Good day, ladies and gentlemen, and welcome to the Axcelis Technologies Fourth Quarter and Full Year 2012 Conference Call. My name is Tahisha, and I will be your operator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Ms. Amy Rasimas, Director of Investor Relations of Axcelis Technologies. Please proceed.

Thank you, Tahisha. This is Amy Rasimas, Director of Investor Relations. Welcome to our conference call to discuss our fourth quarter and full year 2012 results. With me today is Mary Puma, Chairman and CEO; Jay Zager, Executive Vice President and CFO; and Doug Lawson, Senior Vice President of Strategic Initiatives. If you have not seen a copy of our press release issued earlier today, it is available on our website. Playback service will also be available on our website as described in our press release. Please note that comments made today about our expectations for future revenues, profits and other results are forward-looking statements under the SEC's Safe Harbor provision. These forward-looking statements are based on management's current expectations and are subject to the risks inherent in our business. These risks are described in detail in our Form 10-K annual report and other SEC filings, which we urge you to review. Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements. I'd now like to turn the call over to Mary Puma.

Thank you, Amy. Fourth quarter results were impacted by continued challenging global economic and industry conditions. Revenues, which came in around the midpoint of guidance, reflected ongoing weak system sales and low GSS revenues. As we expected, GSS revenues were negatively impacted by low fab utilization rates and customers holding back on year-end spending for consumables, spare parts and upgrades. Our Q4 results include the impact of the Lam Research transaction and a noncash inventory reserve adjustment. Excluding these 2 items, our financial results were generally in line with our guidance. Jay will review our Q4 results including details of these items in a moment. Despite an operating loss, we were able to generate cash from operations during the quarter. Additionally, the Lam deal yielded $8.7 million of cash. Both factors contributed to a better-than-expected year-end cash balance of $45 million. I'd now like to discuss the strategic value and structural details of the Lam agreement. On December 4, 2012, Axcelis and Lam announced that the 2 companies had entered into a strategic collaboration agreement focused on the interrelationship between each company's core technologies. Additionally, Axcelis agreed to sell its dry strip intellectual property to Lam as part of a planned strategic realignment that will allow us to focus our resources on the ion implantation market. These 2 actions are extremely important to Axcelis' huge strategic direction so I'll spend a few minutes on each. First, let's review the dry strip transaction. Axcelis agreed to sell its dry strip intellectual property, including the advanced nonoxidizing process technology associated with the Integra product line and some additional assets to Lam for $10.7 million. In addition to the intellectual property, several key technologies transferred to Lam to ensure smooth product transition for our customers. Axcelis will exit the 300-millimeter dry strip systems…

Thank you, Mary, and good afternoon, everyone. Although fiscal year 2012 remained challenging due to the industry downturn, Axcelis effectively used this time to make several important improvements to our financial models and processes. We continue to significantly reduce our operating expenses, lowering our quarterly break-even revenue to approximately $60 million. We also improved our cash managements, particularly with respect to our inventory and material procurement processes. We've reported a Q4 operating loss of $14.1 million and a Q4 net loss of $14.8 million or $0.14 per share. These results include 2 unusual nonrecurring items. The agreement with Lam Research resulted in a net gain of $7.9 million and had a favorable cash impact of $8.7 million. The gain reflects the $8.7 million cash payment we received from Lam, partially offset by some associated product material costs of $800,000. We also incurred $500,000 of restructuring costs as a result of this transaction. Additionally in the quarter, we completed a comprehensive review of our worldwide inventory levels and recorded a $13.4 million noncash increase to our inventory reserves. This analysis reflected both historic and projected inventory requirements supporting both our systems business and our aftermarket business for all our products, components and parts. With this change, we believe that our current inventory reserve levels are appropriate to support our business going forward. Q4 revenues were $44.6 million at the midpoint of our guidance and essentially unchanged from the third quarter. System sales in the quarter were $17.4 million, while sales for our aftermarket business were $27.2 million. As expected, we saw a modest sequential increase in our systems business, offset by a modest sequential decrease in our GSS business. System shipments were $17.6 million at the quarter, more than twice the Q3 shipments. Within these shipment totals, ion implant shipments were…

Thank you, Jay. 2013 is starting out with challenges, but also much promise. We continue to be committed to doing what it takes to manage through the trough of this cycle, both fiscally and operationally. Our strong product portfolio and the opportunities from our collaborative relationship with Lam give Axcelis momentum. We believe that with a laser focus on implant and a little help from the economy, 2013 will be a year that brings growth, profitability and shareholder gain. With that, I'd like to open it up for questions.

[Operator Instructions] Your first question comes from the line of Christian Schwab from Craig-Hallum Capital Group.

Great. Guys, can you kind of walk me through what you think the TAM for ion implant was in '12 and what you think your approximate market share was in high energy, high current and medium current?

Yes. We still don't totally understand or haven't quantified what the drop in the TAM was for Q4. But it's probably somewhere between $600 million and $700 million. Based on that and what we know from a bottom's up perspective of customers, we expect that our implant share was probably about flat with 2011. And at that point, our best estimate is that it was around 12%. We also feel that we held approximately the same amount of market share in each segment. So in medium current, it was less than 5%. In high current, it was between 5% and 10%. And then in high energy, it was over 50%. So we maintained our leadership in high energy and did not get the traction that we had hoped in 2012 in high current and medium current, mainly due to the industry downturn and the lack of capacity buying that existed at our customers.

How long do you think it takes, Mary, for the industry to kind of recover, excluding this year, back to what historically has been an average TAM of around $1 billion?

Well, I expect that we'll see the market improve, as we said, sometime during the second half of the year. I would hope that 2014 would be something that would approximate something that we would call more normal, that would be in that range, Christian.

Yes. Christian, this is Doug. I think as we get into the second half of this year, we'll start to see the CapEx spending come back up. Implant has been relatively stable in the $1 billion range, a little bit higher during big upturns, a little bit lower during downturns. So I would expect that we'll start to see a return to those levels towards the end of this year and be pretty stable in the next.

Okay. In Lam's conference call, they were -- the CEO was pretty excited about the collaboration with the Axcelis team and made comments about working hard about developing opportunities and plans in the weeks and months ahead, but for competitive reasons really didn't want to talk about it to Wall Street analysts at the time. As you guys have begun working with Lam, do you think that the opportunities are about selling existing products in doing a more competitive offering in combination with Lam versus something maybe you did before and have a more competitive combination of the 2 process steps versus AMAT and Varian? Or do you think it's more about next-generation products or tweaking of your existing products to target some of the well-known complications at the 2x node in particular for system on chips for mobility and eventually 450?

Yes, Christian, this is Doug again. I think it will begin impacting current products for both companies. Mary talked about the relationship between the etch and the deposition and implant. We see lots of opportunity to explore process interactions there that current products that will work very well with. I think as the 2 companies work closely together, we'll find places where we can improve implant processes and probably implant equipment over time. And I think, as we move into the 450 world in the next few years that there will, again, be more opportunity not just because of 450, but just because of the continued migration down Moore's Law into smaller and smaller geometries. And we especially see lots of opportunity with the 3D structures especially with transistors in the past being heavily dependent on implant. Today, that's a little bit less the case in terms of the electrical characteristics. We see lots of opportunity and material modification that could actually grow the implant TAM.

Where do you guys think the easiest low-hanging fruit for market share gains is for doing deals in conjunction with Lam? Is it the high and medium current area where we should be monitoring you guys over the next year, 1.5 years regarding market share gains because of your collaboration with Lam or not?

Well, I think it's too early to really talk about that and I think we would probably say the same thing as the Lam CEO, that it's a little early to tip our hand competitively. What I will say is we have huge opportunity in medium current. We have low single-digit share and we have a new product in the Purion M that's doing very well in the evaluation. And we expect that, that product will gain us market share independently, as we look at what we can do with that product and our high-current products and our high-energy products in conjunction with the Lam relationship, there could be additional upside there. But it's still too early to tell what that is.

Yes, for right now, Christian, the thing to focus on are all the things that we've been talking about in terms of product penetrations with the medium current and the high current, and moving from the memory space, in particular with the high current into the foundry logic area, those are all the near-term opportunities we have. And we think that we'll see some of those come to fruition in 2013.

Yes, and in fact, let me just add a little bit to that. Kind of a combination of your 2 questions, Christian, in terms of market share and the cycle and so forth. The foundry space is definitely a very big growth area over this next couple of years, and the current evaluations we have going on in high current will lend a lot of opportunity to us for market share gains there. And so we think that, that's an area. So between the medium-current product being new and in evaluation, the foundry product -- the high-current products and foundries, both doing well at the very beginning of this next upturn, puts us in a very good position for market growth.

Great. And then my last question, what is a company like TEL is going to be doing? Does this -- does your collaboration with Lam preclude you from another strategic collaboration with TEL as they may be looking on the outside in regarding a combination of Lam's 40% range, upper 40% range and Edge [ph] and AMAT trying to be a player?

Yes. Christian, I don't know. I mean, it's really very difficult and it's really inappropriate for me to speculate on what TEL might do. We're just very focused on what we're going to be doing with Lam.

Ladies and gentlemen, I would now like to turn the conference back over to Ms. Mary Puma for closing remarks.

I'd like to thank you, all, for joining us today. We will attending the Stifel, Nicolaus conference in San Francisco on February 7; the UBS conference in Boston on February 27; and the Piper Jaffray conference in New York on March 12. And we hope to see many of you there. Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.