Ladies and gentlemen, thank you for standing by and welcome to the SST second quarter 2009 earnings results conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Chief Executive Officer, Mr. Bing Yeh. Please go ahead.

Thank you all for joining us today for SST's second quarter 2009 conference call. I am Bing Yeh, Chief Executive Officer. With me today is Jim Boyd, Chief Financial Officer. Jim will begin the call today with a financial discussion. Following that, I will discuss the status of the company and the current market conditions. Then, we'll open up the call for questions and answers. Jim?

Thank you, Bing. During the course of this conference call, we may make projections or other forward-looking statements regarding the flash memory and non-memory market conditions, the general economic climate, the company's future financial performance, the performance of our new products, the market's acceptance of those new products, the company's ability to bring new products to market, the company's ability to develop new technologies, the company's ability to secure manufacturing capacity, inventory levels, ASPs, margins, cash flow and cash balances, and our tax provision and expected tax rate, and other items as may be appropriate. Please keep in mind that these statements are predictions and that actual events or results may differ materially. Please refer to the company's annual report on Form 10-K for the year ended December 31st, 2008 and other filings made with the SEC for additional information and risk factors, which could cause actual results to differ materially from our current expectations. Now, our second quarter 2009 financial results are as follows. Net revenue for the second quarter were $58.1 million compared with $50.1 million in the first quarter of 2009 and compared with $83.7 million in the second quarter of 2008. Product revenues for the second quarter of 2009 were $51.8 million compared with $38 million in the first quarter of 2009 and with $71.1 million in the second quarter of 2008. Licensing revenues for the second quarter were $6.3 million, which compared with $11.3 million in the first quarter of 2009 and with $12.6 million in the second quarter of 2008. There were no upfront license fees in the second quarter of 2009 compared with $1.5 million of upfront license fees in the first quarter of 2009 and compared with $850,000 in upfront fees in the second quarter of 2008. Segment revenues for the second…

Thank you, Jim. After hitting bottom during the month of January our product shipments rebounded the momentum continued into the second quarter. The inventory replenishment coupled with modest improvement in demand accounted for better-than-expected product revenue in the second quarter. However, our licensing revenue declined significantly in the second quarter as expected, reflecting the decline in our licensee's business in the first quarter. We expect our licensing revenue to rebound in the third quarter, following the same recovery pattern as our product revenue in the second quarter. Market conditions remain challenging in the memory space as there continues to be uncertainty over the macroeconomic environment, resulting in poor visibility and continued pricing pressure. We continue to experience ASP declines, particularly in commodity memory. Although the rate of decline is improving, this drop in ASPs is a result of both weak end market demand and manufacturing overcapacity in our industry. While it is likely that the memory improves modestly for the rest of this year, capacity is so plenty for – that the pricing environment continues to be challenging. And we believe that it may strengthen even as end demand returns, until fab utilization comes back to a healthier level. Given these difficult conditions, we are taking a fresh look at every aspect of our business and are focusing our resources on areas of our business that will yield the most impact over time, creating additional opportunity without additional R&D expense in the near term. These efforts include a targeted approach to product development that emphasizes non-commodity with differentiated features, new programs to enhance our licensing business, and continue to focus on cost control as well as inventory and cash management. By leveraging our core competencies and improving the efficiency of our efforts, we believe that we can move closer to…

(Operator instructions) And no one is queuing up for questions. Please continue.

Okay. Thank you for participating in this conference call. As always, feel free to contact Leslie Green, Investor Relations; Jim Boyd or me directly if you would like to arrange a call or a meeting. We thank you for your continued interest in SST.

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