Ladies and gentlemen thank you for standing by. Welcome to the MKS Instruments third quarter earnings conference call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This conference is being recorded today Wednesday, October 22, 2008. At this time, I’d like to turn the conference over to Ms. Jonna Manes, Director - Investor Relations; please go ahead ma'am.

Thank you. Good morning and thank you for joining our earnings conference call. Earlier this morning, we released our financial results for the third quarter of 2008. You can access this release at our website, www.mksinstruments.com. As a reminder, various remarks that we may make about future expectations, plans and prospects for MKS constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in today’s press release and in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2007 and most recent quarterly report on Form 10-Q, all of which are on filed with the SEC. In addition, these forward-looking statements represent the company’s expectations only as of today. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. Any forward-looking statements should not be relied upon as representing the company’s estimates or views as of any date subsequent to today. Now, I will turn the call over to Leo Berlinghieri, Chief Executive Officer, and President of MKS.

Thanks Jonna and good morning everyone. Thank you for joining us on the call this morning. I’ll give an overview of the third quarter, our growth strategies and outlook. Ron Weigner, our Chief Financial Officer, will review our financial results and guidance and then we’ll open the call for your questions. Despite an increasingly difficult environment, we generated third quarter results within our range of guidance. We continue to penetrate the high growth solar market and this progress reduced the impact of lower spending for semiconductor capital equipment in a cyclical downturn. Third quarter sales declined 8% sequentially to $157 million and non-GAAP were $0.18 per share. Our cash position remained strong. We generated $19 million in cash from operations and finished the quarter with $257 million in cash and investments. Demand for semiconductor capital equipment continued to soften in the third quarter as the industry faced challenges that included over supply in memory devices, lower spending by fabs and lack of foundry investment. Our sales to semiconductor OEMs declined 10% sequentially as the market conditions weakened. In this period of softer demand, we are focusing on solutions for next generation tools to make OEM and fab customer successful and increase our dollar content. Our position at key OEMs remains strong and we are pleased that several new products are performing well during customer evaluations. As you know technology transitions don’t stop during a downturn. Fabs face process challenges because smaller device dimensions require new materials in more layers of material. OEMs are looking for enabling technology to solve these challenges and we are providing this technology. For example, process contamination has a large impact on yield at smaller feature sizes. In 2008, we are seeing growing market acceptance of dissolved ozone for wet cleaning at feature sizes of 45-nanometer…

Thank you, Leo and good morning everyone. Third quarter sales of $157.4 million decreased 8% sequentially, primarily a result of continued weakness in the semiconductor equipment market. Sales to other markets included 27% sequential increase in sales to our solar customers, but this was offset by lower sales to flat panel medical and other non-semi markets. Sequentially sales to OEMs decreased 10%, sales of semiconductor fabs decreased 15% and sales to other markets decreased 5%. Third quarter GAAP net income was $6.8 million or $0.14 per share, compared to $9.2 million or $0.18 per share in the second quarter of 2008. Non-GAAP net earnings were $8.9 million or $0.18 per share, compared to $10.5 million or $0.21 per share in the second quarter of 2008. In the third quarter sales of non-semiconductor markets were sales to contract manufacturers of key semiconductor OEMs decreased 32% sequentially to 3% of sales. As result of continued softening and an outlook for slower than expected recovery, we reduced our headcount in the third to 2,547 people. Third quarter gross margin decreased sequentially to 40% from 41.2%. During the quarter, we size direct labor headcount to reflect the lower sales volume, the sequential change of gross margin primarily reflects the effect of product mix, the fixed volume cost being a higher percentage of sales. As result of headcount reduction a one-week shutdown and reductions in debt discretionary spending, our total operating expenses decrease to $53 million. R&D expenses decreased $1.1 million sequentially to $19.5 million, and SG&A decreased $1.6 million sequentially to $33.5 million. Also during the quarter, we sold unrecognized the gain of approximately $500,000 on securities previously written down. Currently we do not own any other securities that we believe would be subject to an impairment and fair value. Our normalized tax rate…

(Operator Instructions) Your first question comes from Jay Deanha - JP Morgan.

You guys continue to run a tight shift and nice job in solar. Leo, since the end of these September quarter last couple of weeks or so, have you seen any change in turn it all stabilization and the forecast are continued weakness in the forecast from semi and, I was kind of shock at that percentage decline in your contract manufacturing business to semi OEMs that was down 37% in the quarter. If you think you’re getting that point now where you’re sort of looking at kind of maintenance level equipment demands of that the shipments to the semi OEMs can sort of stabilize in 1Q versus 4Q or is it still slippery, too hard to tell.

Jay, thanks for the comments. I think it’s too hard to tell so far. It’s changed so far each quarter and I don’t think anything has stabilize enough that, we can get some kind of indications of what’s going to happen beyond this quarter yet. I think that on the contract manufactures one of the things that we commented on our few of the calls is that, when there been questions around inventory and things like that. I’ve always mentioned that the contract manufacturers usually wildcard, if you know as the equipment companies changed their bill schedules they need to consume inventory, if we’re dealing directly with them we have that adjustment, if we’re dealing to contract manufacturer they have their adjustment of inventory. So they’ve always been the wildcard we’ve talked about, I suspect, I don’t have any specific number, but I suspect some of that is them adjusting their inventory. As you know they work on fairly thin margins and inventory can be a great cost to them. So, that’s my suspicion of what probably happen there. I don’t think there is anything that’s different in the dynamics of the business relative to the actual demand in the equipment. I think as far as, so far, obviously we’ve adjusted the guidance based on what we’ve seen is the trend. So, I think the guidance sort of reflects the answer to the question of, I think stabilizing or not, we’ve got a lower guidance in the previous quarter, which to us as it, it didn’t stabilized in Q3.

Okay and then a follow-up, can you expect to continue to see double digit percentage sequential growth in solar for the next several quarters, in particular is amorphous silicon starts the transition intend on junction whether there’s four CVD cluster to fab instead of one?

I think, there where we have, we’ve talked about the content being so much higher. A lot of it depends on each customer and the timing of their projects spend. If I think about it over sort of the long run, I don’t look at exactly a quarter beginning and end; my answer would be yes. We expect to see continued growth over the quarter but when you get to that larger quantity within a customer, the timing of one month could make a difference, whether its one quarter or the next in terms of when they need their product and I think that certainly there are new lines of production in amorphous silicon. So how well they can get those lines up in running, how long they can get that equipment in and utilize it, I think we will play roll in some of that timing, so I think in general we expect that the solar will continue to grow, but from quarter-to-quarter, some of that timing may effected here or there.

Okay. Then the last one a big thin film customers you mentioned in Asia, what type of thin film was that?

That was amorphous thin film.

Your next question comes from Brett Hodess - Merrill Lynch.

Leo, as Jay mentioned you did have a very good cost control in the quarter and so I’m wondering as you look into the downturn here, given the gross margin guidance in the quarter. How much more room do you think you have, if revenue stay down in this low level or may be even a little bit lower to take cost down, and where do you think breakeven is now. Can you give us some color on that?

You know Brett is given here in the guidance, we saying that our breakeven at present is about a $130 million and certainly, we have a list of action items that we could take to further reduced our cost structure. It probably wouldn’t be some of those are could have a fairly good impact, but it wouldn’t be appropriate to discuss those actions on this call, until we actually take any actions to further reduce cost.

But you could take it lower? Thanks.

We could take it lower than the 130 and right now our cash breakeven is above 120 in a quarter.

Okay and then second question. When you look at your sales directly to the semi OEMs where you commented that you usually see some inventory correction impacting your thing slowdown, we have been in a weak environment for a quite allow, as your sense that there is still inventory reduction going at you direct OEM customers or you just seeing the actual demand pull at this point?

I thought that was the case last quarter and I think lot of it depends on stabilization of their schedule. So what we where, if you remember what everybody was taking about last quarter was sort of bottoming of orders and stabilization of output our sales in the fourth quarter and then maybe some growth in the first quarter, it seems like a long time ago but if their schedules decreased, which I think there is some questions mark whether their schedules decreased in the fourth quarter and when they recover each time they decrease there is an opportunity to consume inventory and make that adjustment before things stabilize, where we get that little bump up. So we probably have more to go is my guess before that trickles backup again.

Your next question comes from Jim Covello - Goldman Sachs.

This is [inaudible] for Jim Covello. I have a couple of questions, first question is on Q4 revenue guidance. Just wanted to get a sense of how you think about it, in terms of your semi business versus the non-semi businesses?

One of the comments was that obviously we expect semi to decrease fairly significantly. Ron had mentioned on the call that he thought also non-semi would go down as well and I think part of that is, we obviously have some higher growth non-semi areas, but we also have $280 million to $290 million per year of non-semi, there is large portion of that that could be effected by the macroeconomic conditions and so, with this environment that we’ve been in and I think our belief is that some of those projects will be delayed and there will be reduction there. So, overall we expect both semi and non-semi down, but obviously semi would expect to be down more.

And then the solar business is that I mean that you should continue to grow in next quarter?

We would expected to continue to grow, but the comment I made on the previous question was that, as you get into some of these larger orders, which give you the ability to grow two and three times year-over-year. The timing of those orders can change by month or two in effect, whether it's in one quarter or the next.

Okay. That make sense, and just as you think about, your solar revenues over the next couple of quarters. Are those primarily coming from your existing customers? We know their build out plans etc. Are you expecting some new customers there as well?

I’m just going to guess, that we have one of the most diverse and extensive customer basis in solar. We have over 100 customers in solar. So they probably had many that we don’t know about we’re not solar to, we are constantly trying to gain content on those solar tools with design wins getting our next generation tool and because of that we provide so many different products in the market. It’s hart to just say, we look at their bill plan, we know exactly what’s going to happen. There is the lot of customers that are solar and semi-customers or solar and some other technology customers and they don’t place their orders. Our forecast is that they place it somewhat in part by number or some estimate, so we can’t see it that way, but we are fairly confident unless something really happens in the overall solar market. We’re well positioned and really we’re in the mode of how do we get more share and how do we make sure of that. You get designed into those most significant customers and so we put a lot of our relationship and developments efforts too when we do have to do any kind of modification. That’s really the focus is really to make sure where on every tool of every solar customer.

Okay and then, I curious, have you seen sort of credit environment impact any of your customers ability to order and that sort of playing a roll in some other declines we are seeing in the orders.

No, that hasn’t been an issue for us as far as credit of any of our major customers. Although, we certainly, mindful that it could be an issue and we are keeping an eye on that and as far as our suppliers is the same thing, one of the things that we have done to mitigate any issues with a lot of our suppliers is that, our objective is not being more than 30% of their business. So, I don’t think there is substantial risks there either for us.

I would also say that, if you look at the fact that, the primary declines in semi have been major OEMs. Those major OEMs have quite healthy balance sheet for cash. So, I wouldn’t anticipate even going forward at least with those major customers that credit crunch are tightening would have any impact. It may effects smaller customers probably, but I would see it affecting the majority of the customer base.

Can I just ask a quick housekeeping question on the tax rate? What should we be thinking about for 2009?

The same as I mentioned 27% which is our rate for 2008.

Your final question comes from CJ Muse – Barclay’s. CJ Muse – Barclay's: I guess first off on the solar front, great sequential number, but I think I recall you guys talking about at least 50 plus million and that you’re guiding kind of 40, 50 for the years, so I’m wondering, have you seen small push outs here that are moving out into first half of ’09, causing that reduction?

No, CJ I thought we have been pretty consistent with that $40 million to $50 million number relative to revenue in 2008. So, I m not quite sure why we would have different impression, but that sort have been the number, we have put out at the beginning of the year and kind of stuck with it and with your second question is, we haven’t seen any push outs or anything like that. CJ Muse – Barclay's: Okay. I guess, looking into 2009, in the current state of affairs for the FPD market, when you add up your solar in your FPD and I have got that running about a 100 million for calendar ’08, do you think that can grow in combination in 2009 and if so, what kind of magnitude do you see?

Can you repeat the question again? I want to make sure I understand it correctly for the answer. CJ Muse – Barclay's: I guess what I’m trying to get out is, with display likely weaken in next year, but solar growing. Can that two combined grow year-over-year in calendar ’09?

Yes. I believe I think. We’ve talked about our flat panel business being somewhere in the couple to 3% or 4% depending on what quarter. So, I mean first of all, the second half of the year flat panel has been pretty much non-existent, so you are not a talking about a great 2008 versus 2009 in FPD, but you’re talking about a great solar year in 2008 and so I think you’d still expect the combination of those to grow. CJ Muse – Barclay's: Okay. I guess just to follow that, what about for total non-semi considering the current macro backdrop impacting the non-solar businesses. Do you think that can grow in calendar ’09?

If I knew that answer, I would be in the market at the right place. CJ Muse – Barclay’s: And I guess the last question from me is, when you think about now the changing mix in your business and I don’t know if you want think about the next two quarters or looking out there all of calendar ’09 but how should we think about the impact there on your gross margins?

I think what we’ve commented on the past is obviously the big semi OEMs, probably have the best pricing, because just by the sheer volume of what they buy and is probably a lower gross margins on the OEMs especially in semi but also your operating costs are lower there, the sales cost and those types of things you’re getting a lot more revenue out of the resources required. So I think there may be a tradeoff a little bit of gross margin, but you might end up a little higher operating expense. So I think at the end of the day, if you look at from an operating profit standpoint, I don’t think you would see a significant shift in that end of it. CJ Muse – Barclay’s: Squeezing in one last question, in terms of the weakness in the semi business that you enjoyed in September in your guidance too in December, is that primarily foundry related in terms of the CapEx and utilization or is that across the board with all customers?

I think its more in general and again our products are very difficult to pinpoint relative to a semi market segment or fab segment, because again we’re selling the same part. We don’t know whether that parts going to go a memory or whether its going to go to a foundry or whether its going to go to a logic device but I think in general it’s just been a reduction in spending and fewer customers investing.

(Operator Instructions) And there are no further questions at this time. I would like to turn it back to management for any closing remarks.

Thank you. Thanks for joining us on the call this morning. Thank you for your interest and we look forward to seeing you at one of the several upcoming investor conferences. This concludes our comments.

Ladies and gentlemen, this does just conclude our conference for today. Thank you for your participation and for using ACT Teleconferencing, you may now disconnect.