Greetings, and welcome to the Kulicke & Soffa third fiscal quarter results conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Geoffrey Grande of FD. Thank you. Mr. Grande, you may now begin.

Thank you. Good morning everyone, and welcome to Kulicke & Soffa's third quarter 2009 conference call. For those of you who have not seen the results announced this morning, they are available in the Investor Relation section of the company's Web site at www.kns.com. An audio recording will be made of this entire conference call, including any questions or comments that participants may contribute. This recording may also be accessed from the Kulicke & Soffa Web site for a limited time. During today's call, we will make reference to non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP results are available on our Web site at www.kns.com. To view them, go to the Investor Relations portion of our Web site, and click on the ‘GAAP to non-GAAP reconciliations’ link. The content of this conference call is owned by Kulicke & Soffa Industries and is protected by US copyright law and international treaties. You may not make any recordings or other copies of this conference call. You may not reproduce, distribute, adapt, transmit, display or perform the content of this conference call in whole or in part without the written permission of K&S. Today's remarks are governed by the Safe Harbor provisions of the 1995 Private Securities Litigation Reform Act. Actual results may turn out significantly better or worse than indicated by any forward-looking statements that we may make this morning. For a more complete discussion of the risks associated with the operations of Kulicke & Soffa, please refer to our SEC filings, particularly the 10-K for the year ended September 27, 2008, and our other recent SEC filings. It's now my pleasure to introduce the host for today's call, Scott Kulicke, CEO and Chairman of the Board. Scott?

Thank you. Good morning everyone, and welcome to Kulicke & Soffa's third quarter 2009 conference call. For those of you who have not seen the results announced this morning, they are available in the Investor Relation section of the company's Web site at www.kns.com. An audio recording will be made of this entire conference call, including any questions or comments that participants may contribute. This recording may also be accessed from the Kulicke & Soffa Web site for a limited time. During today's call, we will make reference to non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP results are available on our Web site at www.kns.com. To view them, go to the Investor Relations portion of our Web site, and click on the ‘GAAP to non-GAAP reconciliations’ link. The content of this conference call is owned by Kulicke & Soffa Industries and is protected by US copyright law and international treaties. You may not make any recordings or other copies of this conference call. You may not reproduce, distribute, adapt, transmit, display or perform the content of this conference call in whole or in part without the written permission of K&S. Today's remarks are governed by the Safe Harbor provisions of the 1995 Private Securities Litigation Reform Act. Actual results may turn out significantly better or worse than indicated by any forward-looking statements that we may make this morning. For a more complete discussion of the risks associated with the operations of Kulicke & Soffa, please refer to our SEC filings, particularly the 10-K for the year ended September 27, 2008, and our other recent SEC filings. It's now my pleasure to introduce the host for today's call, Scott Kulicke, CEO and Chairman of the Board. Scott?

Thanks, Geoff. Good morning and welcome to our call, the purpose of which is to discuss K&S's financial results for the June 2009 quarter. The semiconductor industry has improved significantly over the last few months. Increases in IC unit output have driven improvements in our customer’s capacity utilization, which in turn has driven increased demand for both our equipment and our expandable tools. As a result, our revenue in the June quarter was roughly double that of the admittedly very low March quarter. We expect this momentum to carry into the September quarter, and are forecasting revenue to again increase to between $85 million and $90 million. Before we focus on some of the financial details of the quarter, I would like to take a moment to comment on our recent announcement about Maurice Carson, who will be leaving K&S next week to take the CFO position at Actel. Maurice has been a major contributor to K&S over his six years as our CFO. We will miss him, but understand his wish to move back to California. Mike Morris will be replacing Maurice as our interim CFO. Mike has been with K&S since 2006 serving as treasurer and also overseeing all our financial planning and tax functions. With that I will turn the call over to Mike.

Thank you Scott and good morning everyone. I'm pleased to be here this morning to discuss our June quarter results. Our remarks today will include non-GAAP measures as a supplement to our GAAP results in order to provide a better view of our financial performance. The items we exclude to determine our non-GAAP measures are explained in our earnings release and are also provided on our Web site. As was the case last quarter, all operating results associated with our former wire business are reported as discontinued operations and are not included in the current or prior quarter's discussions. On today's call, I will compare the June quarter to the March quarter, and will refer to non-GAAP numbers unless otherwise noted. Finally, please note that the September quarter is a 14 week quarter. Net revenue from continuing operations for the third quarter was $52.1 million, up $26.9 million from last quarter. Volumes were up across all of our product lines, except die bonders. As you will recall, we launched our new iStack die bonder last March, and are currently facing out our legacy models, which explains the reduction in volume. Ball bonder and tools revenues rebounded sharply from last quarter. Ball bonder unit sales were weighted towards subcontractors that comprised 71% of our ball bonder shipments. Gross profit was $19.7 million, up $11.6 million from last quarter. Our gross margin was nearly 38%, up 585 basis points. The improvement in gross margin was driven by increased ball bonder and expendable tools volume. Operating expenses were $31.5 million, down $2.2 million from $33.7 million in the March quarter. Excluding the addition of Orthodyne, our cost-cutting measures have lowered our operating expenses roughly $5.5 million per quarter, and are mostly completed. Looking forward, we expect operating expenses for the September quarter to be about $34 million, an increase of $2.5 million. Most of this increase reflects $1.4 million of added costs from the extra week in this fiscal quarter. Also included are costs associated with consolidating our production in Asia, higher selling costs driven by increased revenue, and a partial salary reinstatement. Turning to the balance sheet. We ended the quarter with total cash and investments of $117.3 million, down $12.9 million from the last quarter, even with the significant increase in sales this quarter, accounts receivable plus inventory less accounts payable increased by just $1.3 million. DSO was 87 days, down from a 114 days last quarter. Scott?

Thanks Mike. The revenue growth we are experiencing has built on increasing demand across all segments of our customer base (inaudible) the memory sector. Even in that particularly hard hit part of the industry, at least some of our customers are reporting sequential improvements, but none have yet to commit to increases in assembly capacity. Of particular note is that almost 20% of the ball bonders we shipped in the June quarter were to LED customers. This is a market segment we historically didn’t serve. Starting about a year ago, we began to focus on LEDs, optimizing our ConnX bonder for these unique applications and creating a parallel distribution channel to reach these new customers. We are pleased with the incremental market share we are gaining as we penetrate this growing segment of the market. Also of note is improving strength in the power segment of the semiconductor industry. These are customers of Orthodyne who we acquired last year. This part of the customer base typically lags the rest of the industry but began to show improvement late in the June quarter illustrated by increased demand for both wedge bonders and wedges tools. While we are pleased and excited by all these positives we haven't forgotten that the global macroeconomic situation is still quite fragile. Customers are tending to order equipment cautiously waiting until the last minute to commit capital, often placing sequential orders for smaller quantities of bonders and then expecting quick deliveries. Our ability to forecast future demand remains low. The flexibility in short cycle times of our manufacturing models serves us well under these conditions. Industry improvements notwithstanding, we remain focused on shrinking our cost base. As we have previously announced, we are consolidating expendable tool manufacturing in China. Also, we are investing in manufacturing capability in Kuala Lumpur as a way of reducing manufacturing costs for our equipment. The savings from these programs have already started to kick in and we expect those savings to be fully realized in about a year or so. We will continue with programs like these as a way of executing our strategy of being the industry’s low-cost provider. That goal is coupled with a matching goal of being the technology leader in our space. Through the year, we maintained our various engineering programs and will continue to rollout those new products, equipment and expendable tools that will keep K&S in the technological lead. Like many of you, we've been through a difficult time, but the semiconductor industry is bouncing back and the current surge in orders and the consequent improvement in our financial performance indicate that we are well-positioned to take advantage of future semiconductor growth. I will take a few questions now

Thank you. (Operator instructions) Our first question comes from the line of Gary Hsueh with Oppenheimer & Co. Please proceed with your question. Your mike is now live. Gary Hsueh – Oppenheimer & Co.: Great, thanks for taking my question. Scott, just coming off of the Siliconware Precision call, they basically said that they took 90 wire bonders in Q2, 160 planned to take in for Q3. And in terms of further wire bonder expansion in Q4, they expect to add more than 160 in Q4. So is it pretty safe to say now even at this point, this early into the second half that Q4 is sequentially up over Q3? And could you basically address or talk about how the current state of wire bonders -- how that is not pendulum swinging really in the other direction here?

Okay. We are exclusively not giving guidance for Q4 right now, Gary. Yes, we have seen some customers that like SPIL who are talking about ongoing orders. But until we see purchase orders we don’t really build them into our forecast. But the pattern that is illustrated by the SPIL members you just quoted is typical of what we are seeing from a lot of customer. They are being cautious, as I said in my opening remarks. So rather than come into the traditional 300, 400, 500 machine order they are buying 50 here, 80 there, 20 here again. And they are layering the orders one on top of another. And again, I think that plays to our ability to ramp production quickly, our very short manufacturing cycle times. So we feel good about that. As for the pendulum swing comment, I am not sure I quite understand what your question means. Gary Hsueh – Oppenheimer & Co.: Well, we kind of cut off the spigot in terms of capital spending investment, expansion of wire bonders in Q1. I am just wondering if it hasn't gotten too hot or heavy in Q3 and Q4 and whether or not we are building too much capacity.

Well, the best way we can look at that, and the way we measure it is capacity utilization. Certainly, when customers cut off the spigot last fall, capacity utilization plunged from a typical trough of the cycle level in the 70% range, 70s, down to as low as 50%. It is back up to that 70, low 70% range. But people ought to understand that that is the kind of trough of cycle levels. There is still significant upside from that. And it seems to me leveling out at a level that says our customers are being quite. And again, it goes back to my comments about ordering in small tranches. They are being very careful to not over-commit capacity. They are being cautious in a way to make sure that this pendulum swing you talk about and overreaction on the upside isn't taking place. So we feel pretty good about that. But the standard caveat it is hard to forecast this industry also has to be kept in mind. Gary Hsueh – Oppenheimer & Co.: Okay. Just a follow-up question here on gross margin, in particular for the equipment segment, just felt that the gross margin in the equipment segment was just a little bit light relative to what I would have expected for that kind of revenue growth. Just wondering is this pricing pressure for more sizable orders that you put down in Q2 or is this a reflection of more of mixed shift with LED now comprising 20% of the total.

It is partly a mix shift, it's partly a customer shift. It is still not huge volumes. There's still an overhead absorption opportunity as volumes increase. Of course, there's pricing pressure, but there is always pricing pressure in this business. We have got some good competitors out there. So it is a little bit of all of those things. Gary Hsueh – Oppenheimer & Co.: Okay. And finally, just a few questions here for Mike. What should the expectation be for taxes here in the fiscal fourth? And secondly, for the residual amount of the 1% convert that is due 2010, June 2010, I'm just why that’s still classified as long term debt and not a short term debt here?

Sure. To get to the tax question, I would use a cash tax rate of 5%, a book tax rate of around 10% looking into the next question. And then in terms of the 1% note, the timing of the end of this quarter put the maturity of the note beyond one year by a few days. So, it’s still classified as long term and not in the current portion. Gary Hsueh – Oppenheimer & Co.: Okay. Got it. Thank you.

Thank you. Our next question comes from the line of David Dooley [ph], Steelhead Securities [ph]. Please proceed with your question. Your mike is now live. David Dooley – Steelhead Securities: Thank you.

Hi, David. David Dooley – Steelhead Securities: Hi, how are you?

Pretty good. What's up? David Dooley – Steelhead Securities: I was wondering if you might be able to help us a little bit with this big increase in revenue. Will all the $35 million increase I guess at the midpoint, will most of that or all of that be coming from the equipment segment or will the expandable business grow from its current level.

The expandable segment will -- most of it will come from equipment. There is also on going increases in expandable. So, both businesses are on a positive trend lines. Of course, the expendables, because they are tied to IC unit output, never move as dramatically as the equipment. But they are trending upwards. David Dooley – Steelhead Securities: Okay. What do you think -- with the $35 million of incremental revenue that you are projecting in this upcoming quarter, and the growth margin rate around 40% that you -- well, I guess you have 38%. But if you had a 40% gross margin it looks like you are going to be pretty close to a breakeven level of revenue. Does that maybe move to a $2 million or $3 million, is that kind of what we are thinking here or will margins expand further?

David, are you trying to play 20 questions to get me to give you an EPS guidance? David Dooley – Steelhead Securities: Well, just trying to figure out where the breakeven is I guess. Yes, I am beating around the bush there.

And you know, I am not going to go there. I'd also like to avoid the breakeven conversation because it has so much to do with product mix and customer mix. As I said in my opening comments, the wedge bonder side, the Orthodyne side is kicking in a little later than the ball bonder side. Those products have good margins and that will help a little bit. So there is a lot of detailed assumptions that go into any kind of breakeven discussion. I guess it’s fair to say that one way or the other, it will be in that neighborhood. But I am not going to go more detail than that. David Dooley – Steelhead Securities:

Relative revenue of ball bonders versus wedge bonders in the equipment segment. People our making hand signs at me here because I don’t know. Is it 4 to 1 or 5 –

4 to 1 I think so.

About 4 to 1 ball bonders to wedge bonders right now. David Dooley – Steelhead Securities: Okay. And the gentleman before me made the comment about the Siliconware commentary, which they were pretty clear that there were going to add a certain number of units in Q3, and then add more in Q4. And I think what I heard you say is –

Well, I sort of blanked on Gary's question and I apologize. In fact, they gave Gary more information in the conference call apparently than they are giving our sales guys, which indicates the kind of caution that they are showing us. David Dooley – Steelhead Securities: Well, Scott, it's been that way for years. They always give us the order on their conference call.

Okay, well, I guess we will give Gary his commission when we get ours. David Dooley – Steelhead Securities: Anyway, so they talked about ordering more bonders in Q4 than Q3 and gave a number of 160 in Q3. So that, of course, got everyone excited for wire bonders purchases in Q4. And what I am trying to get at is -- and I think what I heard you say is a lot of the other customers seem to be kind of having a similar order pattern where they are starting to order small, maybe getting a little bit bigger, and it looks like the number of units ordered by the subcons in Q4 would be up from Q3. Is that what you were saying or --?

I very explicitly didn't give the Q4 forecast. David Dooley – Steelhead Securities: Well, we are not asking you to guide your revenue.

Sure you are. David Dooley – Steelhead Securities: There is another segment of revenue there, right. You guys have to order wire bonders as well. So just inside the subcon segment -- well, you said that was a typical pattern, so I am just interpreting your words I guess.

I have got my General Counsel here at the other end of the table staring daggers at me. Don't give a Q4 forecast. Don't give a Q4 forecast. I am not going to give you a Q4 forecast. There is some optimism in the industry and there is some people that are very cautious in the industry. People are taking it a step at a time. We are taking it a step at a time. David Dooley – Steelhead Securities: Okay. One final thing, could you talk about what your customers’ utilization rates are currently? In fact, you mentioned the number that was dramatically lower than what SPIL just mentioned. So I just wanted to get clarification.

Interestingly, I don't have that chart in front of me. I believe it’s in the middle 70s right now. But people are looking it up for me as we – here we go – I am being handed the chart. Last week, it was actually 77, bouncing around in the middle 70s. David Dooley – Steelhead Securities: Okay. Yes, the utilization rate still was 85, moving to 95, so I guess that is why they are adding capacity.

By the way, I give this comment often and I will repeat it here. The way we measure capacity utilization may be different than they way SPIL measures it. We only look at ball bonders. So really we deal with ours almost as an analog. And it is the slope of the curves that matter and you probably shouldn't read too much into the absolute number, at least of our numbers and that may even count for the difference in how they track. We recently compared -- I recently compared ours with the LSI Research capacity, back-end capacity utilizations and again, there is kind of an offset in the absolute number because they measure the whole capacity, not just ball bonders. But they all track over time in terms of the slopes of the curves, which, again is where the power of that particular data stream is in our opinion. So the way we read it, our customers are not real tight, but they are at that level where increases in IC units require moderate levels of increases in capacity. And that is the kind of revenue streams we are seeing right now. David Dooley – Steelhead Securities: One final question. What do you think the utilization rate of the LED wire bonders are and how big of a market opportunity is that for Kulicke?

We think the LED segment takes, depending on where they are in their own cycle, I don't know that business well enough to really tell you quite how that cycle goes yet. But we think that they take a normalized couple, 200 to 300 bonders a quarter every quarter. And, say, we are just beginning to penetrate that. We are excited about it. It’s all new customer names. They are technologically interesting applications that require a different point of optimization from the bonder. What we have seen is a customer base that is not very happy with their existing suppliers and are very happy to embrace a K&S style supplier, which is a high customer satisfaction model, high technology, a lot of interaction with the customer to help them solve their process problems. We are getting a very enthusiastic reception from those customers. David Dooley – Steelhead Securities: Well, good. Congratulations.

Thanks, David. Next question?

Thank you. Our next question comes from the line of Krish Sankar with Bank of America-Merrill Lynch. Please proceed with your question. Your mike is now live. Krish Sankar – Bank of America-Merrill Lynch: Krish Sankar, I had a couple of questions. In terms of September quarter, I know you guys still shipped some older die bonders in June. How do we think of that in September? Is it all going to be mostly new? And does it impact the gross margin line?

I don’t expect a lot of die bonders in the September quarter. There will be a couple of the old ones. We are still in the qual phase for the new ones. As the new guy on the block, customers are giving us a very careful look-over before they commit to us. But so far, people are very impressed with the performance we’ve been demonstrating to them. But I don’t expect a significant amount of die bonder revenue one way or the other in the September quarter. Krish Sankar – Bank of America-Merrill Lynch: Okay. And then you had mentioned earlier that the Orthodyne customers probably lagged by a quarter or. So this (inaudible) in June was part of the cost revenue for Orthodyne?

I hope so. Krish Sankar – Bank of America-Merrill Lynch: Okay. And then another question on your cost savings, I remember last quarter you guys mentioned about a $22 million annualized cost reduction plan. Now with your revenues uptick happening, can you just update us on what the cost reduction plan is right now, and has there been any changes to that?

Well, cost-reduction plans are a little difficult for us to quantify because there are two major buckets. There is an operation expense bucket and there is COGS bucket. The COGS bucket kicks in later. Some of it doesn’t actually kick in until late in 2010, early 2011, and of course, how much we get on that is a function of revenue with the time. So I am reluctant to give you hard numbers on COGS reduction. But we think we can continue to reduce the COGS structure of both our equipment and our tools products. About the operating expense line, I am going to pass that ball to Mike and let him give you some --.

The comment I made, Krish, about the operating expenses being lower, roughly $5.5 million a quarter. That’s the $22 million that you are referring to and that’s mostly completed. Krish Sankar – Bank of America-Merrill Lynch: Okay. When I look, you guys did about 20% of your ball bonders as an LED customer. How would that dynamic change when you start moving into the September quarter?

I actually expect as a percent of ball bonders’ shipment, it will come down because we will be shipping significantly higher quantities to our more traditional customer base. Now it will come down because the denominator of that fraction will go up, not because the numerator will necessarily come down. Krish Sankar – Bank of America-Merrill Lynch: Got it. Got it. All right. Thank you very much.

Thank you. Our next question comes from the line of Lee Simpson with Jefferies & Co. Please proceed with your question. Your mike is now line. Lee Simpson -- Jefferies & Co.: Hi, good morning, gentlemen. Just a couple of quick questions if I may. Looking at the state of the evaluations, putting the evaluations aside rather, you have come to what looks like the end of a new product cycle. Does that all go well for keeping R&D at the levels that we have seen for the last couple of quarters as we look out into September and December quarters?

Yes. R&D has come down in part because we in part because we are past the prototype parts expense stage of both the iStack and before that the IConn/ConnX. Inevitably, there will be another burst of prototype parts expense associated with especially our ball bonder roadmap. But that is quarters out because we are still in the early stage of the IConn product life cycle. So, I expect you will see R&D at about this level with the significant exception that, as our financial performance improves we are going to have to reinstate the rest of the temporary salary cuts we put in place last year or earlier this year. And as we do that of course, all the operating expenses will go up some. Lee Simpson – Jefferies & Co.: Right and that sounds like a sort of mid-2010 phenomenon, is that what you're guiding to?

No. On salary reinstatement? Lee Simpson – Jefferies & Co.: Yes.

No, I think salary for all my employees who are listening in on the call, I think it will happen much sooner than 2010. Lee Simpson – Jefferies & Co.: Right. I understood. I understood. Maybe a quick one for Mike as well. I notice that, yet again working capital managed to stay just below that $80 million mark. Are you still quite comfortable with that as a high tide level going into the next couple of quarters?

No, I would expect working capital to go up as we have to find incremental account receivables consistent with the increase in revenue. Lee Simpson – Jefferies & Co.: Right, that's pretty clear. And it looks like, maybe just generally, if we (inaudible) the idea of customer caution, but the evidence seems to be in the sales basin what the implied net new orders are that there is a shift in the capacity phase for back-end ordering now. And I wonder, given the new profile that we have with Kulicke & Soffa, LED customer base, wedge bonders still to pick up, new die stack stuff to come further out. Does this actually -- do you feel pretty confident at this point that the usual up cycle of two, three quarters could actually be three, four quarters this time around.

Boy, Lee, that's -- we spent a lot of time talking about that question. And since you're relatively new to the story, you get to hear what Gary and Dave and the rest have heard for quarter after quarter. Every cycle is unique. It is difficult to sort of say, well, the standard cycle means that the following will happen over the next two or three quarters. This cycle is doubly unique because of the macroeconomic stuff that is going on and you got to be a lot smarter than any of us to forecast that. So it is plausible, but we wouldn't forecast it. Lee Simpson – Jefferies & Co.: Right. Understood. Okay, thanks very much.

And again, let me say that so much of the company's business processes are a reflection of the unforecastability of this business, the volatility especially of the ball bonder revenue stream. It isn't important -- it isn't necessary that we are able to forecast it well because we've build into all our business processes, the flexibility to rapidly turn up or rapidly turn down. The June quarter was a perfect example. I mean we didn't expect to ship anywhere near that amount of equipment as that quarter started. Customers started out being pretty cautious. They came in and they placed orders, they came in and they placed more orders. We cranked up our manufacturing machines in a way that we are uniquely able to among our competitors. We raised guidance. They placed more orders. We cranked up the machines some more. We are continuing to crank up the machine and we will go where our customers want us to go. It is why we have such high customer satisfaction numbers and such market leadership. And we will take it as far as they want to go with it.

Thank you. (Operator instructions). There are no further questions at this time. I would like to turn the floor back over to Mr. Grande and management for any closing comments you may have.

Great. Well, thank you everyone for joining us today. We appreciate your time, and we look forward to providing you another update next quarter.

Great. Well, thank you everyone for joining us today. We appreciate your time, and we look forward to providing you another update next quarter.