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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 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. The non-GAAP financial measures help to clarify the impact of these items. Aaron will discuss the financial performance for the quarter, and Alex will give us his comments on the industry and on Pericom’s business. Then, Aaron will provide guidance for the second quarter of fiscal 2012. Aaron? Aaron Tachibana Thank you, Bob, and good afternoon, everyone. Our consolidated net revenues for the first quarter were $35.3 million, and decreased by 18% from the $43.3 million reported last quarter and decreased by 17% from the $42.8 million for the same period last year. Most end market segments declined sequentially due to the reduction of inventory by our distributors and direct customers. The distribution channel inventory declined approximately 11% sequentially, and exiting Q1 there was roughly 6.5 weeks of inventory, which was well within our normal range of six to 10 weeks. During the last four to five quarters, we had peaked around eight weeks, so 6.5 was really healthy given the economic situation. The Q1 geographic mix was as follows; Asia 90%, U.S. 6% and Europe 4%. And our sales by channel were; international distribution 65%, contract manufacturers 23%, OEMs 9%, and U.S. distribution 3%. Consolidated non-GAAP gross profit was $13.1 million for Q1 compared with $15.7 million last quarter and $15.1 million last year. Non-GAAP gross margin for the first quarter was 36.9%, and was up 70 basis points from last quarter’s 36.2% and 160 basis points higher than last quarter’s 35.3%.
The sequential quarter gross margin increase was primarily due to having less PC and consumer mix in Q1, which carries a lower gross margin percentage than our consolidated average. During the quarter PC and consumer volume decreased more than 25% sequentially due to the channel inventory reductions and weaker end customer demand.We’ve been talking about margin expansion through a better mixture of products and we are starting to see some early signs of traction. As we look forward four to six quarters, we continue to target gross margins in the range of 38% to 40% as a run rate. Non-GAAP operating expenses were $11.3 million for Q1 compared with $11.2 million last quarter. We will continue to tightly manage our spending until we have signs of a recovery and revenue returned for a normal run rate at a minimum. The non-GAAP effective tax rate was 36% for Q1 compared with 34% last quarter. The Q1 tax rate remain high primarily due to the mixture of domestic versus foreign income. In addition, we have some foreign entities that have losses for which we cannot offset against income. Non-GAAP net income was $1.8 million, or $0.07 per share, for Q1 compared with $3.6 million, or $0.14 per share, last quarter. Most of the net income decline resulted from the lower revenue volume. Now turning to the balance sheet. Our balance sheet remained in excellent shape and the cash generation of our business remained strong. We exited Q1 with $124 million of cash including both short and long-term investments and marketable securities, which equated to $5.06 per diluted share. Cash decreased by $3 million from last quarter due to the final PTI acquisition payment, and also we repurchased 456,000 shares for $3.5 million at an average price of $7.67 per share. The repurchase price was approximately $2 below our book value of $9.71 per share for Q1. And starting the buyback program back in 2007, we have repurchased over 4.5 million shares for $46 million. Read the rest of this transcript for free on seekingalpha.com