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Please note that we are referring non-GAAP financial measures for net income, gross profit and operating expenses in addition to our GAAP financial results. Due to the PTI acquisition and also non-recurring items, we have a significant amount of non-cash and non-operating expense included in the income statement which are not reflective of the performance for our normal business operation.Aaron will discuss the financial performance for the quarter and Alex will give his comments on the industry and on Pericom’s business. Then Aaron will provide guidance for the first quarter of fiscal 2013. Aaron? Aaron Tachibana Thank you, Bob and good afternoon everyone. We recently concluded fiscal year 2012 and although our revenue declined year-over-year, we continue to lay the foundation for long-term growth with higher levels of profitability. Our focus to expand business within the end markets as networking and telecom, server and storage and embedded has resulted in a 180 basis point improvement in gross margin year-over-year. Fiscal year 2012 also marks eight consecutive year of profitability on a non-GAAP basis and we have been profitable each quarter for the last five years Now let’s review some of the detail. Our consolidated net revenues for the fourth quarter were $37.9 million, an increase to 40% sequentially from the $33.4 million last quarter and decreased 12% from the $43.3 million for the same period last year. Revenue increased in all key market segments with the exception of PC and notebook. The full fiscal year 2012 net revenues were $137.1 million compared with $166.3 million for last year which represented an 18% year-over-year decline. For Q4, sales by channel were international distribution 64%, contract manufacturers 26%, OEMs 8% and US distribution was 2%. Consolidated non-GAAP gross profit was $14.1 million for Q4 compared with $12.1 million last quarter and $15.7 million last year.
The non-GAAP gross margin for the fourth quarter was 37.1% and was up approximately 90 basis points from both last quarter and last year’s 36.2%. The sequential quarter improvement was primarily due to the improved FCP factory utilization which exceeded 80% in Q4 compared with 70% last quarter. Our consolidated gross margin has been in the 37% range for the past three out of four quarters now.We've been making good progress towards enhancing our margins and are within reach of our targeted margin levels of 38% to 40%. For the current quarter that we are in now, we could see a 20 to 40 basis points improvement based on the billings and backlog thus far. Our strategy does not change. We continue to focus on increasing penetration of our GEN3 USB and PCI Express and clock products across server, networking and embedded applications for margin accretion and long-term sustainable growth. These end markets and applications generally have a much longer design and sales cycle which could take 18 to 24 months to realize revenue compared with the PC or consumer segments that generally have a nine to 12 months cycle. Non-GAAP operating expenses were $11.8 million for Q4 and were up $0.8 million sequentially. The increase was primarily due to shutdown savings of $0.4 million last quarter whereas Q4 had none. We are committed to being a leader in connectivity solutions and will continue to invest in next generation solutions that will drive both growth and margin expansion. In any given quarter, our operating expenses could vary plus or minus a few percentage points, but should remain in a range similar to Q4 in the near term. Although we've been discussing non-GAAP results thus far. I would like to point out our GAAP tax expense was $3 million in Q4 which was unusually high. Read the rest of this transcript for free on seekingalpha.com