Good day, ladies and gentlemen, and welcome to the PDF Solutions, Inc. conference call to discuss its financial results for the third fiscal quarter ending Monday, September 30, 2013. [Operator Instructions] As a reminder, this conference is being recorded. If you have not yet received a copy of the corresponding press release, it has been posted to PDF's website at www.pdf.com. Some of the statements that will be made in the course of this conference are forward-looking, including statements regarding PDF's future financial results and performance, growth rates and demand for its solution. PDF's actual results could differ materially. You should refer to the section entitled, Risk Factors, on Pages 10 through 16 of PDF's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and similar disclosures in subsequent SEC filings. The forward-looking statements and risks stated in this conference call are based on information available to PDF today. PDF assumes no obligation to update them. Now, I'd like to turn the conference over to John Kibarian, PDF's President and Chief Executive Officer; and Greg Walker, PDF's Chief Financial Officer. Mr. Kibarian, please go ahead.

Thank you, and welcome, everyone. Overall, the third quarter of 2013 was another strong quarter for PDF Solutions. During this period, we saw continued growth in the adoption of our yield management solutions across both fabless and foundry markets. These results highlight the opportunities open to the company as the semiconductor market moves to more advanced technologies such as 3D transistors and multiple pattern -- multiple patterning processing. PDF Solutions continues to pay -- play a key role in the characterization of these new technologies across the major foundries. From a financial perspective, in the third quarter, we achieved revenue of $25.5 million and non-GAAP profit of $0.27 per share. Additionally, we had another strong quarter for cash generation. These results reflect the growing importance of PDF Solutions as a fabless foundry boundary and the successful implementation of our technology -- technologies by our clients to accelerate process yield ramps and product availability. In a moment, Greg will go into more details of our third quarter financial results. On the new business side, we have the following engagements to report, all with existing clients: an R&D engagement for 14-nanometer technology development; a 14-nanometer yield ramp engagement; a 20-nanometer DFM engagement, which is an extension of an existing Integrated Yield Ramp engagement; and a new DFM engagement with a fabless client. These engagements are indicative of the growing trend by our clients to leverage the Characterization Vehicle technology and services across the entire process life cycle, thereby improving yields and manufacturability of their designs and processes. Our 2 14-nanometer engagements are based on the extensive deep capability that PDF has gained on the 16- and 14-nanometer processes across the industry as a whole. Between our foundry, IDM and fabless engagements, we have Characterization Vehicle infrastructure at work on 5 different companies'…

Thanks, John. As a reminder, in addition to using GAAP results when evaluating PDF's business, we believe it is also useful to consider our results using other non-GAAP measures. For internal purposes, the company focuses on non-GAAP net income and EBITDAR. Non-GAAP net income excludes stock-based compensation expenses, amortizations of expenses related to acquired technology and other intangible assets, restructuring charges and their related tax effects as applicable. Additionally, the income tax provision has been adjusted in our net -- non-GAAP net income to reflect cash tax expenses only. EBITDAR is equal to earnings before income tax adjusted to exclude depreciation, amortization, restructuring and stock-based compensation. You can access the earnings press release that contains a reconciliation of EBITDAR and non-GAAP net income to GAAP results in the Investors section of our website located at pdf.com. Now, let's turn to a review of the financial results. Total revenues for the quarter were $25.5 million with an GAAP net income of $4.8 million. This resulted in GAAP EPS of $0.15 per fully diluted share. Net income on a non-GAAP basis totaled $8.6 million or $0.27 per fully diluted share. Total cash increased by $8.5 million during the quarter. For the quarter, cost of sales and operating expenses, taken together, were $17.7 million on a GAAP basis and $15.8 million on a non-GAAP basis, which is an increase in non-GAAP spending of approximately $170,000 over Q2. Overall, we are very pleased with the continuing strength in the total revenues, earnings and cash for the quarter. Moving on to revenue details. Total revenues of $25.5 million for the third quarter were up approximately $700,000 as compared to $24.8 million in the prior quarter. Total revenues were comprised of design-to-silicon-yield solutions or solutions revenue of $17 million and gainshare performance incentive or gainshare revenue…

[Operator Instructions] Our first question comes from the line of Tom Diffely. Thomas Diffely - D.A. Davidson & Co., Research Division: First, a question on the design-to-silicon side of the business. Is there some way you can give us a relative view of the size and revenue potential of the different types of engagements, the DFM engagement versus the yield ramp versus the R&D development?

Yes, I think the R&D and the yield ramp engagements are similar sized. Typically, they're multiyear engagements. And the fixed fees portions are in the multi-millions of dollars. And they'll run for 1 to 3 years. So roughly, you can kind of do the math. It's somewhere between, on the short end, 4-ish million dollars; on the high end, $12 million or $15 million over a 2- to 3-year time period. But DFM engagements tend to be smaller. As we've said before, the fixed fees on those -- in the 1-ish million dollar range, plus or minus a little bit, sometimes $2 million depending on the time period that they represent the vehicles, et cetera, and the content that's provided. And of course, typically the majority of our wafer fees come from the factory engagements so there are wafer fees associated with some of the DFM engagements, particularly around production control, scribe testing, et cetera. We're only speaking -- the yield ramp in R&D engagements are the ones that really -- or the ones we tend to focus on. They drive the majority of the wafer fees. Thomas Diffely - D.A. Davidson & Co., Research Division: Right, okay. And when you look at the actual -- the revenue from that, is it percentage of completion or milestones or equal payment?

That is generally percentage of completion. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And so that can vary from time to time as far as 2 projects can have different revenue streams?

Yes, that's true. And generally speaking, there's a lot upfront because that's delivery of vehicles and systems, right, so you've got more percent completion at the beginning of an engagement than the end. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And then when you look at some of the future growth coming from the fabless group, that's more on the DFM side. So maybe more smaller projects going forward?

Yes. Generally speaking, that's true, Tom. I mean, what we've noticed and if we look at this quarter as one of -- as another example of it, the foundries, themselves, last quarter, in the enterprise agreement, when the foundry started funding along DFM specific to their high-valued accounts, this was another example for a foundry that wanted to make sure a specific product was going to hit the time-to-market window. That -- they fund the DFM that had both improved fixed fees as well as improved wafer fees associated with it. And so they're starting to get to be bigger and more -- the numbers I gave you is kind of a historical look and getting to be better as, I think, customers, and I alluded to this in my prepared remarks, right, the specific design rule changes and all the interactions between a particular product or family of products in the technology are becoming more important for bringing up these leading-edge products. Overall, they're growing and improving in size and value to the customer. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And then from this, a margin profile of the different programs, all fairly similar?

Yes, fairly similar. Arguably, the DFM a little bit better on the fixed fees gross margin. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay, all right. And then, John, you referenced the dual decline in the gainshare portion of the business and you said that the ramp of that one customer of 20-nanometer should, and this part I didn't quite hear, did you say that you expect that royalty revenue rate to go back up again from here just based on 20-nanometer ramping faster than the rest of the business was falling down?

Yes. We get paid when they ship to their customers. So sometimes at the beginning of product introduction, they build a lot and don't ship, so you'll see the volumes come down another node as they fill up the factory on a new node. But those wafers don't get counted until another quarter later. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. Is this similar to what we saw with another customer about a year ago?

Yes. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay, all right. And then, Greg, you mentioned on the SG&A, the step-down in the operating expense there, that it was due to a timing. Does that mean it was essentially the delta there was pushed out to the fourth quarter?

No. Actually, if you go look at how we have to recognize expense on audit fees and tax advisory service fees, in the old days we used to basically take those expenses ratably across the year. With the current accounting rules, you have to recognize them as they're incurred and you tend -- they tend to be lumpy throughout the year. So if you look at Q1 was very high, Q2 was very low, Q3 is kind of in the middle. But when you compare Q3 to Q2, it's an increase over a very low Q2. And then Q4 also tends to be fairly high. So basically, it's just the timing effects. The full year number is actually right on where we expect because we negotiated that upfront 2 years ago. So the fees that we're seeing a right on our forecast. They're just timed slightly differently. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. So if Q3 is, I think, it was up Q2 from that point of view, but you still had a pretty big drop sequentially. Maybe that's what the component was then.

Yes, and that really is related to our compensation expenses, particularly related to the variable compensation structure that we have. As we've talked in the past, a large component of our compensation in any given period is variable tied directly to the -- basically tied to gainshare so that contributes a large portion of the EBITDAR. But basically, when you see gainshare drop, our viable comp will drop with it such that we can maintain our leverage at net income on a non-GAAP basis. Thomas Diffely - D.A. Davidson & Co., Research Division: Well, based on that explanation, do you expect that compensation to go up next quarter?

Well, let's put this way, I hope it goes up. As a member of SG&A team, I seriously hope it goes up. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And at some point, obviously when you negotiate with customers, it takes a while to get all the contracts in place and stuff. At some point, do you think there will be some kind of a lump sum catch-up with some of your larger customers?

As far as fixed fee solutions? Thomas Diffely - D.A. Davidson & Co., Research Division: Yes, as far as the gainshare from your products that have been produced over the last year that have come up on your lines that you worked on.

Yes, we think there will be some of that. We don't get as much information out of our customers on their end customer product ramps as we'd like. But we do see those effects flow through every now and then. And we could well see something like that happen some time between now and Q2 next year. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And then finally, Greg, you talked about the tax rate, the 15% to 17% on a cash basis; and 37%, 38% on a GAAP basis. Is that a tax rate that you think is kind of just good going forward beyond just the next quarter?

No, I think the cash tax rate will come up. We're actually going through analysis right now to say will we see a significant difference between the cash and book tax rate throughout all of next year. Theoretically, they should approach each other. But the GAAP will never completely close because you always are putting in some new timing differentials and tax credits. So I would -- we haven't done the projected rate for next year, but it will be above the rate we're at right now. My guess is this probably would be in the low to mid-20s for cash tax next year. Thomas Diffely - D.A. Davidson & Co., Research Division: And that's just the easing up of NOLs?

Yes, NOLs and other credits.

[Operator Instructions] At this time, there are no more questions.

Great. Thanks you, everyone.

Ladies and gentlemen, this concludes the program. Thank you.