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FormFactor's CEO Discusses Q2 2012 Results - Earnings Call Transcript

The company assumes no obligation to update the information provided during today’s call, to revise any forward-looking statements or update the reasons, actual results could differ materially from those anticipated in forward-looking statements. For more information, please refer to the Risk Factor discussions in the company’s Form 10-K for the fiscal year 2011, as filed with the SEC, subsequent SEC filings and in the press release issued today.

With that, we will now turn the call over to CEO, Tom St. Dennis.

Tom St. Dennis – Chief Executive Officer

Good afternoon. During the second quarter, FormFactor experienced a strong recovery in orders and revenue relative to the first quarter of 2012. The increased demand was led by both our DRAM and flash customers. We achieved record shipments of our matrix product line and now have over 1,400 cards shipped.

Gross margins, as a percent of revenue, were the highest since the fourth quarter of 2007, reflecting continued improvement in our manufacturing operations and supply chain organizations. Orders for the second quarter were also the highest since the fourth quarter of 2007, as we have continued to improve our market share with key customers.

Lastly, our cash flows from operations were positive in the quarter. All of these were important milestones for the company. We continued our product development and customer evaluations of our next generation matrix products in Q2 with three customers, and we expect to complete the evaluation phase with all three customers during Q3 with revenue beginning in Q4.

Our vertical SoC product development is continuing with our focus now on customer-specific designs versus engineering test vehicles. We expect to ship the first complete card for customer testing later this quarter. Similar to Q3 last year, we have recently seen a significant slowdown of orders for DRAM probe cards. The 10% decline of DRAM spot prices since May of this year along with slower personal computer sales appears to have reduced our customer’s demand for DRAM probe cards. In the NAND flash and NOR flash markets, price drops for NAND flash and overall volume decreases have reduced orders for our probe cards in these segments.

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