Good afternoon. My name is Cara, and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter earnings release conference call. (Operator Instructions) I’ll now turn the call over to Casey Eichler, Ultra Clean’s Chief Financial Officer. Sir, you may begin your conference.

Thank you Cara. Welcome to our third quarter financial results conference call. With me today is Clarence Granger, Ultra Clean’s Chairman and Chief Executive Officer. I will begin by presenting the financial results for our third quarter and Clarence will follow with some remarks about the business. A few moments ago, we issued a press release reporting financial results for the third quarter ended October 2, 2009. The press release can be accessed from the Investor Relations section of Ultra Clean’s website along with the information for the tape delay and replay of the live webcast at www.uct.com. Together with our recently issued press release, this conference call enables the company to comply with the SEC regulations for fair disclosure. Therefore, investor should accept the contents of this call as the company’s official guidance for the fourth quarter of fiscal 2009. Investors should note that only the CEO and CFO are authorized to provide company guidance. If at any time after this call we communicate any material change in guidance, it is our intend that such updates will be done officially via public forum, such as a press release or publicly announced conference call. The matters that we discuss today include forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995 related to matters including our future financial performance, new product orders and shipments and industry growth. Investors are cautioned that forward-looking statements involve risk and uncertainty that may cause actual results to differ materially from those projected in the forward-looking statements. Some of those risks and uncertainties are detailed in our filings with the Securities and Exchange Commission. The company disclaims any obligation to publicly update or revise any such forward-looking statements or to reflect events or circumstances that occur after this call. Now let’s…

Thanks, Casey. As stated by many of our customers, semiconductor capital equipment demand began to rebound in the third quarter of 2009. What surprised us with the magnitude is the demand increase. From Q2 to Q3 UCT’s semiconductor equipment revenue increased by 95%. A small percentage of this increase was related to the completion of all of the re-work in our customer’s subsystems inventory, but most of it was due to increased demand. We also experienced a 51% increase in demand in all our other served markets As a result of this increased demand, we significantly exceeded the revenue and EPS guidance we provided at the beginning of the quarter. We anticipate further significant revenue growth in the fourth quarter again led by increased demand in the semiconductor capital equipment market. Also during the third quarter, we continue to focus on our balance sheet growing our net cash by $1 million. We accomplish this primarily through cost reduction activities. Our inventory increase of $4.5 million was primarily in support of additional shipments projected early in Q4. Additionally, we enhanced our strategic position in Asia through the lease of a manufacturing facility in Singapore and the purchase of facility related assets. I’ll now provide further details on our activities and accomplishment. During the third quarter, we continued our cost containment activities with nine shut check down days. In the fourth quarter, we are planning three shutdown days during the year end holiday season. Also during Q3, we maintained across the board pay cuts ranging from 7% to 22%. These pay cuts were eliminated at the end of Q3 with all employees returning to full salaries at the beginning of Q4. I want to take this opportunity to thank all our employees for enduring the financial sacrifices that were imposed upon them…

(Operator instructions). Your first question will come from Edwin Mok - Needham & Company. Edwin Mok - Needham & Company: First question I have is on the non-semi group, it looks like it actually had pretty strong growth as well, and I think you said 51% sequentially. Can you help me out with in terms of which area that you see maybe stronger strength over other areas, maybe weaker?

Edwin this is Clarence. We saw a very strong rebound in the medical portion of our business. As I think I mentioned in the last quarter, we had actually seen a little bit of a slowdown in the medical side. We saw a significant recovery on that side. We’re seeing a good recovery and flat panel, and the research with FEI continues very strong. I would say the only weak area that we’re experiencing is still on the solar side. We’ve seen very little, it’s coming up a little bit which is the percentages is a very large number, but the magnitude of the overall revenue in solar is still very, very small for us. So that’s the area that’s hurting most, all the others seems to be making a good rebound. Edwin Mok - Needham & Company: Any of these non-semi customers were 10%, and customer if so is it possible for you to give us how much the business was?

My sense would be that there will be one customer that’s non-semi that will be more than 10%. Edwin Mok - Needham & Company: Can you tell us how much?

I would say that they are probably roughly 14% or 15%. Edwin Mok - Needham & Company: Then if you look out in the fourth quarter, you expect similar to the non-semi piece may, is growing but maybe not as much as your mid point of guidance, where it’s just semi piece part all grown in the guidance, is that fair to describe it that way?

Yes, that's there Edwin. We’re continuing to see the greatest percentage growth in semiconductor, obviously semiconductor went down further and so it seems to be balancing up a little more in the other area. Edwin Mok - Needham & Company: It seems like a lot of your customer, you have to suggest that they have better visibility in the first half of 2010. The second, visibility translate to you guys or are you guys still pretty short in terms of the visibility the following quarter or how do you look at that?

We don't think it's appropriate to give guidance beyond one quarter, but we do have visibility. Because what we build is highly customized for each of the end users. So if we’re building a tool for Novellus, say and the end consumer is Samsung we will know that, or if the end customer is Intel or IBM, we’ll know who the end customer is because of the degree of uniqueness associated with our subsystem. So we typically get our customers build schedules as far out as they go. So in some cases they go out six months, obviously within the three months window they are more accurate, but we typically get some level of visibility out beyond one quarter. Edwin Mok - Needham & Company: And then finally on the OpEx?

I’m sorry, what was the OpEx question. Edwin Mok - Needham & Company: The question was, just given that some of your expenses are coming back, obviously it was a temporary measure, how do I look at your OpEx line going forward?

I think we are going to have the same impact that you’re going to have across the company related to the payroll. We are looking very closely at being the payroll that we’ve had reduced it’s, now being returned to clearing stock as well as mandatory time off. I think you might see a slight increase in the OpEx related to volume and to obviously the pay and the mandatory, but we are working very hard to continue to hit the targets that we talked about last quarter, and I don’t see a big change to that. Edwin Mok - Needham & Company: Is it fair to say that, I mean you used to have like $8 million, $9 million per quarter of OpEx when your revenue level was like $100 million plus level? Is it fair to say that OpEx could go back to that level or is it going back to that $100 million plus?

That is absolutely correct Edwin. So one of the things we’ve done is modify our business structure. I mean if you take a look at the Q3 comparison, and Q3 of last year, we had $60 million in revenue and we actually had a loss per share of $0.09. This year Q4 if you take the midpoint of our guidance, it’s roughly $60 million, and we’re saying we’ll have a profit of $0.02 to $0.03 on that, and that’s a mid point. So you can see that there has been a structural change that’s factoring people being back at full salaries and taking just a nominal number of shutdown days around the holiday season. So that should be a steady state ongoing operating expense level, reasonable operating expense level. So we’ve reduced it dramatically from where it was, and I would expect it to stay down. Obviously as we grow more to $100 million it will increase somewhat, but it will still be significantly lower than it has been in the past.

Yes, the obvious places are again around the pay cuts being returned in the mandatory time off. Obviously, the more you sell the more commissions you have. So there are impacts to the growth that, but what Clarence is saying is, it was very, very difficult for the team here to get to those levels, and we’re going to look at that very hard as things start to ramp, and see how we can do things more efficiently and more effectively versus just retuning back to the operating structure that we had there before.

Your next question comes from Jay Deahna - J&K Securities. Jay Deahna - J&K Securities: Following up on that last line of questioning, it’s obvious that the leverage effect is a little muted here in 4Q because of the mew manufacturing facility and bringing the compensation back, fewer shutdown days. As you move through 2010, if your revenues grow sequentially each quarter, would it be fair to assume that the operating leverage effect going positive would be a little more rapid than coming off of a lower than normal cost basis?

Sure, Clarence has talked I think quite a few times in conferences about, we tend to recover a little more quickly when things start to ramp up, than kind of the broader semi cap equipment market. As you recover, ramping those expenses does delay a little bit on the way up, and so, you’re going to see some leverage from the recovery, and especially as your moving from 23 to 41 and into our guidance next quarter. You’re going to see some increased leverage for a while in that model and I think that’s going to carry into 2010.

Let me add to that Jay, this is Clarence. So obviously we do expect to see significant growth as we move forward in terms of the drop through the bottom line, and we think we’ve done pretty well on that in Q3, if you compare it to where we originally thought we were going to be. But I would make a comment. You mentioned returning salaries and reduced time off, and your also mentioned the new facility. The cost in the new facility is not huge, it’s pretty small cost, and we think the incremental business that we are picking associated with it, will more than offset the cost of that incremental facility. So that will not be a burden on our cost structure rolling forward.

And in fact long term will be very helpful. Jay Deahna - J&K Securities: Okay, and can you refresh us on what your GAAP and non-GAAP breakeven points are now, and what are your upside cyclical gross and operating margin targets?

If you look at our gas and non-gas business as Clarence about the… Jay Deahna - J&K Securities: No, GAAP.

I’m sorry, sure. On a cash basis, we didn’t talk to that, because we really haven’t changed our expectation there. We had said mid-40s for our cash flow breakeven and mid-50s for our profitability, and I think as you can see in our guidance we are holding to that, even though we have some of these expenses coming back. So we continue to feel that we can breakeven and get to profitability at the prior levels that we talked about last quarter. Jay Deahna - J&K Securities: Obviously breakeven is mix dependent, so would you say from your equipment being a little bit on the higher end of normal as percentage of the mix, is that good or bad?

Actually it’s pretty neutral Jay. This is Clarence. We get pretty much the same margins over time with all of our customers in virtually all of our industries. It tends gravitate to a level that seems to be pretty much consistent in terms of what customers are willing to pay for outsourcing services, and obviously we provide a little more than just a traditional contract manufacturer and that we do engineering activities and other similar kinds of things that bring a little more value adds, but that seems to be consistent in terms of what our customers are willing to pay for that service.

What you do see as we talked about in the past is, as you get a more mix going to Asia and that’s China, as well as the new facility we talked about in Singapore, you tend to get better margins as you get increasing concentration of revenue coming from those low cost regions. Jay Deahna - J&K Securities: So, as you increase your revenue from Asia, this cycle versus last, you still expect your kind of normal or upside revenue run rate margin to be higher than last time and if you could just refresh my memory on what those targets are?

I think when you get out into the cycle, depending on the mix that you’re going to have, your gross margins are probably in the 15% to 18% range, and I think your bottom line is probably in the 8% give or take range depending on the mix that you have in Asia.

So, one thing I would add to that Jay is, I am more confident than ever that we’re going to see a significant shift to Asia over the next two to three years. So up until now we’ve been shipping in the range of 15% to 20% out of our Asian facilities. I absolutely believe within the next two or three years more than 50% of our revenue will come out of our Asian facilities which will have a net positive impact on our overall gross margin. Jay Deahna - J&K Securities: Okay. Now, when Casey said 15% to 18% gross margin objective range, I didn’t quite catch what he said, I thought he said a single point instead of a range, is that right or is that wrong?

I said approximately. We’ve talked in terms of 6% to 8%, and so depending on where we are in the cycle and where we are in the mix, that’s probably a range. We would hope to get closer to the 18% in Asia and 15% in the US on the gross margin side. Jay Deahna - J&K Securities: That’s fine. Clarence, when you were talking about expectations for this cycle versus last cycle, and you ran through that math and came up at $600 million, which is one of the half times bigger than your last peak. Was that predicated on business that you have today and design wins that you already have that is not yet ramped, and does that not include incremental design wins that may occur over the next year or two?

You are correct, that does not include incremental design wins. That includes where we think we are, what parentage of our business is already expanded from GAAP delivery to other modules and semiconductor, the additions with FEI, the additions with the Orbotech. So, if we were to bring on some new customers, say in other areas, we still are hopeful that we’ll see some growth out of the solar side. So as we are able to identify new customers and new product opportunities that would be further potential for upside. Jay Deahna - J&K Securities: Okay, and the last one for me is relating to that. You did say in your prepared comments that your sales pipeline was pretty good. So I presume that there are still incremental opportunities with existing customers and some other customers out there. So where do you stand with all of that? I mean is there other intuitives or variants or FEIs or part time dynamics floating around out there, kind of characterize the sales pipeline, and if any of that will transition up that revenue in 2010 or 2011?

Sure. First of all l wouldn’t’ say there is any FEIs out there right now, there maybe but we don’t see on the immediate horizon. I would say that there are lots of little opportunities, by little I’m hoping things that could be $5 million or greater with several of our customers, those would be incremental. I was frankly hoping to have some in this quarter. I think maybe some of that ended up being timing associated with our customers or maybe the impact of the ramp slowing their ability to transition products down, but I’m very comfortable that in 2010 we’ll see quite a few new opportunities that will be incremental to our existing business. Jay Deahna - J&K Securities: Great, and I actually did have one last one there. I don’t know if I’ve ever seen a company deliver positive cash flow at 78% sequential revenue growth, that was pretty impressive. What were the tricks pulling that off, and going forward, given your expectations for growth sequentially over the next several quarters, do you expect to continue to be cash flow positive?

One of the things that we do, and then I’ll let Casey add on, but we are a fairly quick turned business. So we can typically time from receipt of order till shipment to delivery, and be typically in the four maybe six weeks range; it’s getting closer to four weeks. So we can typically turn things fairly quickly. So our customers give us an order, we have a relationship with our suppliers where they can provide us products, raw materials typically within two or three weeks. So we don’t end up with large increases in inventory that are sitting on our shelves for extended periods of time. So we have traditionally been able to generate cash, both in good times and bad times. Obviously none of us have ever seen as bad a time as in these last couple of or the early part of this year, but typically we’ve been able to generate cash in good times and bad times, and our expectation going forward into 2010 is that we will be a cash generator, Casey, did you have?

No, I think that covers it pretty thoroughly. Obviously we had a build in AR and AP that you would expect in particular. As I referenced, towards the end of the quarter we had a quite a bit of AP that obviously the product may not still be here, might have shipped, but we haven’t paid down the AP. So there are ebbs and flaws. I think Linda and the team here have done a good job of cash management back through the real severe downturn. Now as we are going back up we are not losing out the focus on watching and monitoring and maintaining cash. So it’s what kept the good companies alive through the downturn and I think it’s what helps still companies in the up turn.

I got one last point on that. Just to let you know, we are expecting a tax refund in Q1 of 2010, that should be somewhere between $3 million and $3.5 million. So that will be incremental cash for us.

(Operator Instructions) Your next question comes from Tim Summers - Newbridge Securities.

Are you guys seeing your OEMs pull any business in from their first-quarter billed plans into the back half of this year, specifically the fourth quarter?

Not that I am aware of right now.

Obviously you’ve seen a fairly steep ramp in 3Q and 4Q business; are you seeing business in the first quarter or the first half of next year ramp in an increasing rate as well or is that kind of leveling out?

It’s a little too far for us to project forward Tim, but I would say it’s definitely not decreasing in that time period. It’s a little early for it to fill out, so it’s hard for us to know how it’s going to fill out and certainly not beyond Q1, but we are optimistic about Q1.

Secondly, you mentioned that you are going to be taking three shutdown days in 4Q. In sort of a normalized life business environment, how many do you normally take?

Yes, that was what I was going to point out, that this is the return to normal situation. So for those who had looked at the calendar, I think Christmas this year is on a Friday and New Year is on a Wednesday or Thursday. So we are talking about taking off three days between those two periods, and we will still have people working that are working on critical projects; that’s a normal mode of operation for us at this time of the year.

Your next question comes from Edwin Mok - Needham & Co. Edwin Mok - Needham & Company: A quick question on FEI; you mentioned that you expect to hit the $10 to $15 million half year. Do you have any idea, and you have talked about increased opportunity there. How do you look at that company or how does that business go into 2010? Obviously there is a very steep ramp, and it’s kind of hard to kind of get addition in ‘10, can you help us out with that?

I don’t know what I can do to help you out Edwin. This Clarence again. I guess the way you can think of it is, we didn’t start business with them until Q2. So the $10 million to $15 million that we are talking about is spread over three quarters instead of four. So you can assume that we’ll do at least one quarter more than what we are talking about, an extra $4 million or $5 million. So you can assume $16 million to $20 million with the steady state that we already have. Last quarter I mentioned that we had, I think it was an extra $4 million to $5 million per year with them in a new award that we received, so you can assume of $20 million to $25 million with the current business that we’ve already received from them. Obviously I haven’t made any announcements with other new business, but we are certainly hopeful of getting new business with them. Edwin Mok - Needham & Company: Then on intuitive, I think you guys have announced before that you’ve got one extra module, can I ask if that helped you on this quarter, did that module start to finally start to ramp you guys this quarter, can you help me out with that?

Sure. That extra module that we received from intuitive surgical is a cleaner module. So it actually cleans the surgical tools, it’s an ultrasonic cleaner. The volume on that has not significantly ramped at this point in time. So that was not a factor in our increased revenue with them in this past quarter. We are still hopeful that they’ll gain significant market acceptance, but it has not yet happened.

(Operator Instructions) Your next question comes from Jay Deahna - J&K Securities. Jay Deahna - J&K Securities: First of all on intuitive surgical, where do you stand in their manufacturing packing order? Are you their largest manufacturing partner or in the top three?

We make a 100% of the robot, the patient side robot. So they have two major consoles, they have the doctor side console, essentially the joy stick controllers and video displays, and then they have the patient side console which is the robot. So I’m not sure what the revenue split is between the patient side console and the doctor’s side counsel. We have a 100% of the patient side console. So we are either number one or number two of their largest suppliers. If we are not number one we are very close to it. Jay Deahna - J&K Securities: I see, and are they telling you anything about the rate at which they are seeing their machines purchase for new types of surgery that weren’t done before?

They aren’t talking about the rate, they have told us that they were recently qualified for heart repair surgeries, which is a relatively new thing for them, but we have not been told what the rate of acceptance is. Obviously a key part of their objectives is to try and find greater applications and to expand internationally. Jay Deahna - J&K Securities: Then second topic, are you actively hiring new people in manufacturing today in all regions, and did you acquire people in Singapore?

It was a small number of people in Singapore, less than 20 people in total, so there was some add there, but it was a very small group. In the US we ended last quarter at about 387 and we ended this quarter at around 454 people. So we have been adding people both full time and temporary as we ramped our manufacturing. I don’t know if Clarence mentioned this, I don’t think he did, but we’ve taken everyone back that we had on Furlough and so we don’t have anyone left on Furlough and so that was obviously that was where we went first. Jay Deahna - J&K Securities: Is your headcount going to be higher at the end of 4Q than it was 3Q?

Yes. Jay Deahna - J&K Securities: Okay, so obviously that’s starting up for something at 1Q. Okay, so then the last question is, are you looking actively at any acquisitions right now or conversely is anyone looking at you, because I noticed some of the big US EMS companies are looking to do more business with smaller customers, and you have a pretty interesting niche EMS companies, so all of a sudden you might be in that wheel house; just wondering if you are seeing any overtures from that perspective.

Obviously we are not going to make any comment about anybody or any overtures out there. On our front we’ve said last quarter and I think we would continue to say this quarter, that we continue to look at growing the business both organically and non-organically. So we are always looking at ways to build the business in the accretive way and we will continue to do that, but on people looking at us, I really can’t make a comment. Jay Deahna - J&K Securities: And then last question Clarence, do you still have that same methodology and acquisitions, I think you have like a two or three point.

Sure. Our philosophy is it needs to the immediately accretive, it needs to add to either our customers or capabilities, and it needs to be of reasonable size. So those are pretty much our criteria, we are very consistent with those. We do think as you know, we did an acquisition in the middle of 2006, that has been very successful for us. Financial times have been difficult, we are I would say out of that situation, and so we are in a better position should a good opportunity come along to be able to execute on that.

And there are no further questions in the queue.

All right. Well, I would like to thank everybody for joining the call today. If there are follow-up questions, I’m happy to try to answer those in the future and on behalf of Clarence and I appreciate the interest. So thanks again.

This concludes today’s conference call. You may now disconnect your line.