Good day, ladies and gentlemen, and welcome to the Fourth Quarter Axcelis Technologies Incorporated Earnings Conference Call. My name is Denise and I'll be your operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). I would now like to turn the conference over to your host for today, Mary Puma, Chairman and CEO of Axcelis Technologies. Please proceed.

Thank you, Denise. This is Mary Puma, Chairman and CEO of Axcelis Technologies. With me today is Kevin Brewer, Executive Vice President and CFO; and Doug Lawson, Executive Vice President of Corporate Marketing and strategy. 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 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. Axcelis returned to profitability in Q4. We accomplished this by executing against our plans to grow Purion system revenue. Our system revenues have increased 26% quarter-over-quarter and have doubled since the first quarter of 2013. Throughout 2014 we will continue to grow Purion system sales and maintain tight control of our cost structure in order to achieve last peak quarterly revenues of $90 million during the current industry upturn and to sustain profitability through the full cycle. Our fourth quarter revenues, gross margins, expenses, operating profit and earnings per share were all within guidance. Revenues were up 20% quarter-over-quarter, with system revenues up 26% as we continued to make progress selling our Purion products. Tight cost controls allowed us to generate an operating profit of $1 million and earnings per share of $0.01. Turning to first quarter guidance we are expecting revenues to…

Thank you, Mary. Throughout 2013 we were focused on driving quarter-over-quarter improvement in operating performance, strengthening our balance sheet and launched new products on the Purion platform. In Q4 we returned to profitability with positive earnings per share of $0.01 compared to a loss of $0.04 in Q3. The spending controls growth in our systems business and stronger gross margins drove the substantial Q4 improvement. We have now been below our targeted quarterly breakeven on $60 million for four consecutive quarters. Looking at the details of our Q4 results across the board we are reviewing guidance for the quarter. Revenues were $58.6 million, up 20% from Q3. The total revenue system sales were $25 million, up 26% from Q3 and 100% from Q1. GSS sales finished at $33.1 million, up 16% from Q3 and 18% from Q1. We expect our GSS revenue to fluctuate quarter-to-quarter based on the level used to and upgrade sales. In the quarter sales to our top ten customers accounted for about 75% of our total sales with 3D customers at 10% or above. Approximately 55% of our shipments were to memory customers primarily flash while 45% with the foundry logic customers. Q4 system bookings were $16.8 million. System backlog including deferred revenue finish the quarter at $21.5 million and our book-to-bill finished at 0.62. Lower system backlog and book-to-bill in the quarter are not indicative of upcoming system sales and simply reflect customer specific order and practices. Q4 gross margins improve 36.3%, up 150 basis points from Q3. Product mix along the high effect utilization and cost initiatives drove this incremental improvement. Q4 inventory ended at $95.8 million, up slightly from $94.3 million in Q3 reflects a ramping business. Q4 combined SG&A and R&D was $20.2 million with SG&A spending at $11.3 million and R&D $8.9 million. Q4 operating profit was $1.04 million reflecting an improvement in performance of $3.8 million over Q3. Net income finished at $614,000 or $0.01 per share. Included in this number is $515,000 of foreign exchange loss and costs associated with financing. Cash, cash equivalents and restricted cash finished at $47.1 million in the high end of guidance. In 2014 we will continue to maintain tight spending controls. We’ll make any necessary investments to drive top line growth for our Purion products. Improving profitability is a top priority. We plan to keep expenses in line with the low level established in 2013. Gross margin improvement in 2014 will be fueled by platform commonality and higher tools sales and we have aggressive gross margin initiatives in place for all of our Purion products. Our cash position is strong and adequate to fund our planned business growth. And we have a line of credit in place should we need additional working capital. With our improved financials, strengthened balance sheet and launch of the Purion product family we are well positioned as the industry continues to recover. Thank you and now I'd like to turn the call back to Mary.

Thank you, Kevin. We are very excited about the potential of the Purion platform. Our Purion penetration strategy is now in full swing. Our Purion XE high-energy system has strong market acceptance. Customers using the Purion XE in their fabs have also taken the first Purion M based upon their strong preference for the Purion platform. The Purion M's performance has further cemented their acceptance of this platform. And finally the Purion H in addition to providing complete commonality across all implant segments, brings significant advantages and technical performance and manufacturing flexibility. There is a strong pull for the Purion H from our customers using the Purion XE and Purion M. Purion has been designed to be the implant platform of the future. It has been optimized for the low energy requirements of advanced logic devices, the high-energy requirements of advanced memory devices and uniform angling dose control requirements of FinFET devices. Its broad application based coverage will open up new manufacturing strategies for our customers implant base resulting in higher levels of fab productivity and lower cost. We are confident that the Purion family will propel Axcelis back into leadership in ion implantation and bring significant financial rewards to our shareholders through this cycle. With that I'd like to open it up to questions.

(Operator Instructions). Our first question comes from Brett Piira with B.Riley and Company. Please proceed.

Great, thanks for taking my call. Could you please talk a little bit about obviously your revenues were at the low end of guidance, still it's in there but were there any specific segments that were weaker than you would had hoped what were the gives and takes there?

I think the issue there was we had some new tools that we had teed up in the quarter that actually have moved around on us and that was one of the things that moved the needle. Just as you heard us say systems moving around can change a quarter, financials in a quarter in any given quarter. The same thing is true of used tools. They tend to some of the larger volume dollar transactions.

Hi, Brett. I think the thing to look at is that high-energy continued to be strong in the quarter as we've been talking about. And so with the memory cycle continuing in high-energy has really been the focus for the period inline and making sure that's out there and is kind of penetration point for the Purion product family.

Okay. Great. Maybe as a follow-up, can you give us any revenue breakout by segment from the outlook? Do you still think memory should be the main driver, how do you think it should go?

Yeah I think as Mary said during the call we see memory pretty steady during the course of this year, both Flash and DRAM seem to both be very active. That's good for us on the high-energy side which again allows Purion XE to continue to penetrate, gain footprint and open the door for the rest of the Purion family.

Okay. Great. Maybe just one more and then I'll jump back in. Last time you guys had some pretty good visibility in to 1Q that you thought it was going to be up sequentially. How is your visibility now looking into 2Q, just any commentary of how things are different from last call?

Yeah I think the guidance that was given is 60 to 66. And I think we are still kind of in that same memory pattern. So I think we look favorably towards the high-energy business as a result of that. And again just as just kind of said that kind of opens the door for the Purion M as the second half of the year opens up.

Yeah I mean there are multiple things that we are really looking forward to in the second half of the year as Doug just said. We should have memory and foundry customers in those segments both spending and then the addition of the Purion M to the mix I think it’s going to be very positive for us.

Great, thanks a lot guys.

Thanks, Brett.

Our next comes from Edwin Mok with Needham. Please proceed. Edwin Mok – Needham & Co.: Hey thanks for taking my questions. Congrats for hitting the profitably target and try for that as well in the first quarter. My first question is actually on booking, right. So booking was down quite a bit and you only have a book-to-bill of 0.62. What happened there? Did some booking that you were expecting got pushed out? I saw you guys making announcement about Purion XE booking in the quarter.

Now Edwin if you look at the bookings this quarter and any one of our quarters that number moves around and in particular this quarter because of the particular customers that are buying from us and the tendency to get purchase orders at the last minute is not really reflected in the book to bill in terms of what we see revenue for this quarter. So I won't get too along with that number. Last quarter actually it was up, this quarter it’s down a little bit. But it’s as I said it’s more to do with the specific buying patterns of one particular customer. Edwin Mok – Needham & Co.: I see, okay. That’s fair. Given your revenue guidance for the first quarter which is quite a bit above the [inaudible], implied system shipment were quite a bit above your booking in the fourth quarter. I imagine you expect something incrementally booked in the March quarter am I thinking along the right way?

Oh absolutely, yes.

Yeah. A lot of what we get is booked and shipped in the quarter that’s what happened.

Yeah. Edwin Mok – Needham & Co.: I see so a lot of turned that will resolve in discount, implied in this number.

Yeah maybe an easy way to say it is we’ll have shipments that with the time what the purchase orders may come out we'll probably ship. Edwin Mok – Needham & Co.: Okay that’s good. Carl, I guess follow-up to the visibility question beyond this quarter beyond your current guidance, right? Maybe one way you can help us think about that as you have a Purion M product which was sign up by the first customer and do you expect additional sign up this quarter and you have a Purion H that you trying to do that I guess, right? I guess two quick questions, first is on the three customer on Purion M when do you expect the timing for repeat orders from those customers and in terms of Purion H, I guess right now we’re just focusing on maybe eval or KDP what are the timing, what should we look for in terms of timing for those to come?

Yeah so Edwin I think what we want to do is look at this as some kind of phase where Purion XE is out there establishing the footprint and the common end station presence within the fabs. The three valuation systems at the different fabs. As we said in the script we expect that we’ll see the second two close during the course of this quarter and that will lead to more volume as we get into the second half. There is possibility of some Purion M in Q2 but we’re really looking at Purion M as the second half story and that allows us to cut both across the foundry business which we expect to come back to in the second half as well as the memory business in both segments, DRAM and NAND which we expect to be relatively strong throughout the year. Purion H which was announced we expect that’s really an evaluation story for 2014 and we would expect multiple evaluations to go out during the course of this year leading to footprint being established allowing us to grow the share during the downturn on the high current product.

Go ahead, Edwin. Sorry. Edwin Mok – Needham & Co.: No, go ahead Mary.

What I was going to say is don't forget that there is tremendous amount of work going on here in Beverly right now. We’ve been working with several of these customers throughout the development of the tool. So there are lots of wafers being run here in Beverly. So our expectation is that we’ll put the evaluations in and we anticipate the tool will run very well and perhaps some of the evaluations, perhaps some of them could be shorter although they tend to be pretty rigid on the 12 month but what we would expect is to start to get some repeat orders before the evaluation closes and we have talked about that before that customers will do that if they see good performance on the tool. Edwin Mok – Needham & Co.: I see if you can answer my third question which is the time it takes to finish evaluation so. I guess it's just taking up to a year. Okay, great, helpful. And then on the guidance you guys talked a little bit about the increased cost for the current quarter and I am trying to understand just to be very clear, is it just a New Year kind of some adjustment for New Year or was there any one-time cost increase that we expect to come out in the first, second quarter and beyond?

Yeah Edwin, our plan this year is to do -- grow our share and hold spending in the $20 million to $21 million range. And what we have in Q1 is, I will give you an example of one big thing. Unemployment assurance – in the first quarter and the full year is paid in the first quarter and has to get expensed in the first quarter that's almost $600,000. So the incremental really is some one-time cost. Edwin Mok – Needham & Co.: Great. That exactly answered my question. And then lastly on the GSS ROM. Last quarter and the fourth quarter was really, actually a really big reason why moderate, seems like that's the biggest GSS revenue you guys have had since 2011 or what I remember. Just trying to understand is there just something happened to order, business happened to happen at the same time or is it something that has got changed in your business that allowed you to grow at that rate and how do you kind of think about over a long-term?

Yeah well, I think your GSS is very, is broken into a couple of components. And the service piece of the business in consumables is very tied closely to fab utilization. So that's very dependent on fab utilization in different regions. And then the second piece is really the upgrades and used tools and those tend to be a little more lumpy as you go forward in the quarter depending on what those customer needs are. And those customers tend to be in more of the second tier not in the top pretty five CapEx spenders. So their plans are not quite as solid in terms of visibility. Edwin Mok – Needham & Co.: Great. Can I ask one last question? How much of your sales come from [service]?

Wasn't significant. It was like less than 5% and there might have been one legacy tool that went out but very small. Edwin Mok – Needham & Co.: Great. Thanks for answering my questions.

All right, thanks Edwin.

Thank you.

Thank you.

(Operator Instructions). Our next question comes from Patrick Ho with Stifel, Nicolaus. Please proceed. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Thank you very much. I missed some of the beginning so I apologize if this was addressed already. The transition to 3D NAND, do you see any changes in the capital intensity given the high energy obviously very well positioned within the memory market, do you see that capital intensity increasing as the industry moves to 3D NAND processes?

Well, Patrick. 3D NAND process does have higher-energy requirements which is good for Axcelis and for Purion XE, since they can reach those high energies and very high throughput. So there is a solid demand in the advanced NAND processors I mean that's somewhat true even in the planar NAND for the higher bit densities. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Great. And then maybe you could address the second question I had was the DRAM industry as it moves to 20 nanometers a lot of the process changes that are going on there and particularly with double [battering] emerging for that node, or some of those same requirement on the high-energy side positive side as the DRAM industry moves to 20 nanometers?

Yeah. So DRAM uses a little bit less high energy than NAND, still has a requirement for high-energy. The thing that becomes very, very positive for the Axcelis and the Purion family in that area is the combination of the Purion M and the Purion XE. When we talk about the flexibility that gives manufacturing fabs there is a lot of overlap and that will allow them to run both Purion M and the Purion XE in a 20 nanometer DRAM factory but much more effectively than they could on other combination. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Great. And final question from me maybe one for Kevin. You guys performed very well in the gross margin line this past quarter, with a lot of evaluation tools not in the field right now as well as some of the ones on high-current side that are about to go out this year, can you just comment on the potential lumpiness in margins as those tools are getting recognized as revenues as you trying to just ramp up your volume business which should help margins, how does that offset…?

Yeah. So overall Patrick what we are saying is mid 30 gross margins this year and quarter-to-quarter it will move a little bit but I don't think we will see any significant peaks and valleys in that. The thing that will happen is as the systems business becomes a much bigger part of the mix the system gross margins are definitely improving significantly but they are not quite as high as GSS, We always say GSS is very accretive for the business. So there is always going to be this pressure as we grow the systems business as it kind of starts its work with GSS business but even with that we feel comfortable saying that this year with significant growth in systems and because of the improvements that will hold our gross margins in the mid 30 is kind of flat and then the volume really kicks in. As Mary said you know getting the business back into 40% plus know gross margin range with higher volumes in the system is very achievable this Purion platform. Patrick J. Ho - Stifel, Nicolaus & Co.: Great, thank you very much.

Okay, Thanks, Patrick.

Thank you, Patrick.

Our next question comes from Christian Schwab with Craig Hallum Capital. Please proceed.

Thank you. Almost all my questions have been asked already except one. Mary your comment in the press release and we talked about on the last conference call that we expect to achieve quarterly revenues of $90 million during the current industry upturn. Is that something that you would anticipate approaching in 2014 or is that something that could be more or like the first half of ’15?

Well I think what we have always done is expected that we would tie our peak typically to the peak in the industry. So based on the fact now that the [inaudible] ramp appears to have flattened out a little bit which is actually a good thing, perhaps the upturn will last a little bit longer and the peak has been moved into ’15 it’s very possible that yes our peak quarters could in fact be in 2015 versus ’14.

And Christian the latest Dataquest number suggests that, that peak is in the first half of ’15.

Great. No other questions. Thank you.

Thanks Christian.

Okay, thanks.

We have no further questions. I would now like to turn the call back over to Mary Puma. Please proceed.

Okay, thank you Denise. We have seen a lot of investor interest in Axcelis on recent trips and investor conferences and we are planning to continue to be very active. We expect to be out on the road this quarter as well as attending as the Stifel conference in San Francisco on February 12th and the Piper Jaffray conference in New York in March. Thank you very much for your interest in Axcelis.

This concludes today’s conference. You may now disconnect. Have a great day.