Hong Liang Lu – Chief Executive Officer, Director Peter Blackmore – President, Chief Operating Officer Francis P. Barton – Chief Financial Officer, Executive Vice President, Director

Mike Ounjian – Credit Suisse First Boston Larry Harris – Oppenheimer Paul Wainer - DLS Capital

At this time I would like to welcome everyone to the UTStarcom Third Quarter 2007 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer session. [Operator Instructions] I will now turn the call over to Mr. Hong Lu, please go ahead sir.

Thank you Dennis. Good morning and thank you for joining us today. I am Hong Lu, UTStarcom Chief Executive Officer and I am pleased to host today’s call with Fran Barton our Chief Financial Officer and Peter Blackmore our Chief Operating Officer. The agenda for today’s call is as follows: Peter will begin the call with a discussion of the business units and operational updates, after which, I will give an update on the China market, Fran will then discuss our Q3 financial results, give an update on liquidity and finally he will discuss the thoughts on Q4. Then, we will turn the call over to Q&A. Before we begin with the formal remarks I would like to remind everyone that some of the information we will discuss today constitutes forward looking statements, actual results could differ materially from our current expectations. To understand the risks that could cause results to differ please refer to the risk factor identified in our latest Annual Report on Form 10-K and our Quarterly Report on Form 10-Q and Current Report on Form AK, which are filed with the Security and Exchange Commission. With that I would like to turn the call over to Peter.

Thanks Hong and good morning everybody. Over the last four months, I think you’ll recall, that is since the completion of the previous strategic alternative study by the Board, management has been working with a very high sense of urgency to put the company back on track for profitable earnings growth. We have taken a number of steps and this has included a complete strategic review of the company, which was completed within nine weeks. A thorough evaluation of each of our technologies and businesses, which were then positioned into core and non-core assets. The creation of new business units to both focus the company and also to enable the alignment into core and non-core businesses. This was announced and will be completed by the end of quarter four. Extensive internal communications to ensure all parts of the company are energized. Restructuring to get the right level of cost base going forward, this will also be completed by the end of quarter four. Strengthening our go to market operations in both international and China and Hong will be addressing the progress in China later, and completing a worldwide OEM Agreement with a very large global partner, and our plan is to have two or three worldwide OEM partners in 2008. With each of these steps we are confident we have taken the right actions to get the company back on track. We were careful to protect the R&D investment in our new products. Almost all of our future revenue growth will come from technologies that are early in their lifecycle. It was tempting to cut R&D more and get to profitability earlier, but that would have been a strategic mistake. In some ways, you have to think of UTStarcom today as a large startup. Our previous technologies such as PAS have declining revenues, but we do have many strong technologies to take their place but they are early in their lifecycle and in customer acceptance. We have cut the cost base in the functions against a benchmark goal measured by best in class in our industry and we did this against revenue reflecting our core technologies only. Not all the functions get to benchmark immediately as we do have internal controls to improve, new IT systems to implement and some legal costs as we close out this years investigations. They will all get to benchmark by end of 2008. Although both our Research and Development, and SG&A percentages are currently too high, we believe we can do much better. The model for our R&D is between 10-11% of our revenue, excluding PCD. We believe this is a reasonable ratio for an infrastructure business. The SG&A model is between 13-14%, excluding PCD. Excluding PCD revenues is the right way of looking at our cost base, as PCD is a stand alone business. The SG&A is still too high, but there are a number of costs driving that, including, improving financial controls and implementing a new ERP system. We can get to the ratio as I stated by late 2008 and 2009. The revenues of the early part of 2008 are still ramping. We are also aggressively working on improving the supply chain and this includes procurement improvements, outsourcing certain aspects of the supply chain and ensuring we steadily improve margins as a result. The decision to outsource the supply chain for terminal business unit has been made recently and will be implemented by quarter one. The decision on the infrastructure products will be made by quarter one. All of these programs should bring us to profitability in 2009. In the mean time, we are putting plans to attempt to bring that profitability into 2008, but we cannot commit to the 2008 profitability yet. We will prepare a 2008 budget during the next quarter and give you an update no later than our next earnings call. How are we progressing in the market? I will give highlights of our business. We are structuring our core business into two business units. They are the multimedia communications business unit, which includes IPTV, NGN SoftSwitch and the PAS business, which is based on SoftSwitch and continues to be material, even though revenues have declined. The second is our broadband business unit, which includes, MSTP, MSAN, IP DSLAM and our GEPON devices. We are beginning to see good momentum and enthusiasm and a combination of our IPTV, NGN and our Broadband access solutions such as IP DSLAM, MSAN, GEPON and MSTP. The combination of these products provides good solid differentiation. In particular the IPTV business continues to gain momentum. Attributively we have booked approximately 240 million in IPTV contracts and recognized approximately $80 million in revenue. We recently won new contracts in Fujian Province in China and a major new customer in another Asian country, which we can announce in a few weeks. We currently have IPTV deployments in China, Japan, India and Brazil. We have about half a million live IPTV subscribers and contracts for about 2 million subscriber system capacity. We do need to emphasize this revenue recognition on these orders will ramp as subscribers grow so the message is that the winds are strategic, but expect the revenues in late 2008 and 2009. In addition, in many of these markets we are not only selling our IPTV solution but also supporting our customers IPTV needs with our broadband access equipment. For example, in Brazil our customer Brasil Telecom has already deployed over 400,000 of our IP DSLAM ports to support its 8 million fixed line subscribers. More recently they have started their first IPTV deployment of 10,000 lines. In addition, they have also begun an initial deployment of our continuity fixed mobile convergent solution to provide advanced services for their 3.7 million GSM subscribers. So, Brasil Telecom is a great example of a customer who buys multiple products from the company. Another great example is in India, where we are providing access and IPTV solutions to Bharti S&L and MT&L. MT&L currently has an initial IPTV subscriber target of 500,000 subscribers over three years. Bharti has an initial deployment of 120,000 lines and a subscriber target of 500,000 as well. We are in the process of building BS&L’s network to support IPTV services. Outside of IPTV, our next generation network and optical solutions are also getting a mention in key markets. Our optical solutions are now supporting entire networks in Japan, India, Taiwan and most recently Korea, where over 65% of Korea telecoms backbone network is now based on UTStarcom NetRing Optical Transport Solution. In Taiwan we signed our first contract with a cable TV operator to offer our NGN solution. This marks the third main operator in Taiwan we are working with. In addition, PLDT, the leading fixed line operator in the Philippines has now replaced a portion of its network with Siemens, NEC and Alcatela Class Five Switches with our mSwitch NGN Solution and IAN 8000 multi service access platform. There are several other large carriers from other countries visiting PLDT to see how they successfully managed this transition. In total, there are over 60 million subscribers worldwide on our NGN networks and we have a leadership position in this advanced IP switching technology. During the quarter we signed our first NGN contract in Europe, while we also continue deployments on our first GEPON with another customer. We have also just won our first two IP surveillance systems in China and currently are working on several more. This is a new line of business for us; we have adapted many aspects of IPTV technology to enable this and it give superior capabilities to conventional surveillance systems. We believe this new business has significant potential. A comment on our gross margins, for a number of reasons, broadband gross margins have been lower than we would like, ranging from single digits to the mid teens, but we are now seeing improvements to margins in our bookings. As a result, we believe margins will improve in 2008 into the 20+% range for the broadband business. IPTV implementation is typically in the 25+% range, depending on the mix of the network equipment and set top boxes. Let me talk a little bit about PAS. The PAS is declining as we have previously stated it still has good margins and an impressive customer base. We have included it in our core business as it’s clearly an asset and we are working on leveraging that with new technology such as pocket data. As infrastructure margins have stayed quite strong over the last several quarters, predominantly above 40%. We believe we will be able to maintain these margins above 40% in 2008. PAS handset margins has seen some pressure as the competitors are getting more aggressive, however, for the most part we expect them to continue to be in the 25% range, which is very good for handsets. Hong will discuss the PAS market in more depth in his discussion on China in a few minutes. Moving on to our non-core business I would like to highlight our PCD business. PCD business is doing very well, quarter three was a record quarter for the company with revenues of over $450 million, in addition, gross margins for the PCD business are now in the 5-6% range and we expect them to remain at these levels or even improve slightly in 2008. During the third quarter we launched four new handsets, including the HTC PPC 6800 Next Generation Smart Phone at Sprint, UTStarcom manufactured Super Slice, Virgin Mobile. We also announced the fourth generation Sidekick the LX with T-Mobile and are seeing very good volumes in our CDM 8630 senior citizens phone and the UM150 USB modem with Verizon Wireless. During the quarter we shipped a total of 2.4 million units of which approximately 750,000 were UTStarcom units. Growing revenues and improving margins, the PCDT is doing a great job and we are pleased with their performance. In summary, we are positioning the company for long term success. We do have excellent R&D in core areas of the market. We have acceptance of our technology, particularly in Asia and in developing economies. We are focused on expansion in China, India, Japan, Taiwan, Latin America, Russia, Eastern Europe and Middle East. As Fran will show when he goes through the numbers, quarter three results clearly do not yet benefit from this alignment. We shall see progress in 2008, but I want to make it clear that the revenue ramp in many of these contracts is deferred until implementation is complete, so the way to measure progress will be by bookings, plus a gradual growth in revenue and with it profitability. We have put in place the BU structure for the company by the end of this quarter, so quarter four onwards we shall be reporting to reflect this change. That was not the case in quarter three. The completion of our financial filings was a huge step in the right direction. We are now focused on liquidity and the renewal of the bond so that does not detract from our focus on the core business. Fran will address liquidity in more detail later. We are also looking at all our assets and we shall not be shy about monetizing ones that are non-core to improve our liquidity. I also hope you understand that we also cannot say a lot more about that on this call to protect the revenue streams of the business. The management team is committed, working with a high sense of urgency and is positive about potential as we go forwards. We also believe we have a much energized team throughout the company. We have spent a lot of time meeting people in all locations and discussing the strategy and turn around with them. With that, I would like to turn the call over to Hong, who will provide an update on the China business, Hong.

Thanks Peter. As you know, I have spent the vast majority of my time in China since the beginning of June. The bulk of my time has been spent in three key areas: One, focusing the business on our future strategy. The strategy now includes broadening our sales plans to include broadband access products, GEPON and Optical transport. Whereas, historically, we primarily concentrated on PAS and more recently IPTV sales. Two, I have also spent a considerable time on customer relationships, and finally, the infrastructure improvement. I will discuss each of these in more detail in this call. Beginning with the business and strategy. Despite the continuing rate of decline in the PAS business, I believe with our new self strategy we have some significant market opportunities in China that could drive overall market growth in 2008 and beyond. Beginning with the PAS market, we are seeing continuing decline in the core infrastructure market as aggressive pricing competition from China Mobile and China Unicom, it’s affecting subscriber additions. We still have considerable backlog in the PAS infrastructure business so that revenues are declining at slower rates but bookings are declining at the current rates of the overall market decline. At the same time, we believe there are opportunities to extend the life of the PAS business in China. For example, we are in active discussion with both China Telecom and China Netcom to upgrade their network to include higher speed 128k packet data service. In fact, we are in the progress now of submitting the proposal to China Telecom to expedite their entire network deployment. While it is too early to forecast this opportunity to provide additional PAS revenue to offset products overall decline in the next year or so. If this happens, we would also provide us with the opportunity to sell terminals in support this packet service. In the past, handsets market we have regained some market share in the third quarter putting our share in the high 30%. We are targeting returning our market share to about 40% over the next two quarters. As Peter mentioned, the IPTV marketing in China is also in an area focus. There are currently about 385,000 subscribers on our 18 commercial networks in China. We believe this translates into better than 60% market share. We are seeing healthy subscriber growth and operator demand for those cities in China that we already have license, such as Shanghai, Harbin, [Bujo, Shamen, Hijo and Shean]. For example, we believe China Telecom in Shanghai has set an initial target of over 500,000 subscribers in 2008. The goal is in rival PCCW in Hong Kong, who currently has approximately 800,000 subscribers. In addition, just last week we won an award with China Telecom to be the sole IPTV vendor across the entire Fujian Province. The initial contract is a couple hundred thousand lines in eight cities in the province and we are in active discussion on expansion project for the next year. We are also expanding the focus of our business including IP surveillance and education. A few weeks ago we signed our first IP surveillance contract in the Northeast region of China and just last week we signed our second IP surveillance contract in the Western region. In addition, we are working on a few educational projects in several provinces and in Beijing, which we believe could be quite significant. While regulatory hurdles continue to take time in China for IPTV, we believe the market is ready for significant growth once they are resolved. We believe we have the most stable commercialize IPTV product in the China market. Besides IPTV, customers in China are showing very high interest in our broadband access [inaudible], NGN migration and optical transport products. From an internal perspective, we restructured our sales team and have promoted and hired significant management talents who have already worked to improve communication between the business unit and supply chain, HR and finance. In all, I’m encouraged by both our internal progress and customer demand in China. Now I would like to turn the call over to Fran.

Thank Hong. Let me begin by discussing our financial results for the third quarter of 2007. Revenue for the third quarter of 2007 was $646 million, which represents a sequential increase of approximately $108 million or 20% from Q2. Our overall revenue increases in the quarter can be attributed to three primary items. First, growth in the PCD business, Q3 PCD sales were $458 million as compared to $358 million in Q2, an increase of 28% sequentially. Secondly, growth in the international broadband business, broadband revenues were $42 million in Q3 2007 compared to $39 million in Q2 2007, an increase of 8%. Third, wireless revenues were up approximately 7% sequentially. This was partially offset by a sequential decline of 5% in the terminals business as the PAS market continues to decline. However, our overall book to bill ratio in Q3 was 1.2. PCD revenues represented approximately 71% of total sales in the third quarter. By geography, sales in China represented approximately 19% of total sales in the third quarter. Gross margins – because PCD was a much higher percentage of sales in the third quarter, overall gross margins were lower and came in at approximately 10% of sales. In addition, wireless and broadband margins were both lower in Q3 because of an additional $10 million inventory reserve taken during the quarter. These reserves are the result of our decision to exit some product lines and to reevaluate our forecast as part of our restructuring plans. Wireless margins were also affected by the recognition of some low margin non-core revenue in the quarter. On a positive note, PCD margins improved sequentially and were approximately 5.9%. SG&A expenses inclusive of stock compensation were approximately $70 million or 11% of sales in the quarter. The sequential decline is primarily attributed to a gain of approximately $4 million in the quarter from milestones met in the Marvel sale of assets. In addition, we had a reversal of approximately $2 million in debt reserves as we collected some older AR in China. R&D expenses were approximately $42 million or 7% of sales in the third quarter, trending slightly lower than 2006 spending levels. Other operating expenses were $4 million and included amortization of intangibles during the quarter. Net interest and other income and expense was an expense of approximately $1.5 million in the third quarter, related to the interest expense on our convertible bonds. Total income expense was $3 million for the quarter, reflecting taxes for jurisdictions where we have profits. Our total net loss for the third quarter was $55 million or a loss of $.46 per share. Moving on to the balance sheet, our cash in short term investments totaled $644 million at the end of the third quarter. The sequential increase of approximately $116 million is attributed to short term investments as two previously long term equity investments have now become current. Our total short term debt balance was approximately $415 million at the end of Q3, reflecting additional borrowings of approximately $35 million in China during the period. Short term debt includes China borrowings of approximately $140 million and our convertible bond of approximately $275 million. Our accounts receivable balance was approximately $336 million for the quarter; the increase in AR reflects the increase in revenue during the quarter. Our DSO improved during the quarter and came in at 47 days which was a new low for the company. This reflects continued improvements in our non-PCD DSO and the mix change to a higher PCD portion of total revenue. Our inventory level was approximately $610 million at the end of the third quarter, down approximately $43 million sequentially. This decrease is attributed to better inventory controls and new programs implemented as part of our supply chain improvement process. We used approximately $40 million of cash in operating activities in the third quarter, $55 million of which came from our operating loss during the three month period offset by lower inventory levels and non-cash depreciation and amortization charges. Now, before I discuss Q4, I would like to give a quick update on liquidity. The value of our two largest equity investments as of last Friday, November 9th, was approximately $130 million. These are assets that can be monetized over the next twelve months and are now included on short term investment line on the balance sheet. In addition, the company has begun a program to monetize its IP assets to full benefit. We have a strong IP portfolio of over 3,000 patents which we can license. This also includes some non-core patents that can be sold. We have seen a significant amount of interest in our patent portfolio and have executed our first sales transaction in the fourth quarter. We will provide further information on our patent program on the Q4 call. As we begin our Q4 discussion, I just want to remind you again that these are forward looking statements which are subject to change, as you are aware, we have been very busy in the last month putting out five quarters of financial statements. Therefore, Q4 numbers should still be considered as work in progress. In the fourth quarter we expect that overall revenue should be flat with the possibility of some upside, specifically, PCD and wireless revenues should be flat to slightly up, while broadband and terminals revenues should be down slightly. Overall, gross margin should be up two to four points, this should be driven by PCD margins remaining consistent in the high fives, wireless margins in the low 40% range as compared to lower levels in Q3, and broadband gross margins will continue to be below 10% as we clean up our low margin backlog in the remainder of 2007. Operating expenses will be up sequentially to around $130 million in Q4. Included in these expense assumptions are approximately $10 million associated with our headcount reduction due to restructuring and approximately $5 million of additional non-cash stock option expenses taken in the quarter as we catch up a full years worth of options in the fourth quarter. We have not included any potential one time gains in our fourth quarter assumptions. Finally, we believe cash flows from operations could be neutral; this includes restructuring expenses, but does not include any other special expenses or potential gains. The net of the above is that Q4 should be better than Q3. With respect to 2008, while we are not prepared today to give full guidance for the year we do believe that revenues and margins should improve year over year and operating expenses should come down. At this time we feel the most likely break even point will occur in 2009, however, our goal is to put operating plans in place to attempt to reach break even in late 2008. So, let me summarize. From a financial perspective, our goal is to create shareholder wealth. We are aggressively putting plans in place to do that. Our revenue grew this quarter and we believe it will again next quarter. Further, we believe it will grow in 2008 versus 2007. Our gross margins are expected to improve in Q4 and we expect 2008 gross margin percentages to be better than 2007. Our operating expenses have been cut significantly and we believe 2008 will be considerably lower than 2007. Our inventory and AR programs have been reducing these assets and we believe there is room for continued improvement. Our cash and short term investments of $644 million give us room to operate over the foreseeable future, and as Peter mentioned, we will monetize our assets whenever appropriate. We have significantly lessened the burden of focusing on our past mistakes and are now very optimistic about facing the challenges and opportunities of the future. We believe we can make reasonable profits and enjoy positive cash flows in the future. We believe we should not sacrifice the future potential by slashing R&D or sales programs; rather, we should be thrifty and prudent, but confident enough in our future to persevere against the easy solution of excessive cuts or selling ourselves cheaply. The entire organization is excited about our opportunities and therefore, our future. This will not be a short term recovery, but we have the vision, the technology, and the people in place and the passion to be successful. With that, I would like to turn the call over to the Q&A session, so Dennis would you please organize the Q&A session for us.

[Operator Instructions] Mike Ounjian – Credit Suisse First Boston: Fran, just to start on the liquidity side on that update was helpful, just a couple quick questions. So, obviously, the equity investments gained some values since the quarter was reported. Could you talk about some plans to potentially lock in that value, as it may not be ideal to just sell everything at once, but are there options to at least lock in some of the profits just to make sure the balance sheet doesn’t deteriorate on the equity markets?

Yes, Mike, there are those opportunities. As we have said in the past, consistently, we are trying not to go into too much detail about the plan. I think we are aware of all the options we have, I will say that in the last week we have begun monetizing some of that investment so for now I will just say that. Yes, I understand your point and we are certainly looking at that. Mike Ounjian – Credit Suisse First Boston: Great, you mentioned also that there had been to date this quarter a sale within the IPR portfolio already, is that something that we should consider to be material or was that just more to highlight there are opportunities there that could get more material over time?

Mike is that, this particular one is not material, in our extensive portfolio; we have a number of older patents that maybe aren’t that useful to us and in some cases some non-core patents. Those are being looked at for sale. We have sold one and we expect in 2008 that there could be some significant numbers in there, but not at this time. Mike, if I could emphasize too, I want to be careful that people don’t misunderstand, many of our IP patents are also very core and obviously we are not going to be selling those, we will be licensing those or extracting value that way, so I want to make sure to make the distinction between the core and the non-core patents. Mike Ounjian – Credit Suisse First Boston: Great, that is helpful. Turning to orders, you mentioned book to bill at 1.2 in the quarter, could we get some picture of what the mix looked like, sort of PCD relative to some of the core businesses?

Yes, Mike, I don’t have that in front of me, but I can say that PCD is particularly strong. Of all of the areas, PCD was the strongest, where we are just having tremendous orders coming in right now we are looking for a very healthy continuation of those orders and healthy revenues in Q4 and into 2008. I would say that PCD led the charge there. Mike Ounjian – Credit Suisse First Boston: Peter, just to hit on a couple of points you made. First you mentioned the plans or expectations for two or three global OEM relationships in 2008 if I remember that correctly. Could you give us some more color as to what the strategy is for OEM’s versus selling directly to carriers and any update as to how far along that process is in terms of discussions?

I’m delighted to Mike. We have concluded the first arrangement and bookings are beginning to appear on that and we are using it to sell our range of MSTP, MSAN and GECON in the first arrangement and we are targeting areas around the world where we have presence but we don’t have a large direct sales force, for example, that could be Latin America, Indonesia, Russia. Now, we want to extend that with one or two more worldwide organizations. For the OEM’s we differentiate between regional ones which are local regions and can sign up to help a particular project for these worldwide OEM’s we are looking to sell our portfolio particularly the Optical products and to really use their capabilities with carriers where they have better relations than we are and also to minimize our direct cost of direct sales. I hope that makes sense Mike. Mike Ounjian – Credit Suisse First Boston: Yes, it does make sense. In terms of the one you already completed, you can’t share the name, is it possible to give us some color as to say it is more of a global western vendor, is it one of the Asian OEM’s, any color you can give?

It is a global Asian vendor and we hope to be able to announce it, but cannot do it just yet. Mike Ounjian – Credit Suisse First Boston: Lastly, on the R&D and SG&A target as a percent of non-PCD sales I would agree that is a more effective way to look at it but obviously currently a long way from your target. Could you give us some color in those targets, how you are thinking about how much comes from cost cutting versus how much comes from expectations of revenue growth?

It’s the latter, basically we have taken the cost factions that we have described those will flow through into 2008 and what we did was assess the revenue ramp from bookings we currently have plus confidence of orders that will come that we could get revenue recognition with later in 2008 so that drove the ratios. Now the dependency there is on revenue recognition which I was cautious about because it can slip from out of the core easily if a carrier delays their implementation. Mike Ounjian – Credit Suisse First Boston: Right, fair enough, but its fair to think of it a target for the end of 2008 or early 2009 depending on revenue recognition.

That is correct. Mike Ounjian – Credit Suisse First Boston: Thank you very much for taking the questions. Larry Harris – Oppenheimer: With respect to the cycle for IPTV what sort of time frame should we be thinking about in terms of the time between order and when you ship the products and then from the time that you ship the products until revenue is recognized and then from the time when revenues are recognized and you have cash collection. Talking about a time frame of a year or two years, could you somehow size that up?

The orderer usually takes the partial down payment and so we typically will ask our customer to pay a certain down payment, anywhere between 10-50% down payment when we deliver the product and typically we will deploy the product and put into the services, that could be anywhere between three months to six months and we will probably by then talking about the expansion and we have some condition if they ask us to deliver certain features and based on that particular agreement with the company we will then, depending on that agreement, to recognizing the revenue or not. But are very concerned about the payment terms, so therefore, we wanted to make part of payment earlier and as much as we can so hopefully the model would be about 60% when we complete our delivery and the remaining part to be when a year or so to collect it. Larry Harris – Oppenheimer: With respect to the targeted income statement ratios relative to gross margins SG&A and R&D and as I recall the SG&A and R&D were overstated excluding PCD on the other hand PCD at least right now is about 70% of revenues. How should we be looking at operating expenses at PCD or should we be looking at them as being at the 4-5% of sales range, any help there would be good?

Can you restate your last part because I didn’t know what you are talking about 4-5% operating expense for PCD, did you mean gross margins? Larry Harris – Oppenheimer: Gross margins right now at PCD are at 6% correct?

Just under six yes. Larry Harris – Oppenheimer: I’m assuming there is a nominal level of R&D or at least a lesser percentage of R&D because of the devices that are sold from HTC, [Curital] and others. What I’m trying to get the operating expenses for the total company are likely to be, because PCD is at least for now is still a significant percentage of total revenues.

Let me help a little bit there. PCD as we know it doesn’t really have any R&D. The company does but we actually classify that right now as our terminals business unit. For the products we design for ourselves they aren’t in PCD P&L. For PCD’s P&L all you will see, and if you look at the segment reports in the 10-Q and so forth you will see gross margin and a little bit of SG&A on top of that a couple of points. Predominately all of the objects $135 million per quarter that the company has been running at very very high levels that’s nearly all the non-PCD business and that number I think we have given indications and we are in fact on track to get that down into the 115-120 level, the ratios that Peter gave really for PCDL are talking about having revenues basically increase while expenses are flat or slightly down. PCD’s operating expenses are relatively fixed and flat so as their revenues go up and their gross margins do whatever they do, they don’t typically incur any more operating expense, so their incremental margins blow through to profit. I rambled there a little bit but I don’t know if I got to answer the question you were asking. Larry Harris – Oppenheimer: That’s helpful, thank you.

Thanks Paul Wainer - DLS Capital: Fran, can you give us some status on the lines of credit in China and also convert coming due in March?

The China lines of credit as we have said in the past, as each of them come due, we have been fortunate in the past to renew them and our expectation is to continue that through Q4 and into the new year. We did in the last quarter take down some additional loans of about $35 million on our China lines. From time to time those move up and down. Sometimes, just to use them just to make sure they know we are there and then we pay them back a quarter later. So far nothing has changed with respect to the China lines other than the fact that we used it a little bit last quarter. With respect to the convert, it is still due in March and as we have indicated in the past, we have a number of options to deal with that starting with refinancing some or all of it, repaying some or all of it, monetizing assets, monetizing some of these short term investments. There is a string of options and we are holding all of those options and we’ll do the right thing in the appropriate time. Now we are all caught up starting today with our financials and we are in our quiet periods are closed, our financial are current, so now we’ll go to work and work on those multiple strategies that I just mentioned. I’m not going to tell you exactly what the sequence is because the guys on the opposite side, it’s bad enough they know my strategy I don’t want them to see all my cards too. Paul Wainer - DLS Capital: I understand.

At this time there appear to be no further questions. Are there any closing comments?

We just thank everyone for paying attention and tuning in at this relatively early time of day today. We are very pleased that we did get to file Friday on time and if we had the luxury of having the call after markets or something we would have done that but we wanted to get our conference call as soon as possible after our filing and this was the first available moment that we could get you all together. We encourage you to check in and talk with us now we are totally up to date on all our filings, we feel good about that. I won’t rehash what we went through today but thank you all for tuning in and look for you on the next conference call.