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Aaron will discuss the financial performance for the quarter and Alex will give his comments on the industry and on Pericom’s business. Then he will provide guidance for the second quarter of fiscal 2011.Aaron? Aaron Tachibana Thank you, Bob, and good afternoon everyone. Although the current business climate remains somewhat cloudy, Pericom continues to solidify its strong market position through serial connectivity solutions as evidenced by the pace of our new product introductions along with several key design wins during the first quarter. We also achieved our sixth consecutive quarter of revenue growth while maintaining both profitability and the very strong cash position. Also during Q1, we successfully closed the acquisition of PTI which we announced in early September. The addition of PTI adds approximately $20 million plus dollars of annual revenue at gross margins that exceed 50%, and the combination of Pericom and PTI is accretive immediately after excluding one-time cost and ongoing amortization expenses. We will expand upon the benefits and synergies of PTI later in our discussion. Before getting into the results for the quarter, we would like to point out that we are reporting non-GAAP financial measures for net income, gross profit, 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 income and expense items included in the income statement this quarter which are not reflective of the performance of our normal business operations. Also, Q1 includes one month of PTI results since the acquisition was completed on August 31st. Now let’s review some of the detail. Our consolidated net revenues for the first quarter were $42.8 million and represented a 3% increase from the $41.5 million reported last quarter and a 30% increase over the $33 million for the same period last year. Q1 was a 13-week quarter while Q4 had 14 weeks. The PTI revenue was $1.8 million for Q1, and this was the first quarter of consolidation since the acquisition.
Consolidated non-GAAP gross profit was $15.1 million for Q1 compared with $15.4 million last quarter and $10.6 million last year. Non-GAAP gross margin for the first quarter was 35.3% and was 170 basis points lower than last quarter’s 37% and 300 basis points higher than last year’s 32.3%. The sequential quarter gross margin decline was primarily due to product mix and unfavorable absorption from lower production volume related to FCP.Non-GAAP operating expenses were $10.3 million for Q1 compared with $10.8 million last quarter and $10 million last year. The Q1 expenses were sequentially lower by 0.5 million due to Q4 including one extra week of expenses. Q1 operating income on a non-GAAP basis was $4.8 million or 11% of revenue compared with $4.5 million or 11% of revenue last quarter and $0.7 million or 2% of revenue for the same period last year. Interest and other income for Q1 was $1 million compared with $1.1 million last quarter. The $0.1 million sequential quarter decrease was due to currency exchange losses. Income from our own consolidated affiliates, PTI and JCP, was $0.6 million for Q1 compared with $0.8 million last quarter. The sequential quarter decrease was due to Q1 including only two months of PTI income whereas Q4 was a full quarter. Income before tax was $5.8 million on a non-GAAP basis for the first quarter compared with $5.6 million last quarter and $2.3 million last year. On a non-GAAP basis, the effective tax rate was 35% for Q1 compared with 28% last quarter and 32% for the same period last year. The Q1 sequential tax rate increase was due to the mix of income by jurisdiction and also last quarter included year-end true ups. As we go forward, we expect the tax rate to be in the range of 33% to 34%. Read the rest of this transcript for free on seekingalpha.com