Good day, everyone, and welcome to the Entegris second quarter 2010 earnings release conference call. Today’s call is being recorded. For opening remarks and introductions, I’d like to turn the call over to Steve Cantor, Vice President of Corporate Relations. Please go ahead.

Thank you. Good morning and thank you all for joining our call. Earlier today, we announced the financial results for our second quarter ended July 3rd, 2010. You can access the copy of our press release on our website www.entegris.com. Before we begin, I would like to remind listeners that our comments today will include some forward-looking statements. These statements involve a number of risks and uncertainties which are outlined in detail in our reports and filings with the SEC. On this call, we will also refer to non-GAAP financial measures as defined by the SEC and Regulation G. You can find a reconciliation table in today’s press release as well as on our website. On the call today are Gideon Argov, President and CEO; Bertrand Loy, Chief Operating Officer and Greg Graves, Chief Financial Officer. Gideon will now begin the call.

Thank you, Steve. Good morning and thank you for joining the call. I'll provide an overview of the quarter and then Greg will provide some details on the financial results. There were a number of reasons to be very pleased with our second quarter results. First, sales of a $168 million reflected the sustained robustness of the semiconductor markets and our liquid filter sales exceeded record levels this quarter. Second, we achieved an adjusted operating margin of 17.8%, which is ahead of our target profit expectations for that revenue level. This operating margin result is approaching the five-year high watermark for the company. Third, we generated $28 million of cash from operations, which enabled us to completely repay our credit facility in July, well ahead of schedule. Before providing more details on these points and discussing the near-term business trends, I want to take a moment to provide some context. This March at our Analyst Day, we laid out a clear path for how Entegris can outgrow its markets and how we can realize the operating leverage of the business. This growth strategy is built on the three pillars. Growth in our core semiconductor markets; our fight-back initiatives to take back share in a few key areas, and expansion into what we call new frontiers or adjacent markets. All three in aggregate provide us with a path to grow faster than the market. I'll provide a little more color regarding our progress in the second quarter on each of these fronts. First; we have considerable room to grow in our core semiconductor market by virtue of the increasingly demanding contamination control requirements at leading-edge technology nodes. The 11 new fab projects around the globe that are currently either underway or in planning stages will operate using advanced 45, 32 and…

I'll provide some detail on the second quarter financials and then add some commentary on business trends and our operating model. I'm very pleased with the results for the second quarter and particularly with the operating margin approaching 18%, which exceeded our target profit expectations at this level of revenue. As previously discussed, we are operating our business using a model that targets a range of operating performance for specific levels of sales. This model is an important tool for a number of reasons. First, it provides company wide discipline and visible financial targets for the entire organization. Each of our division has its own target model that in aggregate supports the consolidated operating model that we have communicated to the investment community. Second; the target model demonstrates how we can flex our operations to preserve and maximize our profitability. Third; it shows the leverage in the business and how the actions we have made over the past two years enable us to achieve higher profitability at comparable levels of revenues. Looking beyond the margin performance, sales of 168 million or up 4% from Q1. By geography, sales for our largest region, Asia, grew 9% sequentially. Taiwan sales are on track to exceed 100 million in 2010, a record level for us. The US declined 4%, Japan grew 9% and Europe grew 7% versus Q1. Foreign exchange rate changes had a modest, unfavorable impact on sales. Gross margin for the second quarter improved to 46% from 45.6% in Q1, as we continued to achieve high utilization and continued efficiencies in our manufacturing operations. Operating expenses, excluding amortization were 47.3 million and this was up slightly in dollars from Q1, but down as a percentage of sales. R&D spending was even with the first quarter, while SG&A increased by less than…

(Operator instructions). Our first question is from Krish Sankar with Bank of America Merrill Lynch.

One; in terms of your September guidance of moderate growth, can you just pass it on between the CapEx and the unit-driven business and qualitatively or quantitatively, how do you think they are going to trend in September?

Krish, so moderate is all we're guiding. We're not giving hard guidance. We don't do that because it's difficult to do it in our business with the uncertainty in the economy. The only commentary I would make is we do see device makers operating at very high utilization levels at this point in time and that is something that we would expect to see continuing. For moderate growth, you can read into that some combination of capital and unit-driven, but I'm not going to really divide it precisely for you because it’s not feasible to do so in a way that would be helpful.

In terms of the specialty material business, you said there was a certain amount of inventory restocking, can you quantify how much it was?

A significant amount of the decline in Q2 was due to inventory restocking and that business has very healthy growth prospects. We believe it's going to grow significantly over the next couple of years. We have a number of key design wins that we've achieved and frankly it's operating as we would expect it to, given the fact that it’s only 10% of our revenue, it’s subscale from that standpoint and we are investing a significant amount in creating new products and expanding the reach of that business. So a significant portion of the decline of that business was actually due to restocking by key OEMs and we would expect that business to resume its growth over the balance of the year.

Then a final question for Greg. Greg, if I look at the OpEx guidance as a midpoint, it is roughly $2 million over from Q2 to Q3, what is driving it? Is it just the simple math of improving sales or is there more investment in R&D or something else going on?

It is largely related to continued sales. We are making some modest investments in the R&D area that are at largely variable costs, in other words, project-related costs. So we continue to be very focused on keeping the fixed costs of the business down and you think about it on the sales side, we do have variable costs around things like travel, like customer samples and so those would be the primary areas, so it would be that and project-related expenses in the R&D.

Our next question will come from Avinash Kant with D.A. Davidson and Company.

First, I don't know if Gideon broke down the unit and CapEx-driven businesses in the quarter?

The unit and CapEx-driven businesses, it was 67% unit driven, 33% CapEx driven and so our unit-driven business is up about 4.5% and our CapEx-driven business is up about 4%.

In the regions, you talked about sequential growth, but could you give us the percentage of revenues from different regions or exact revenues whichever way you want to or is it in the filings maybe?

For the most recent quarter, Asia was 39.6%, Japan was 18.3%, North America was 28.1% and Europe was 14.1%. Approximately 60% of the revenue is Asia and Japan.

Talking about, of course, what you are seeing out there in the industry, there’s been a lot of focus on how things are trending in the second half of the year and how capital spending is going to be going. Could you give us qualitatively some idea about what do you think about second half in the CapEx side of the business and how do you think about the unit-driven side of business in the second half of 2010?

On the wafers start which is really the driver for our unit-driven business, we've seen some fairly steady pace throughout Q2 and we’ve not seen any significant change in this trend going into Q3. So, if you combine that with the fact that most leading-edge fabs have been operating at very, very high capacity utilization, we also know from most of our foundry customers that 300 mm capacity was sold out in Q3 and is about to be sold out for Q4 as well. I think that that bodes well for continuous steady growth in the low single digits for the rest of the year in terms of wafer starts and therefore, unit driven for us. In terms of CapEx, obviously we take great comfort on the fairly bullish estimates provided for the second half of the year. I think my only caveat here would be really the ability of the overall supply chain and industry in general to shape and phase up the significant ramp, but CapEx seems to be fairly promising as well for the second half. We expect the second half CapEx business to exceed what we recorded in the first half of the year.

It looks like people are not talking about any kind of pushouts or cancellations, more so than is the ability of the industry to actually be able to produce enough, right?

That would be our read of the situation.

And our next question is from Timothy Arcuri with Citi.

If I look at your unit-driven business and I compare it to the wafer starts, starts are going to be up, I think as of the end of June, maybe 65% off the bottom something in that range and your unit-driven business is up a lot more than that. Certainly, there's some inventory affect there, but seems like that business has sort of begun to outgrow wafer starts a bit where they used to grow more in line with starts. Is there something specific going on there or is it merely would you attribute the outgrowth off the bottom simply to sort of a whip in the supply chain?

Number one, part of it is growth of the bottom. Because what we did see at the very bottom of the cycle was fabs doing things that were very unusual and we haven't seen them do that before, like stripping things off one line and putting them on another line, behavior that is sort of impressed in it. However, what we do see as you know about 10% of the capacity this year is 45-nanometers and below in the industry. As that increases as a proportion of total square inches over time, it’s beginning to have an impact, will have a positive impact because, number one; a lot of the new products, I would say the vast majority of the new unit-driven products we have out there actually are geared towards the advanced nodes. And the intensity of the use of the filtration and purification products at those nodes is somewhat higher. So that will be somewhat of a tailwind, I frankly expect it to happen earlier in time, but it really is sort of 18 to 24 months later because of the downturn. It is beginning to happen. The last thing I’d point out Tim, that if you look at our capital side of the business that is up four times since the bottom of the cycle. In fact, in the third and the fourth quarter of last year we actually increased our shipments to OEMs by a 100% each of those quarters, significantly in excess of what the industry saw. So that’s similar behavior on that side as well.

Gideon, you just take from the peak in your consumables revenue and you assume that it fell in line with wafer starts. It fell a bit more than starts, but if you assume that it fell in line with starts and if you grow it with starts, you are $20 million ahead of where the wafer started trends since the last peak would imply that that business should be so, is that $20 million a sustainable gap that you think will grow from here? Or is that going to actually normalize over time?

I think that some of that gap that you are identifying is related to the POCO consumable which is part of the acquisition that we made in 2008 or maybe you need to adjust your analysis with that but, beyond that, you are right, we've been gaining share and as Gideon mentioned we've been taking share at tighter geometries and the filtration products that we've been announcing in support of those most advanced processes. Specifically, if you look at our Toronto product lines which is a 20-nanometer filter which provides the best retention and the highest flow in the industry, this particular product line actually doubled sequentially from Q1 to Q2 and has had really stellar results for the last four, five quarters. We also have recorded similar wins and market share gains on our Point-of-Use filtration for photoresist applications. So overall, you're right, we've launched a series of new products over the last 18 months and they are starting to really get traction and momentum in the marketplace. How much can we extrapolate that growth rate going forward? At some point in time, the growth of those product lines would have to migrate towards the overall industry growth, but I think that we have some headroom for additional growth in the next few quarters.

Just lastly what were semiconductor revenues as a percentage?

[78%].

Our next question is from Kelly Anderson with Sidoti & Company.

Just first off in the microenvironment segment, are there any specific milestones or is there anything that we can look to gauge progress that you're making on potential share gains in 300 mm shippers?

We don't share necessarily a lot of specific milestones. I'd only say that as you know in this particular case, our objective is to regain market share in our 300 mm shippers. We have set an objective of reaching about 25% market share in the next two years. If you look at our Q2 performance, we've continued to make very solid progress towards that goal. We enjoyed solid growth and continue to capitalize on the success of our SB300 product. As you know, at the heart of the strategy, we need to qualify our product with the wafer growers. We've completed that and now we're turning our attention to work with the device makers to pull their incoming silicon wafers in our shippers and I'm pleased to report that this strategy is working. We've continued to win additional shipping lanes as we call them during Q2. So I think that we're in a very good, competitive situation as we exit Q2, but it's hard for me to really give you some specific milestones that we would be reporting on a quarterly basis.

In terms of the [Micro-E] business, is there any chance that you could sort of walk through what impact if any inventory restocking would have on that particular business or should we expect that [Micro-E] can kind of move in lockstep with changes in capital spending levels?

Yes, we have two drivers for the microenvironment business. One is still a big size of this business is relating to wafer starts. So specifically, the shipping box business is absolutely related to wafer starts and really correlates relatively tightly with wafer starts. On the CapEx side, which would be our (inaudible) or our 200 mm and below process carriers. This is a business that doesn't necessarily correlate very specifically to wafer fab equipment. As a matter of fact, it's a relatively lumpy business over time and really depends more on the new fab capacity additions. So as you start hearing positive news from all of the new projects that Gideon referred to in the prepared remarks, you should expect some positive news for our full business.

Clearly your margin execution in the Contamination Control and Microenvironments businesses has been terrific. But in terms of the Specialty Materials business, correct me if I'm wrong, but I thought at the Analyst Day someone had mentioned that at a $20 million run rate, you could possibly achieve margins at about a 20% level. Is there a piece that we're missing here? Do the margins just accelerate that quickly as you move closer to 20% or are there fundamental changes on how you operate that business that would improve the margins there?

Hey, Kelly there is really no fundamental change in how we operate the business. It is just the fixed cost portion of that business related to new business development initiatives, new product initiatives as a percentage of revenue as these lower revenue levels is higher than in the other two businesses. But that’s not a variable cost, so what we're investing in that new market development, in that business will remain constant. So there's a very significant operating expense leverage in that business.

(Operator Instructions). Our next question is from Christian Schwab with Craig-Hallum Capital Group.

Greg, on the OpEx guidance of $49 million to $50 million for this quarter, is a big chunk of that, the variable cost with getting into these new adjacent markets and is that something as a run rate that you think is sustainable for the next few quarters? Or do you think if revenues continue to march up modestly, that OpEx will follow?

There is a component of our selling expense, Christian, that's variable around things like travel and entertainment, customer samples. We do have some business that goes through manufacturers rep, so there's a small portion of the selling expenses that's variable. In a quarter like this, as we look out at what we can spend and still achieve our target model, we are making some investments in the coming quarters in some ER&D initiatives, those are largely project-related. We've made very little change in permanent headcount and continue to be very focused on keeping that breakeven level and that fixed cost structure down. But there is a variable component to selling expense.

The operating margins this quarter came in towards the highend of your target range of 15% to 18%. Is that kind of the way we should be thinking about the business? Is it kind of a steady state from this type of level as far as an operating margin?

On this level of revenue and higher, we're focused on maintaining the operating margin where we are or at higher levels.

As you look out to 2011 and speaking to your customers and the high number of new fabs that are coming in, do you guys have your own opinion in essence million square inches of wafers being produced or growth in 2011 versus 2010 as we look at your unit driven business?

We don't have a view of that simply because our business doesn't allow us to have a view of that. The narrative that is logical, the narrative that says that capacity utilization remains high and that in fact there is a need for additional capacity, particularly at the advanced nodes. And in order to satisfy that, what you have is a variety of either fab expansion or new fab projects. The number is anywhere between 11 and 13 or 14 depending on how you can cut it. And this data is publicly available. That will add as to my way of thinking and this is a personal view, sort of a legup in terms of capital spending as we go through the next sort of three to four quarters. And at the same time what I believe is happening and, I believe the industry is being reasonably disciplined about avoiding some of the same pitfalls that it had in the past in terms of double ordering and inventory buildup. So, it’s not to say that that is what’s going to happen, but if you have to ask me that’s what I believe will happen over the next few quarters.

And our next question will come from [Dick Ryan with Dougherty Brokerage].

Greg, I didn't catch your comment, there you said FX had an impact on sales. Did you quantify that? I did not catch it if you did.

I didn't but, Dick, it was about $2 million.

And looking at the non-semi space, can you give us a qualitative feel of the LED business, where it stands currently and where we could expect that to ramp in 2011.

Yes, this is Bertrand. I won’t talk about 2011. We don't have that level of visibility, but our LED and dollar initiatives continue to generate the returns that we were expecting. In some cases, actually we are ahead of our targets as we close the first half of the year. So as you know, we have invested in new markets and new applications for our core products during the downturn. We work very closely with leading customers and sponsors in those new markets, throughout 2007 and 2009 and this is starting to pay off and, again this’s not representing a meaningful portion of our revenues quite yet, but we're seeing some really nice growth and good customer reception.

(Operator Instructions). Our next question is from Steve Schwartz with First Analysis.

At SEMICON West, a number of people were talking about a capital spending shift in the near term, more towards just expanding capacity versus technology upgrades. I'm just wondering if that had anything to do with CapEx-driven sales weakening a little bit sequentially.

It's hard to know. It's hard to know. We tend to lead both on the unit-driven side, but particularly on the capital side because our components and subsystems do end up and tools that get shipped down the road. That could be an explanation. That is a logical explanation, Steve. But it is hard to pin it down specifically. It’s a reasonable explanation, yes.

Greg in the past, just recently, I think you've mentioned that the variable comp maxes out at $170 million in revenue, and I'm wondering if that cap still exists and whether or not that would carry over into 2011 or if those caps elevate?

Well, right now, our variable comp is essentially maxed out for this year. So you won't see higher levels of variable comp in the back half of the year than you saw in the front half of the year. We really haven't done any planning around 2011, so I really don't want to comment on that.

And our next question is from Avinash Kant with D.A. Davidson & Company.

Just a follow-up and wanted to check some things, so on the unit driven and CapEx driven, I believe, Greg mentioned that unit driven was 67% of revenues in the quarter and CapEx was 33%, is that right, Greg?

The unit driven was 63, the CapEx was 37.

63 and 37. Okay, okay. That was confusing me.

I do not know, if I misspoke or you misheard but it’s 63 and 37.

Because if I plugged in those numbers it would have meant that CapEx was also down sequentially.

No, no. The CapEx was up about 4% and the unit-driven was up 4.5.

Now it works out fine finally. And also when you talk about, you see a sequential improvements in the third quarter going forward. Of course you are expecting both unit and CapEx driven businesses to be up slightly, right?

I think we're saying in total we expect moderate growth. And I'd rather talk about that after the fact as to how the split is. But we're comfortable that we're positioned well on both front. And let me just clarify, we kind of went back and forth, so 63% unit driven, 37% CapEx driven, unit driven up 3.8%, CapEx driven up 4.5%.

And there are no further questions. At this time Mr. Argov, I'll turn the conference back over to you for closing remarks.

Thank you very much for joining our conference call, and we look forward to updating you in the future. Have a good day.

And that concludes today's conference. We thank you for your participation.