilities 11,436 11,477
Accrued compensation 4,387 3,458
Customer deposits 41,791 -
Deferred net revenue 12,800 5,298
Line of credit - 7,749
Current portion of notes payable - 861
Current portion of obligations under capital leases   12     520  
 
Total current liabilities 100,535 38,753
 
Obligations under capital leases, less current portion 22 189
Notes payable, less current portion - 757
Other long-term liabilities 1,303 1,329
 
Convertible preferred stock - 172,430
Stockholders' equity (deficit):
Preferred stock - -
Common stock 32 3
Additional paid-in capital 338,920 85,828
Accumulated deficit (226,562 ) (228,207 )
Accumulated other comprehensive loss (255 ) (224 )
   
Total stockholders' equity (deficit)   112,135     (142,600 )
Total liabilities and stockholders' equity (deficit) $ 213,995   $ 70,858  
 
Peregrine Semiconductor Corporation
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
   
Nine Months Ended
September 29, September 24,
  2012     2011  
Operating activities
Net income (loss) $ 1,645 $ (6,970 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 3,132 2,991

Loss on disposal of property and equipment

11 8
Stock-based compensation 3,116 2,159
Revaluation of warrants to fair value 633 (147 )
Imputed interest related to customer deposit financing arrangements 273 -
Amortization of premium and discount on investments, net 48 -
Cash received for lease incentive - 348
Changes in operating assets and liabilities:
Accounts receivable (8,727 ) (2,158 )
Inventories (26,709 ) (4,054 )
Prepaids and other current and noncurrent assets (6,354 ) (2,811 )
Accounts payable and accrued liabilities 21,606 9,944
Customer deposits 29,791 -
Deferred revenue   7,122     4,536  
 
Net cash provided by operating activities 25,587 3,846
 
Investing activities
Purchase of property and equipment (13,168 ) (2,547 )
Proceeds from sale of equipment - 24
Purchases of marketable securities   (48,462 )   -  
 
Net cash used in investing activities (61,630 ) (2,523 )
 
Financing activities
Payments on obligations under capital leases (661 ) (531 )
Payments on notes payable (1,618 ) (611 )
Proceeds from line of credit 3,000 1,000
Payments on line of credit (10,749 ) -
Proceeds from exercise of stock options 369 126
Proceeds from exercise of warrants 31 -
Proceeds from customer deposit financing arrangement 13,000 -

Proceeds from initial public offering, net of offering cost

80,278 -
Costs paid in connection with initial public offering   (1,707 )   (1,599 )
 
Net cash provided by (used in) financing activities 81,943 (1,615 )
 
Effect of exchange rate changes on cash and cash equivalents   (12 )   41  
 
Net change in cash and cash equivalents 45,888 (251 )
Cash and cash equivalents at beginning of period 12,119 15,226
   
Cash and cash equivalents at end of period $ 58,007   $ 14,975  
 
Peregrine Semiconductor Corporation
RECONCILIATION OF GAAP TO NON-GAAP RESULTS
(in thousands, except per share data)
(unaudited)
               
Three Months Ended Nine Months Ended
September 29, September 24, September 29, September 24,
2012   2011 2012   2011
 
Gross profit - GAAP $ 25,015 41 % $ 7,125 27 % $ 52,491 37 % $ 26,134 36 %
Non-cash compensation expense   133   1       94     0     404   1       302     1  
 
Gross profit - Non-GAAP $ 25,148   42 %   $ 7,219     27 % $ 52,895   38 %   $ 26,436     37 %
 
Income (loss) from operations - GAAP $ 4,670 8 % $ (4,652 ) (18 %) $ 2,790 2 % $ (6,703 ) (9 %)
Non-cash compensation expense   1,152   2       676     3     3,116   2       2,159     3  
 
Income (loss) from operations - Non-GAAP $ 5,822   10 %   $ (3,976 )   (15 %) $ 5,906   4 %   $ (4,544 )   (6 %)
 
Net income (loss) - GAAP $ 4,713 8 % $ (4,675 ) (18 %) $ 1,645 1 % $ (6,970 ) (10 %)
Non-cash compensation expense   1,152   2       676     3     3,116   2       2,159     3  
 
Net income (loss) - Non-GAAP $ 5,865   10 %   $ (3,999 )   (15 %) $ 4,761   3 %   $ (4,811 )   (7 %)
 
Diluted net income (loss) per share attributable to common stockholders - GAAP $ 0.10 $ (1.72 ) $ 0.02 $ (2.58 )
Adjustment to reflect conversion of preferred stock at the beginning of period 0.04 1.53 0.03 2.30
Non-cash compensation expense   0.03   0.03     0.10   0.09  
 
Diluted net income (loss) per share - Non-GAAP $ 0.17 $ (0.16 ) $ 0.15 $ (0.19 )
 
Net income (loss) attributable to common stockholders - GAAP $ 2,434 $ (4,675 ) $ 283 $ (6,970 )
Net income (loss) - Non-GAAP $ 5,865 $ (3,999 ) $ 4,761 $ (4,811 )
 
Shares used to compute diluted net income (loss) per share attributable to common stockholders - GAAP 24,351 2,725 12,692 2,704
Adjustment to reflect conversion of preferred stock at the beginning of period   9,347   22,365     18,039   22,365  
 
Shares used to compute diluted net income (loss) per share - Non-GAAP   33,698   25,090     30,731   25,069  

Peregrine Semiconductor Corporation
Jay Biskupski, Chief Financial Officer
858-731-9400
ir@psemi.com
or
Investor Relations:
The Blueshirt Group
Suzanne Craig or Melanie Friedman
415-217-4962; 415-217-4964
Suzanne@blueshirtgroup.com
Melanie@blueshirtgroup.com

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