Aaron TachibanaThank you, Bob, and good afternoon, everyone. We have just concluded our fiscal year 2010 in a positive light. Just over a year ago, we and many other industry participants were wondering if and when the bottom of the cycle would be reached. At this time, we are pleased to report that Pericom has just achieved its fifth consecutive quarter of revenue growth since the global recession began late in 2008. In addition to our outstanding financial results, today we announced entering into an agreement to acquire the remaining shares of PTI, a fabless IC company that we previously held a 40.6% ownership stake within. The transaction is expected to close late in Q1 and we expect the PTI results to be accretive immediately. We will explain more about the PTI business later on this call. Our fiscal year 2010 fourth quarter results were better than expected with net revenues growing by 13% sequentially and 40% year-over-year. This was a 14-week quarter and when normalizing for the extra week, revenue grew – revenue growth was 5% sequentially and 30% year-over-year. We expanded gross margin sequentially for the fourth consecutive quarter and it was up 146 basis points over last quarter. GAAP net income exceeded last quarter by 28% and was nearly 277% higher year-over-year. Now, let's review some of the detail. Our consolidated net revenues for the fourth quarter were $41.5 million and represented a 13% increase from the $36.7 million reported last quarter and a 40% increase over the $29.7 million for the same period last year. After normalizing for the extra week, quarter-to-quarter increase was 5% and the year-over-year increase was 30%. The full fiscal year 2010 net revenues were $146.9 million and represented a 14% increase year-over-year and was 12% higher, when normalizing for the extra week.
End market shipments for the fourth quarter were as follows, computer 45%, communication 35%, consumer 11% and 9% from all other. Geographic distribution was as follows, U.S. 10%, Asia 85%, and Europe was 5%. Channel sales mix was as follows, domestic distribution 6%, international distribution 57%, contract manufacturers 24% and OEMs were 13%.Consolidated gross margin for the fourth quarter was 36.7% and was 146 basis points higher than last quarter's 35.3% and 806 basis points higher than the 28.7% for the same period last year. Q4's gross margin of 36.7% was a two-year high for Pericom as we had improvements from mix and favorable absorption from increased volume. Gross profit was $15.2 million for the fourth quarter, compared with $12 million reported last quarter and $8.5 million for the same period last year. For the full fiscal year, our consolidated gross margin was 34.6%, compared with 33.5% last year and gross profit was $50.8 million, compared with $43.1 million last year. Operating expenses were $12 million for the fourth quarter, compared with $10.5 million last quarter. Share-based compensation expense for the fourth quarter was approximately $1.2 million. The additional week accounted for approximately $0.5 million of the expense increase over last quarter. Also, we reinstated salary increases that were absent for over a year and removed the mandatory time-off program, which was in place through early last quarter and both combined were $0.4 million of the increase. Audit-related expenses were $0.3 million higher than last quarter, primarily due to the year-end work that began this quarter. We are estimating that approximately $0.7 million of the Q4 OpEx increase will not repeat going forward. Operating income for the fourth quarter was $3.3 million or 8% of revenue, compared with $2.5 million or 7% of revenue last quarter and an operating loss of $1 million for the same period last year. We were extremely pleased with the 31% sequential increase in our operating income for the quarter concluded. Our total fiscal year 2010 operating income was $7.1 million and was 135% higher than the $3 million last year. Read the rest of this transcript for free on seekingalpha.com