Good afternoon, ladies and gentlemen, and welcome to the Advance Energy’s Second Quarter Earnings Conference Call. All lines are placed on mute to prevent any background noise. After the speaker’s remarks, there will a question-and-answer session. (Operator instructions) I will now turn the call over to Ms. Leschin, Investor Relations. Ms. Leschin, you may begin.

Thank you, operator, and good afternoon everyone. Thank you for joining us this afternoon for our second quarter 2009 earnings conference call. Listening on today’s call are Hans Betz, President and Chief Executive Officer; and Larry Firestone, Executive Vice President and CFO. Both of them will present prepared remarks. By now, you should have received a copy of the press release that we issued approximately an hour ago. If you would like a copy, please visit our web site at www.advanced-energy.com or contact us at 970-407-4670. I'd like to just take a moment to let you know that we will be participating in a number of conferences during the third quarter, including Pacific Crest on August 10 in Vail, Colorado; Citigroup on September 9 in New York; Deutsche Bank on September 16 in New York; and BofA on September 21 in Boston. As additional details become available, we will make other announcements. Now, I would like to remind everyone that except for the historical and financial information contained herein, the matters discussed in this conference call contain certain forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Statements that include the terms believes, expects, plans, objectives, estimates, anticipates, intends, targets or the like should be viewed as forward-looking and uncertain. Such risks and uncertainties include, but are not limited to, the volatility and cyclicality of the industries we serve, the timing of orders received from our customers, our ability to benefit from the continued cost improvement initiatives currently underway, and unanticipated changes in our estimates, reserves or allowances. These and other risks are described in forms 10-K and 10-Q and other reports filed with the SEC. In addition, we assume no obligation to update the information that we provide you during this conference call, including the third quarter guidance provided during the call and in our press release dated today. Guidance will not be updated after today's call until our next scheduled quarterly financial release. I'll now turn the call over to Hans Betz.

Good afternoon everyone and thank you for joining us. We ended the second quarter of ’09 with a particularly bleak view of the market and have since exited the quarter with signs of life returning and an improved outlook for the equipment industry. We have been encouraged to see long-awaited signs of stabilization and pockets of improvement in our markets. Semiconductors have begun to show a moderate upturn, also reflected in our service business while solar equipment grew despite the continuing panel oversupply. Flat panel’s lack of financing shows no sign of ending before 2010. However, different avenues are opening up to address financing issues, not the least of which are the stimulus plans by various governments around the world. We remain optimistic that the effects of these programs will eventually have a positive effect on the macro economy, particularly areas such as solar and inverters. From our current vantage point, the worst of the declines in our markets appears to be behind us and the outlook is positive. Second quarter results delivered sales of $35.6 million and a GAAP loss of $0.38 per share. We believe the careful but substantial cost-cutting measures implemented over the last several quarters were critical to weathering the storm. We continue to conserve cash as we closed the quarter with $175.3 million. A strong balance sheet is a key strategic advantage as we navigate through the cycle; but more importantly, it enables us to invest in next-generation power conversion products and technologies such as the expansion of our Solaron inverter product line. We have delivered on our commitment to accelerate technology investments and keep R&D spending steady at recent levels in an effort to roll out new products and gain market share in our markets. After a year-and-a-half of declining sales, the semiconductor market…

Thank you, Hans, and good afternoon everyone. Total revenue increased 9% to $35.6 million from $32.6 million in the prior quarter, driven primarily by growth in the semiconductor and service sales this quarter. Revenues were down 59.6% from the $88 million in the second quarter of 2008. Semiconductor capital equipment market sales increased 27.3% sequentially to $12.2 million or 34.3% of total sales in the second quarter. We believe the trough in the semiconductor capital equipment market occurred in the first quarter of 2009 and we saw the beginnings of a recovery with the second quarter orders from key OEMs to replenish their inventory as well as addressing new tool orders. Despite being strained by the ongoing lack of financing and general economic conditions, sales to the non-semiconductor markets were 41% of total sales in the second quarter. Non-semi sales were down 5% to $14.6 million due to declines in flat panel display and architectural glass markets. Sales to the solar market were roughly flat at $6.3 million in the second quarter or 17.6% of total sales. As the industry continues to struggle with solar panel oversupply, manufacturers are focused on reducing their inventory and selling their existing capacity instead of expanding their production capacity. Funding through finance expansion is limited as a whole. Sales to the flat panel market fell 14.3% from last quarter to $2.9 million and represented 8.2% of total sales as expansion capital remain limited in this market. Architectural glass sales were 1.5% of total sales or $526,000 compared to 5% of total sales or $1.6 million in the first quarter, due to the lumpiness of this market. Industrial coating and emerging market sales also improved this quarter with a number of small orders showing strength in Europe and North America. Sales grew 9% to $3.6…

(Operator instructions) Your first question comes from the line of Jim from Goldman Sachs. Your line is open. Kate Kotlarsky – Goldman Sachs : Hi. This is Kate Kotlarsky for Jim Covello. I have a couple of questions. First, I wanted to ask about your guidance and try to get a sense of which markets you think are going to be driving most of the upside next quarter, whether you think that the semi-equipment and the semiconductor customers are going to be driving most of the upside, or whether you do expect something from some of your non-semi markets? I guess that is the first question.

So, as far as the drivers for the next quarter, we see in essence three drivers. One is semi-equipment which is improving, of course. The other one is solar and within solar, mostly driven by a strong inverter business we see and of course, service. And as, maybe as the fourth driver, as we indicated in the last quarter call that the industrial coating, which probably will benefit first from the stimulus package, we see it growing strongly in the third quarter as well. Kate Kotlarsky – Goldman Sachs : And as a follow-up on that, as it pertains to the solar business, it sounds like customers generally speaking in the solar space are still pretty cautious and it’s great that you guys are seeing good traction with the inverter product. Is some of this kind of share gain due to geographic exposure? Just want to get a sense for why you guys are a little bit more optimistic than maybe some of the other companies in the solar space.

The reason is pretty simple. I think we have been in China for a long time. We have a strong position and I think we have a pretty strong position in Europe as well, and what we see is, in particular in China, the stimulus package given by the government is bearing fruits already, and our business and solar business in particular in China is pretty strong and keeps strong. So, it’s a different pattern, U.S. versus China for example. Kate Kotlarsky – Goldman Sachs : Okay, that is very clear, thank you. And then just one question on the model for next quarter. Any change to the $60 million breakeven target that you guys had talked about before? And just wanted to get a sense for whether there is any change in the OpEx next quarter versus what we saw this quarter?

We are still in the range of $60 million breakeven, is where we are heading; and OpEx, the same. Kate Kotlarsky – Goldman Sachs : And any charges next quarter that you guys are anticipating?

No. The only one that I mentioned was a $2 million tax expense. I made sure I modeled that in through your numbers for earnings in Japan and Germany as the U.S. tax rate will be zero. Kate Kotlarsky – Goldman Sachs : And is that something you are anticipating in the following quarter as well or is it more of a one-quarter phenomenon as you see it now?

Yes. I would see that in the following quarter as well, Kate. Kate Kotlarsky – Goldman Sachs : Okay, great. Thank you so much.

Your next question comes from the line of Krish from the Bank of America. Your line is open. Paul Thomas – Bank of America/Merrill Lynch: Hi. This is Paul Thomas for Krish Sankar. Thanks for taking my question. Could you talk a little more about, I guess just beyond Q3 into Q4 – now that sales are starting to pick up, are we going to see some expenses come back in from the temporary reductions, or maybe even a little further than that?

Yes. The temporary reductions that we have in are planned in and pretty well locked in through the end of the year. We have not really laid in our plans for next year but we have a combination of more permanent reductions – I mentioned on the call that we moved out one of our facilities; that is going to save us about $500,000 a year. Beyond that, we have other facilities consolidations that we are looking at and executing, so – and beyond that, I would call it efficiencies in the business to go gain. So what our target is, at the time that we would roll out of our temporary cost reductions that we would have a permanent cost reduction to match up with that, kind of along the lines that I mentioned. Paul Thomas – Bank of America/Merrill Lynch: Okay, thanks. And then, also on the guidance range in terms of gross margins, you talked about the revenue drivers. What is going to drive the gross margins to one end or the other of the 23% to 27% range?

It would really be product mix and also the revenue range. Paul Thomas – Bank of America/Merrill Lynch: So is it – which is the lower gross margin driver on that, I guess, of the three drivers that you talked about, the semi and solar and service?

We wouldn’t break it down to that level of granularity. Paul Thomas – Bank of America : Okay.

Your next question comes from the line of Weston Twigg. Your line is open. Tony Tian – Pacific Crest : Hi. This is Tony Tian for Wes. Thanks for taking my question. I have a question regarding the inverter business. Can you tell us exactly the number of units you shipped during the quarter?

How many units we shipped during the quarter? Tony Tian – Pacific Crest : Yes.

We shipped four units during the quarter. Tony Tian – Pacific Crest : And another question regarding the 1000 KW inverter order, is that a modest [ph] unit order? And also, any comment on the timing of the shipment will be helpful.

On the 1 megawatt?

You mean the timing of the 1 megawatt? Tony Tian – Pacific Crest : Yes.

So, I think it was in the script already that we plan to release the 1 megawatt in Q1 next year. Tony Tian – Pacific Crest : Q1 next year?

Yes. And we didn’t say we got any orders for the 1 megawatt; that is still in development. Tony Tian – Pacific Crest : All right. I missed seeing that part. All right, that’s very helpful.

Orders that we mentioned were really on the 500KW inverter and that was an exceptionally strong quarter. Tony Tian – Pacific Crest : I got you. Thank you.

Your next question comes from the line of CJ from Barclays. Your line is open. Olga – Barclays Capital : Hi. This is Olga [ph] calling in for CJ; a couple of questions. First on the solar side, given the inverter backlog they currently have and then your conversations with your traditional solar customers, I guess can you talk about how you see that business ramping into the second half given a pretty subdued first half?

As far as the inverter business is concerned, I think we have seen very strong traction and all the indications are that this is going to accelerate. And that’s the reason, by the way, why we are increasing the manufacturing capability, in order to cope with the demand we expect. As far as the PV equipment is concern, I think we still kind of see flat because of the oversupply which will not go away anytime soon. I think it would probably last through Q3; maybe in Q4, it’s easing off. Olga – Barclays Capital : When you knock that out and I guess, can you talk about some sort of range of magnitude of your solar revenue first half versus second half?

No. Not really guiding at that level, Olga. Olga – Barclays Capital : Okay. All right. And then, on the LCD side, you guys sound pretty subdued about that. Sort of listening to the panel makers so far, there is definitely a lot of projects being outlined in Gen-7, Gen-8. I guess, can you talk about where you are seeing a discrepancy and also where your competitive positioning is at the Gen-8 level?

I think as far the competition is concerned, we have a – of course, Japanese competitors. I think an indicator whether or not the flat panel display business will pick up, is in our view either the announcement of new projects and easing of the financing. So, we haven't seen that in the recent weeks or months. So therefore, we think that new capacities coming online for flat panel will probably not before 2010. Olga – Barclays Capital : I guess, I’m just – you have seen LPO talk about an expansion for the Gen-8 fab. AUL this morning is ramping on Gen-7.5, Gen-8, restarting construction of the Gen-8. So I’m just wondering your tone versus their tone, there seems to be, I guess, a discrepancy there.

I mean, if something comes up this way and if they are really placing order and building these new fabs, I think that would be – right now, it's about – in order to see a real rebound in LCD, I don’t think that’s already (inaudible).

Yes. Olga, the steady business that we do have or the business that we do see in flat panel and that we have experienced over the last several quarters has been – I think we described has been the activity out of Japan and Korea. So, with respect to your comment on LPO, that would be the kind of business that we would see on an ongoing basis. I think we all think the surge or the next real upturn is going to come out of places like Taiwan and China, as Hans mentioned to the script, and that’s going to be on the backup financing. Olga – Barclays Capital : And then, just as a housekeeping question, the $2 million tax funds, is that something we should be thinking about the 2010 as well?

Yes, I would say so. I would say so. I would say that is a safe bet. Olga – Barclays Capital : Okay. Got you. Thank you.

Yes.

(Operator instructions)

Okay.

Larry Firestone, you may begin.

Thank you, operator, and thank you everyone and we look forward to seeing you all at our next conference on August 10 in Vail, Colorado hosted by Pacific Crest. Thank you and bye-bye.