“We also ended the fourth quarter achieving a 210 basis point sequential increase in GAAP gross margin to 35.9%, demonstrating the ability to expand margins above our prior model of 35% and toward our next target of 40%. For the past several years, we have been highlighting our continued investment and focus on new products as well as process and packaging technologies to expand our customer content and gross margin opportunities. Today, we continue to accelerate the pace at which we are transitioning older generation products to new higher margin products that provide higher value to our customers.

“With this achievement of $1 billion in annual revenue, we recently established our next long-term goal of $1 billion in gross profit. In support of this objective, we are increasingly focused on key end market opportunities that include automotive, industrial, high-end smartphones, IoT and high-end computing with our Pericom products. Further, we continue to expand market share with our higher value new products and remain committed to increasing profitability as we benefit from our solid operating leverage to drive earnings expansion and cash flow for the Company and our shareholders.”

Fourth Quarter 2017

Revenue for fourth quarter 2017 was $268.4 million, a decrease of 5.9 percent from the $285.2 million in the third quarter 2017 and an increase of 15.7 percent from $232.1 million in fourth quarter 2016. Revenue in the quarter decreased sequentially reflecting typical seasonality and increased year-over-year due to continued strength across all of the Company’s geographies and target end markets.

GAAP gross profit for the fourth quarter 2017 was $96.4 million, or 35.9 percent of revenue, compared to third quarter 2017 of $96.3 million, or 33.8 percent of revenue, and the fourth quarter 2016 of $67.3 million, or 29.0 percent of revenue. The 210 basis point sequential increase in gross profit margin was due primarily to continued improvements in product mix combined with strong margin contribution from the Pericom products as well as reduced impact from the closure of its wafer fabrication facility located in Lee’s Summit, MO (“KFAB”).

GAAP operating expenses for fourth quarter 2017 were $72.9 million, or 27.2 percent of revenue, and $64.3 million, or 24.0 percent of revenue, on a non-GAAP basis, which excluded $4.7 million of amortization of acquisition-related intangible asset expenses and $4.0 million for restructuring. GAAP operating expenses in the third quarter 2017 were $72.6 million, or 25.5 percent of revenue, and $63.9 million, or 22.4 percent of revenue, on a non-GAAP basis.

Fourth quarter 2017 GAAP net loss was ($30.7) million, or ($0.62) per diluted share, compared to net income of $14.5 million, or $0.29 per diluted share, in third quarter 2017 and net income of $1.3 million, or $0.03 per share, in fourth quarter 2016.

Fourth quarter 2017 non-GAAP adjusted net income was $21.6 million, or $0.42 per diluted share, which excluded, net of tax, $3.8 million of non-cash acquisition-related intangible asset amortization costs, $2.6 million of restructuring charges, as well as $45.9 million tax expense due to the new tax law reform impact. This compares to non-GAAP adjusted net income of $22.6 million, or $0.45 per diluted share, in third quarter 2017 and $7.7 million, or $0.15 per diluted share, in fourth quarter 2016.

The following is an unaudited summary reconciliation of GAAP net income to non-GAAP adjusted net income and per share data, net of tax (in thousands, except per share data):