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In accordance with regulations of Fair Disclosure, Pericom will continue to only provide guidance via its earnings 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. 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 third quarter of fiscal 2011. Aaron?Aaron Tachibana Thank you, Bob, and good afternoon, everyone. We are very pleased to report another solid quarter of earnings and results despite the recent inventory adjustments by our customers and channel partners and the slowdown of the consumer and PC segments. Q2 was our 23 rd consecutive quarter of profitability and we are very proud of this accomplishment. During Q2, we generated almost $8 million of cash, forged ahead with the PTI integration, consolidated our first full quarter with PTI and announced nine new products for our Signal Integrity, Timing, and Connectivity product areas. 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 of our normal business operations. Also, Q2 included three months of PTI results, whereas last quarter only had one month due to the close timing of the acquisition. Now, let’s review some of the detail. Our consolidated net revenues for the second quarter were $40.7 million and represented a 5% decrease from the $42.8 million reported last quarter and a 14% over the $35.8 million for the same period last year. The PTI revenue for Q2 was $5.4 million compared with $1.8 million or one month of Q1. The sequential decrease of 5% was mostly attributed to the inventory reduction efforts by our distributors and customers and also the softness from PC and consumer sectors.
The Q2 geographic distribution was as follows. Asia, 88%; US, 8%; and Europe was 4%. Our channel sales mix was; international distribution, 63%; contract manufacturers, 22%; OEM, 10%; and US distribution was 5%.Consolidated non-GAAP gross profit was $14.8 million for Q2 compared with $15.1 million last quarter and $12.1 million last year. Non-GAAP gross margin for the second quarter was 36.3% and was 100 basis points higher than last quarter’s 35.3% and 240 basis points higher than last year’s 33.9%. The sequential quarter gross margin increase was primarily due to the benefit of consolidating PTI results for a full quarter and 50% plus gross margin. PTI’s gross margin added roughly 200 basis points to consolidated average, but was partially offset by unfavorable absorption due to low volume in Q2 and also unfavorable currency exchange from the weaker dollar. Non-GAAP operating expenses were $10.5 million for Q2 compared with $10.3 million last quarter and $9.4 million last year. The Q2 expenses were sequentially higher by $0.2 million due to consolidating PTI for a full quarter, compared with only one month of PTI expenses last quarter. We partially offset the PTI increase with reductions in payroll-related costs from the winter holiday shutdown, lower variable selling costs due to the volume decline, and lower order-related expenses in Q1. The Q2 operating income on a non-GAAP basis was $4.2 million, 10% of revenue, compared with $4.8 million or 11% of revenue last quarter and $2.7 million or 8% of revenue for the same period last year. The sequential decrease of 1% was due to the $0.2 million increase in OpEx on slightly lower revenue for the quarter. Interest and other income for Q2 was $0.8 million compared with $1 million last quarter. The $0.2 million sequential decrease was due to realized gains from the sale of cash investments in Q2 compared with last quarter. Read the rest of this transcript for free on seekingalpha.com