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FormFactor's CEO Provides Q2 2012 Mid-Quarter Update (Transcript)

Michael Ludwig

Thank you and then good morning. As Tom mentioned strength in DRAM probe card demand came from customers seeking shipments of orders that have been anticipated for the second half. Additionally, our reduced lead time has allowed the company to compete more and win additional DRAM and complex Flash memory opportunities at certain customers. Overall we are seeing positive impacts to our Q2 revenue outlook.

We expect Q2 revenues to increase to $50 million to $54 million, higher than our previous Q2 revenue guidance of $43 million to $47 million. We expect revenues to increase in both DRAM and Flash Memory markets compared to the first quarter of 2012 levels.

Given the new revenue guidance, we expect non-GAAP gross margins to be in the range of 26% to 28%, compared to our earlier guidance of 22% to 24%. Non-GAAP gross margins are being positively impacted primarily by higher absorption of fixed costs and direct labor from higher revenue levels. Our non-GAAP operating expense guidance remains unchanged. We continue to expect Q2 non-GAAP OpEx to be roughly equivalent to the amount expensed in Q1 2012.

Higher receivables and inventory expenditures from increased revenues will be offset by increased collections[ph], resulting in a cash burn of $4 million to $6 million excluding stock repurchasing.

Our visibility is so limited with respect to Q3therefore we will not provide any guidance with respect to Q3 2012 until our second quarter earnings call at the end of July.

With that let’s open the call for Q&A, operator.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question is from Terence Whalen from Citigroup, your line is open.

Wenge Yang – Citigroup

Hi, this is Wenge Yang for Terence, thank you for taking my question. First of all regarding the DRAM strengths, could you comment is this more a seasonal factor or do you see some secular change in the shift from PC to mobile, that is at the last not more than one to two quarters?

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