Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Aehr Test Systems Fourth Quarter Fiscal Year 2011 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Tuesday, July 19, 2011. And I'd now like to turn the conference over to Mr. Lasse Glassen of the Financial Relations Board. Please go ahead.

Good afternoon, and thanks for joining us to discuss Aehr Test Systems results for the fiscal 2011 fourth quarter and full year. By now, you should have all received a copy of today's press release. If not, you can call my office at (213) 486-6546, and we will get one out to you right away. With us today from Aehr Test are Rhea Posedel, Chairman and Chief Executive Officer; and Gary Larson, Vice President of Finance and Chief Financial Officer. Management will review its operating performance for the quarter before opening the call to your questions. Now I'd like to turn the call over to Gary Larson. Please go ahead, Gary.

Thank you, Lasse, and thanks to everyone for joining us today. Before we begin, I'd like to make a few comments about forward-looking statements. Please be advised that during the course of our discussion today, we may make forward-looking statements that involve risks and uncertainties relating to projections regarding industry growth and customer demand for Aehr Test products, as well as projections regarding Aehr Test's future financial performance. Actual results may differ materially from projected results and should not be considered as an indication of future performance. These risks and uncertainties include, without limitation: World economic conditions; the state of the semiconductor equipment market; acceptance by customers of Aehr Test technologies; acceptance by customers of the system shipped upon receipt of a purchase order; the ability of new products to meet customers' needs or performance described; the company's ability to maintain sufficient cash to support operations, the impact of the Japanese earthquake and tsunami upon the company's operations; the company's development, manufacture and marketing of a commercially successful wafer test and burn-in system; and the potential emergence of alternative technologies, each of which could adversely affect demand for Aehr Test products in the fiscal year 2011. We refer you to our most recent 10-K, 10-Q and other reports from time to time filed with the U.S. Securities and Exchange Commission for a more detailed description of the risk facing our business and factors that could cause actual results to differ materially from projected results. The company disclaims any obligation to update information contained in any forward-looking statements to reflect events or circumstances occurring after the date of this conference call. Now I'd like to introduce our Chairman and CEO, Rhea Posedel. Rhea?

Thank you, Gary. Good afternoon, and welcome to our conference call for the fourth quarter of fiscal 2011. Net sales for the fourth quarter of fiscal 2011 were $3.7 million, slightly higher than the fourth quarter of fiscal 2010, but down 12% on a sequential quarter basis compared to net sales of $4.2 million in the previous quarter. The net loss for the quarter was $144,000, an improvement from the prior quarter's net loss of $946,000. During the fourth quarter, we benefited from an increase in ABTS system revenues. The balance of the shipments came mostly from FOX-1 WaferPak contactors and system upgrades for wafer sort testing at NOR Flash. These WaferPak shipments indicate to us that Spansion, a key customer and leading NOR flash producer, is achieving ongoing cost and throughput benefits with our FOX full wafer contact solution. We had a number of additional highlights that I'd like to bring to your attention. First, Spansion continues to invest in upgrading their FOX-1 full wafer parallel testers and buying WaferPak contactors for new and existing devices. During the fourth quarter, we announced booking over $2 million in orders for FOX-1 WaferPak contactors and services. Second, we're pleased to report that Spansion has moved all of their FOX-1 testers from TI's facility in Aizu, Japan. About half were moved to their Fab 25 facility in Austin, Texas. Most importantly, a number of FOX-1 testers have been placed at a leading Taiwanese test subcontractor. Having FOX-1s in use at a leading wafer sort test subcon could potentially help us sell FOX-1s and WaferPak contactors to other Taiwanese IC producers. Third, we are pleased to announce on June 2 that we sold our ownership in ESA, our distributor in Southeast Asia, for nearly $1.4 million in cash. Fourth, we are pleased to…

Thanks, Rhea. As Rhea mentioned, net sales were $3.7 million in the fourth quarter of fiscal 2011, up slightly compared to the fourth quarter of the last year. For fiscal 2011 full year, total net sales were $13.7 million compared to $11.7 million in the fiscal year 2010, an increase of 18%. As you may recall, in fiscal 2010, the company sold the remainder of its Spansion U.S. bankruptcy claim, which resulted in the recording of $2.7 million as revenue related to cancellation charges. Excluding the impact of the sale of the Spansion claim, fiscal 2010's product sales were $8.9 million. And compared with that, our fiscal 2011 full year product sales showed an increase of 54%. Gross profit was $1.6 million for the fourth quarter of fiscal 2011 or 43% of net sales. This compares to gross profit of $1.8 million for the fourth quarter of fiscal 2010 or 50% of net sales. Moving on to look at operating expenses. SG&A was $1.5 million in the fourth quarter, down slightly from the prior year period. Fourth quarter R&D expense was $1.2 million compared with $1.3 million in the fourth quarter of last year. R&D spending can fluctuate from quarter-to-quarter depending on the development phase of new products. Operating expenses were reduced by $677,000 and $120,000 in the fourth quarters of fiscal 2011 and fiscal 2010, respectively, related to proceeds received from the Spansion bankruptcy claim. Net loss in the fourth quarter was $144,000 or $0.02 per diluted share compared to the net loss of $819,000 or $0.09 per diluted share a year ago. Pro forma net loss in the fourth quarter of fiscal 2011 was $609,000 or $0.07 per diluted share compared to a pro forma net loss of $614,000 or $0.07 per diluted share in the same period…

[Operator Instructions] Our first question comes from the line of Geoffrey Scott with Scott Asset Management.

Can you start off with the split between the ABTS revenue and the FOX revenue?

I would say it's probably 1/3, 1/4 of ABTS and the rest of it's FOX.

1/3, 1/4 ABTS, and the rest, FOX?

Yes.

Okay. On March 31, there was a press release which talked about an order for a FOX-15 WaferPak cartridge from a leading communications equipment manufacturer.

Correct.

And the expectation that if the eval was successful that it would relate -- it would turn into a FOX-15 order. Where are you along in that process?

So we have designed and developed, and we have the first article of that WaferPak in our hands, and right now, our objective is to try and ship it this quarter or early next quarter. So we're close.

So you're going -- you'll release [ph] the cartridge to the customer?

Correct. Actually we're going to do burn-in services here and prove it out using our system.

Okay. So the FOX systems that they're going to be using is going to be in your shop?

Initially. Hopefully that could turn into an order.

And how long will it take for that decision to be made?

It could be like -- I mean, the decision process for the order could be 3 to 6 months.

So fiscal '12?

That's correct.

Okay. Is this a -- you talked about prospects for one additional either FOX-15 or FOX-1. That was including this prospective customer?

This could be one of those potential orders, but actually, it's another customer, a larger customer opportunity, that we're working with.

I mean, are we now being optimistic because there might be more than one?

It's always better to have more than one, if you say you're going to book one. As you know, you need 3 or 4 to get 1 or 2. So, yes. We are talking to more than one. We are down the sales process with more than one.

Okay. I am encouraged by the optimism on the ABTS side. Is that kind of a correct feeling I should have?

That's correct. I mean, if you look at our strategy, it's really to penetrate more major accounts. I mean, we have Spansion, we have Micronas, but we didn't have, up until this point, a major ABTS account. And last year, we sold the first one to a -- which is a special system, to a large Japanese IDM. That system has been qualified, and now their Singapore production facility has bought one, and hopefully that's going to be qualified early next quarter, so they could start to ramp with production quantities. And then we've talked -- what we're talking about is we got a $0 PO from another large IDM, who is going to evaluate the ABTS over the next 90 days, 120 days, and hopefully -- we're confident we're going to pass the qualification, that there could be future production orders for the ABTS.

The L56i, has that been shipped to anybody else?

It was shipped to ISE, the local test lab. I think we announced that probably 9 months ago or so.

I just didn't remember if it was the same model, yes.

Yes. They're using it. And we shipped a minimized -- the same chamber but without a full complement of electronics. Over time, they've added more electronics as they started to sell more qualifications. I mean, they just -- they don't do production, but they do -- but they -- device qualifications, that -- small lots that they do for major IC producers around the valley, fab-less companies. And so they're able to sell more and more of those, and they have added more capacity. So they've got the system about half full. So they like it.

Okay. The fact that Spansion has moved the machines, some of them, to Taiwan, is that as important as I think it sounds?

Well, it's -- I mean, first of all, the systems at TI, I mean, weren't really utilized, and I don't think TI was -- I mean, that's not their business. So moving them out of TI is a positive. And whether it went to Taiwan or to Austin -- but we feel that having them in Taiwan is going to help us in our selling ability to other -- the IC producers in Taiwan, because everything in Taiwan is done through subcons. So it's always a question of what other -- when we go to an IC manufacturer, what other subcon in Taiwan has one? And we couldn't say any names. But now we can give them a name of a local subcon. They can get a reference and so on. And so hopefully, that's going to help grease the skids for future orders in Taiwan. I mean, it's just a process that gets started. So we got to get them installed, up and running and qualified.

Got it. Is there enough optimism for fiscal '12 to talk about a target revenue number for the year?

Typically, we don't give a year forecast in our...

You never have, no. And I've always asked you for one.

But as I say, I think -- we will, based on -- we're starting the year with a higher backlog. We have these -- we talked about having these 2 ABTS production accounts. Hopefully booking another -- shipping another FOX system. So our goal is to grow revenues and generate cash this year.

And is $24 million possible?

Well, for a cash breakeven, it was $5 million or $5.5 million, and you're warm.

Okay. I'm warm. I want to be hot, right? I don't want to be warm, I want to be hot.

I know. So do we. But we certainly -- we feel fairly positive about the year. Our goal is to generate cash and to be profitable at the same time.

And our next question comes from the line of John Nelson with State of Wisconsin Investment Board.

Can you give me and the listeners a little bit better idea about the competitive landscape at this time for FOX and ABTS?

Okay. There are actually a number of different products, so it's not an easy question to answer. So on the FOX, we have 2 different products. We have the FOX-1, which is a single site for wafer sort test system. So in terms of what we're doing for NOR flash, I mean, we don't feel there's any other competitors that can test as many devices in parallel as our FOX-1. There's other tester companies that have a lot of capability, but they're limited to the number of devices they can test in parallel. On the FOX-15, which is a multi-site or multi-wafer-level burn-in system, it can burn in 50 wafers at one time, right now, I don't believe there's any competitive systems, at least not that we know of. So when we move into that space, well, basically it's either a question of whether we can do it and do it at a cost-effective price, but we don't usually meet up with any competitors. On the ABTS, which is the burn-in market, there are a number of competitors in that space. So there's people that very low-cost suppliers would tend to go after the high-end segment of that market, which is the individual temperature control per device, the high-power part of it. And there, there is an entrenched competitor called Micro Controls in Minneapolis. So that's a U.S. competitor. On the other applications that we're targeting with the ABTS for memory, a DRAM production burn-in and test, there are a number of Asian competitors, some in Korea and some in Taiwan and some in Japan. But we feel the ABTS, the new ABTS-N72 that we're going to be rolling out soon, has a cost advantage and a capacity advantage and a capability advantage.

Okay. And if you're comfortable, can you give a little bit of flavor for where the R&D dollars are going?

So in the past year, I would say most of the R&D dollars were invested in the ABTS-L56i. And I did forget to mention, even though there is a competitor, MCC, we feel our system offers more capability at a lower, lower price per device. So we can be competitive on the cost front. And we've also -- a lot of the dollars were invested into the memory ABTS-N72. So those 2 products. So it's mostly ABTS was the area that we are targeting with our R&D dollars, some on WaferPak contactors and some on FOX enhancements. But probably 75%, 80% of it was on the ABTS. And this year, I think there'll probably be more spend on the FOX, improving the FOX-1 and the FOX-15. So that a lot of the technology is movable from one product to the other. So what we did on the ABTS, we'll be moving over to the FOX, improving the FOX-1 with that same technology improvement.

[Operator Instructions] And gentlemen, I show no further questions in queue at this time. Please continue.

Okay, this is Rhea. I'd like to thank you for joining us this afternoon, and we look forward to next quarter's conference call. Thank you.

Bye-bye.