Good day, ladies and gentlemen, and welcome to the PDF Solutions Conference Call to discuss its financial results for the Third Fiscal Quarter ended Wednesday, September 30, 2014. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session for which instructions will be given at the time. (Operator instructions) As a reminder, this conference is being recorded. If you have not yet received a copy of this corresponding press release, it has been posted to PDF’s website at www.pdf.com. Some of the statements that will be made in the course of this conference are forward-looking, including statements regarding PDF’s future financial results and performance, growth rates, and demand for its solutions. PDF’s actual results could differ materially. You should refer to the section entitled “Risk Factors” on Page 11 through 17 of PDF’s annual report on Form 10-K for the fiscal year ended December 31, 2013 and similar disclosures in subsequent SEC filings. The forward-looking statements and risks stated in this conference call are based on information available to PDF today. PDF assumes no obligation to update them. Now, I’d like to introduce John Kibarian, PDF’s President and Chief Executive Officer and Greg Walker, PDF’s Chief Financial Officer. Mr. Kibarian, please go ahead.

Thank you, and welcome, everyone. Today I will start our discussion with a brief overview of the third quarter for PDF, followed by a review of some of the major activities in the overall semiconductor logic market and finish with some comments about our outlook for PDF Solutions for the next year. Greg will then walk you through the Q3 results in detail. Finally, we will open up the discussion for Q&A. As we stated in our press release dated September 29, 2014, our Q3 financials were negatively impacted by our inability to close two contracts with one of our key customers. Solutions revenue was $7 million to $8 million lower in the quarter than originally anticipated and we also recognized previously deferred costs related to these contracts in the quarter. For the full year, we estimated the revenue impact of these two contracts to be in the range of $10 million to $12 million. Since the press release, we have continued to engage with the customer to resolve the situation. But as of today we have no further update regarding the status of these contracts. Looking at the rest of our business, Q3 was a successful quarter for the company. Gainshare had another strong quarter. We saw very strong results from one of our major clients as they continue to ramp a new facility. Additionally, our expenses continued in line with our expectations and we generated $9.5 million of cash from operations. During the quarter, we closed a key deal that significantly expands our solutions effort at one of our major customers. Additionally, we're experiencing increased activities for our YieldAware solution and the Exensio software system added to its foundation. For example, we completed a significant new license and service agreement with a key fabless customer, delivering positive results…

Thanks John. As a reminder, in addition to using GAAP results when evaluating PDF business, we believe it is also useful to consider our results using other non-GAAP measures. For internal purposes the company focuses on non-GAAP net income and EBITDAR. Non-GAAP net income excludes nonrecurring items, stock based compensation expenses and amortization of expenses related to acquired technology and other intangible assets and their related tax effects as applicable. Additionally, the income tax provision has been adjusted in our non-GAAP net income to reflect cash tax expenses only. EBITDAR is equal earnings before income tax adjusted to exclude nonrecurring items, depreciation and amortization and stock-based compensation. You can access the earnings the press release that contains a reconciliation of EBITDAR and non-GAAP net income to GAAP results in the investors section of our website located at PDF.com. Now let's turn to a review of the financial results. Total revenues for the quarter were $22.4 million with a GAAP net income of $1.8 million. This resulted in GAAP EPS of $0.05 per fully diluted share. Net income on a non-GAAP basis totaled $6.3 million or $0.20 per fully diluted share. Total cash increased by $9.2 million during the quarter. Cost of sales and operating expenses together were $19.5 million on a GAAP basis and $15.3 million on a non-GAAP basis which is an increase in non-GAAP spending of approximately $873,000 over Q2. Moving on to revenue details, total revenues of $22.4 million for the third quarter were $2 million less than in the second quarter. This reflects the $7 million to $8 million negative impact of the two contracts that were discussed in our September 29 press release. Total revenues were comprised of design-to-silicon-yield solutions or solutions revenues of $10.9 million and Gainshare performance incentive or Gainshare revenue of $11.5…

Thank you, Mr. Walker. (Operator instructions) Our first question comes from the line of [John] (ph) with CGS Securities. Your line is open.

Hi guys. Thanks for taking my questions.

Hi John.

How are you doing? Can you provide any more color into the nature of the issues with the [primary] (ph) negotiation with and is there potential for any impact to your other customers at all?

Yes. On the first question, we cannot provide any additional information in the interest of not doing anything that would get in the way of the negotiations and other restrictions from the prior contracts. We have to be very careful about what we state there. All we can say is what we said, which is we’ve had ongoing discussions but no other updates at this point in time.

Okay, in relation of the clients?

We really don’t see this issue having any impact on any other clients at this time.

Okay. And then you mentioned stepping R&D. Is there a higher level strategic plan concerning costs and allocation of resources if this plan actually doesn’t come back to the table?

Yeah, we're working through both our next year operating plan and our strategic planning process right now. Our assumption going into that is we will not bake these contracts getting signed into that planning process and we are comprehending our advanced development activities in that process also, though we haven’t actually come out with numbers yet.

Okay, thanks. And then assuming the client does not reengage, when do you think the impact on gain share would start to be felt?

Probably that would impact -- had it then closed, they would have impacted gain share in late part of the second half of 2015 and beyond.

Okay, and just one more, given the decline in the share price and your cash balance, what’s your position on share repurchases?

Well, as I said, it’s a subject that is discussed at the Board Meetings. At this point in time, the Board is in the process of renewing our prior existing stock purchase -- repurchase plan, but other than that nothing new at this stage.

Okay, thank you very much.

Your next question comes from the line of Tom Diffely from DA Davidson. Please go ahead.

Yes, good afternoon. First question just on the industry itself. Based on what we’ve heard recently about the complexity of yields on 14 nanometers and below has your view of the foundry market changed all as far as like how many players you think will be active at 14 nanometers and below over the next couple of years or is it more of a timing issue versus an absolute game changer?

Yes thanks Tom. This is John. I think we’ve had a pretty consistent view about the number of players that are in 14 nanometer and below. They’ve been the obvious four that have been there. We do expect with couple of others will actually get into the FinFET business on the 14 nanometer or 16 nanometer. I think there has been a lot of fuss about what’s going on in China. In fact that would be on a very long time horizon but you can expect that to happen at some point and also I think it’s been well understood that UMC was involved in the IBM alliance and also therefore has an ongoing 14 nanometer FinFET technology deployment. Primarily though I think it will be -- it has been Intel central and global foundries as before more significant investors at FinFET at this point. I think eventually will be six. Tom Diffely - DA Davidson & Co: Okay. And then, I think you mentioned that the R&D level might be going up here over the next few quarters. Is that just a transfer of some of the people from COGS into R&D or is that an absolute increase in costs?

As I said we’re going through that planning process right now. My assumption would be and don’t hold me to this because we’re at the start of the process. It’ll be probably end up with a mix of both of those things. Tom Diffely - DA Davidson & Co: Okay. And in your mind as the worst case scenario if these contracts don’t get resolved that there is enough opportunity out there with other players like UMC, SMIC, all these other guys where you can redeploy a lot of these people and still drive some valuable new contracts.

Yes, I think as Greg said in his previous answer, I gave -- in my prepared comments I’ve said that we expected to see single-digit growth and solutions revenue and larger growth in gain share. That growth is under the assumption that we do not sign those contracts. Tom Diffely - DA Davidson & Co: Okay. So you would assume then that -- you wouldn’t see any kind of a headcount reduction for a pretty substantial period of time to go to plan B if you will first.

Well, I think that what you probably see is our normal process where we go through and look at our resources on board, how they’re deployed, how they’re performing and then you know as we’ve talked for years that we go through a process where we evaluate that and we make appropriate adjustments as we look at those deployments. Tom Diffely - DA Davidson & Co: Okay, and then Greg you talked in the past about taxes possibly going up until the low to mid 20s next year. Does the inclusion or exclusion of this large customer impact that?

It does have an effect because it does cause as you heard me state in this quarter a shift in the mix of where income is being generated around the world. In this particular case, going forward, we’ll have a little bit of impact as we think that we’ll see a higher percentage of our income being generated in the U.S. and that will have a minor impact. At this point in time, for next year we haven’t really changed the guidance on the cash tax rate. We still think it’s going to be in the low to mid 20s. Tom Diffely - DA Davidson & Co: Okay, all right. That’s helpful. And then John, talking about the IBM comments you made earlier, in your view IBM is still ongoing in the process development work that you’ve worked on in the past and then is it just purely the manufacturing that goes off the global foundries?

I think they’ve already made a comment about advanced R&Ds. So I think IBM stays in the advanced R&D. I think over time 14 nanometer and 10 nanometer will transition to global foundries. We have existing contracts with IBM on the development side. Some of those would transition to global foundries as we’ve said before in our call. The truly advanced stuff will I think continue at IBM and global foundries and that again is another piece of opportunity. I think what we tried to elude to on the call is ultimately once you kind of flip these things up, they become a fabless and a foundry entity. If you remember, back in 2011-2012 timeframe as that happened with AMD, AMD then became a bigger user of PDS technology as just even thought they were the same companies in the same factory. Now that was two entities it creates for PDS logical characterization and we believe we have that opportunity with IBM’s other businesses they start working with the foundry even if it maybe some of their old manufacturing assets. Tom Diffely - DA Davidson & Co: Okay, that sounds good. Have you ever disclosed the split between solutions and gain share for IBM?

No, we have not. Tom Diffely - DA Davidson & Co: Okay. Safe to assume that some of your revenues stays with IBM and then goes to global foundries but there should be no real loss it sounds like.

That’s correct. Tom Diffely - DA Davidson & Co: And then let's see here oh yes, so you made a comment early on about one new key project which I didn’t catch what that was for in your prepared remarks?

Yes, this is an expansion of efforts to one of our current customers on some of their current projects.

There were three things that we talked about. One was that. The second was the extensive deployments to fabless customers as well as our general deployment of our big data systems. And the third was template engagement with a fabless customer deploy a Template technology, which really expands for most of their next couple of quarters really expands our ability to provide production control solutions on that platform to the manufacturers and so it's a very significant opportunity for us. Tom Diffely - DA Davidson & Co: Okay, great and that was it. Thank you very much.

Thank you.

Your next question comes from the line of Rick Johnson with Thai Capital. Your line is open.

Good afternoon, just wanted to ask when did you stop doing your work on the two non-contracts?

Yes, we have not disclosed that. So at this point in time, that’s confidential information that we are restricted on what we can actually talk about.

Can you say that you’re not doing work currently on those same projects?

Can’t talk about it at all.

Okay. Can’t even say whether you stopped or still working.

No.

Okay. Can you tell us what the trigger point would be when you can't say anything about these contracts? What would be the finalization process of saying it's done or no negotiations, it’s over, we’re not working on them, what would be a triggering point of even [be you don't say anything].

That’s highly dependent on the outcome of our ongoing discussions. Depending on what path that goes down, you have different trigger points, so I really can't project what that’s going to be.

Okay.

At this time, there are no more questions. Ladies and Gentlemen, this concludes the program. Thank you.