Good morning, ladies and gentlemen, and welcome to Advanced Energy's fourth quarter earnings conference call. (Operator's Instructions) Thank you. I will now turn the call over to Annie Leschin, Investor Relations. Miss Leschin, you may begin.

Thank you, operator, and good morning, everyone. Thank you for joining us this morning for our fourth quarter 2009 earnings conference call. With me on today's call are Hanz Betz, Chief Executive Officer, and Larry Firestone, Executive Vice President and CFO, both of whom will present prepared remarks. By now you should've received a copy of the press release that we issued approximately an hour ago. If you'd like a copy, please visit our website at www.advanced-energy.com or contact us at 970-407-4670. Let me take a moment to mention the conferences that will be attending in the first quarter. They include the Piper Jaffray Technology and Renewables Conference in New York on February 23rd, the Pacific Crest Emerging Technology Seminar in San Francisco on February 24th, and the Goldman Sachs Technology Internet Conference in San Francisco on February 25th. We will make additional announcements should additional events occur. Now I'd like to remind everyone that except for historical 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, excepts, plans, objectives, estimates, anticipate, 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 industry (inaudible), the timing of orders received from our customers, our ability to benefit from the continued cost improvement initiative currently under way, and unanticipated changes in our estimates, reserves, or allowances. These and other risks are described in Form 10-K and 10-Q and other reports filed with the SEC. In addition, we assume no other obligation to update the information that we provide you during this conference call, including the first quarter guidance provided business 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'd now like to turn the call over to Hanz Betz.

Good morning, everyone, and thanks for joining us. 2009 has been referred to in many years; the year of global financial crisis, the deepest recession seen in years, et cetera. For companies with exposure to the capital equipment industry, the credit crunch was felt across many industries, regardless of size of market exposure, most significantly in the semiconductor market already in the midst of a cyclical track. It was a year that began with record lows and ended with unexpected highs as it did for Advanced Energy. The resurgence of the semiconductor market in the fall of 2009, along with initial new signs of improvement in the broader economy and non-semiconductor markets, led to a stronger than expected end to the year. We saw nearly 30% sequential revenue growth in the fourth quarter to $66.4 million. Our strategic cost reduction efforts throughout 2009 were extremely effective and timely, demonstrated by our better than anticipated gross and operating margins this quarter of 36.8% and 2.9% respectively. In the early fall of 2009 we were targeting to return to profitability in early to mid 2010. The good news is that we came in at least a quarter ahead of the plan, delivering $1.5 million or $0.04 per share of profits in the fourth quarter. Our ability to effectively manage our balance sheet, including inventory and accounts receivable during the year, left us with a yearend position of $177.5 million in cash and investments, down only $2.6 million from the beginning of 2009. The beginning of 2010 is showing great promise, led by the surge in capital spending in the semiconductor market. Currently our market is facing a supply shortage causing increased backlog at suppliers as OEMs race to build and ship their systems and suppliers like Advanced Energy hasten to keep pace…

Thank you, Hans and good morning, everyone. In the fourth quarter we saw a marked improvement in our financial performance with significantly higher revenues and margins. Leading to profitability for the first time in more than a year we optimised our legal entities structure, which will lead to a lower effective tax rate in the coming years and continue their strong cash management. Finally, our backlog grew substantially as Advanced Energy continues to be one of the leading suppliers to the industries we serve. Now I will go into more details of our performance. Revenues grew an impressive 28.4% sequentially to $66.4 million, from $51.8 million just shy of the $67.5 million in the fourth quarter of 2008. The rebounded semiconductor sales improved Thin-Film Solar sales and the continued traction in our solar inverter products drove the increase in revenue. For the full year in 2009 sales were $186.4 million, down from $328.9 million in the same period last year. While the annual decline in revenues appears significant the widespread nature of the global financial crisis impacted all of our markets. With the exception of service, most of our markets maintained a similar percent of total sales in 2009 as in 2008. The semiconductor market represented 41% of sales for 2009, versus 40% for 2008 and non-semi markets were 39% versus 42% a year ago, specifically sales in the solar market accounted for 16% of total sales versus 17% a year ago and service was 21% of sales, versus 18% last year. Revenues to the semi-conductor capital equipment market increased 58.2% sequentially to $32.9 million or 49.6% of total sales in the fourth quarter. Sales improved across all regions as OEMs worked to supply equipment as quickly as possible given the strong increase in demand across the industry. Because OEM…

(Operator's Instructions) Your first question comes from the line of Colin Rusch with ThinkEquity.

Good morning and congratulations on the performance. Can you give us a bit more detail on the solar and rotor bookings and the traction in Europe just in terms of the backlog numbers that you gave, how much of that is coming from Europe?

On the orders that we had in Europe we've shipped our first production units into the European markets and we've got letters of intent for additional units into Europe, but I don't think we can give you much more color than that.

Okay. And can you give us a breakdown on the solar CapEx equipment? You mentioned $6 million in sales, was that all from Amorphous or can you give us some of the crystal and silicon breakdown for that segment as well?

Yeah. I can't really break it into the Amorphous and the poly, but it's a combination of both because we've seen the Chinese market coming back in where I would say for the most part in 2009 the investments were in Amorphous, but now we've seen a shift in the market towards the poly side, so it's a mixed bag of both.

Right. And on the solar demand in China can you talk a little bit about what you're expecting in terms of the shape of the ramp for the inverters? We've seen some fairly substantial activity on the project development side, when do you think you'll be able to start seeing revenue from inverters in China?

I think we just shipped the first one for evaluation for a pretty large product and it's a question how this is satisfying the requirements, but we are pretty confident and I think in China we see some kind of upcoming larger project and one of the most famous ones is the 2 gigawatt which has been signed by (inaudible) and the Chinese government. So I think we are pretty confident because we have seen a very strong success because of our performance of the inverters in US and because of the fact that we are pretty strong in China for a pretty long time. I think we are pretty optimistic to gain business and traction there too.

: And can you talk a little bit about the next generation product development and the progress you're making there and any information that you're sharing with the street on what the next generation approximately will look like?

You mean on the inverter side?

Yes, please.

So we have under development which is due for launching in the market in 2010 is the 1 megawatt. It is on course and again, I think we will finalize that in maybe the end of Q2, maybe somewhere in Q3.

Perfect. Thanks a lot, and again, congratulations.

Your next question comes from the line of Weston Twigg from Pacific Crest.

Yeah. First question just on the semiconductor side, wondering high revenue guidance and wondering how much of that is coming from an additional bump in the semiconductor revenue versus the other segments?

Yeah. I mean we're not going to give you that level of breakdown, but what I will say is we do expect the semi market in Q1 to grow pretty substantially again so it's going to be another up order for semi in Q1.

Okay. And then how should I look at OpEx growth? You talked about some costs coming back, has that all been rolled in as you added back salaries and bonuses or do we expect some more in Q1-Q2?

So far that's all been rolled back in. I think we mentioned on the last call that the salary, restoration, and the reversal of the shutdown would be about a $1.1 million a quarter additional cost and throughout the P&L; so in cost of goods as well as R&D and SG&A.

Okay. And then just one more question on the inverter piece, looking out for the whole year can you give us an idea on the number of units you might ship in 2010?

I think it's hard to give the number of units, but what we do expect qualitatively is having a slowdown in Q1 because of seasonality, as I mentioned before, I think we're expecting a pretty strong rest of 2010, but it's hard to give you an exact number there.

Okay, thanks.

Your next question comes from the line of Krish Sankar with Banc of America.

If you look at the semiconductor side of the business, where do you think your OEM customers' inventory levels are today versus let's say six months ago?

I think it's pretty clear because we are running like hell in order to fulfill all of these drop-in orders so this is very indicative for us that they have no inventory for us at this point in time.

Got it, okay. And then the second one is on the inverter business, can you tell where your ASPs are now? Do you see any ASP degradation or is it still holding pretty steady at this point?

Still in the same range that we've talked about, around $0.25 a watt I would say generically. There's volume deals on bigger projects and things like that which influence that, but I'd say generically around that range.

And can you give us some color on, if you're willing to break it down, how do we think about going forward the inverter margins maybe in 2010 or 2011?

Well, I think we're still on the very front end of run-in inverter and high-volume production or in any kind of volume. Last quarter we shipped our 100th inverter so that's indicative of still pretty low volume so our supply chain management team and our operations team are still working at driving the costs out of the inverter. So what I think we see or what we've said is that over the course of the rest balance of 2010, we'll see inverter margins increase from south of the corporate average which is where we are today to north of the corporate average.

Got it. Okay, and then the final question, how do you think of the incremental margins going forward? Do you have any goal for it or a certain range that you're targeting?

They're probably just north of 40% to get past the breakeven point.

Got it. All right, thank you.

(Operator's Instructions) And your next question comes from Jim Covello with Goldman Sachs.

Great, guys. Good morning. Thanks so much for taking my questions. Just a couple of them; on the solar side how concerned are you looking forward with the German subsidy issue, and then how concerned are you about the balance sheet of some of the companies that are making the orders today, in particular some of the China companies where there hasn't been as much financing available recently for some of those companies in the IPO market. And then on the semi equipment side I certainly understand the idea of very good visibility in the first half, limited visibility on the back half. What are you looking for whether it's segment wise or otherwise, new FAB wise in the back half of the year to give you better visibility? Thank you.

For the first question, I think the ratcheting back of the fee and tariffs in Europe across the different countries is, in my view, beneficial for AE, and the reason is because Europe has been a very proliferating, let's say, solo inverter business. Because the fee and tariff was so hefty and was so fast that prices came second. And by ratcheting back the fees and tariffs, what they will experience now is a cost pressure which automatically goes to a more cost effective inverter which is a sensor inverter which is a high-power inverter because it's designed for an engine which is much, much more cost effective than smaller inviters which you have in great numbers. So from that perspective I think it's opened up for us an easier penetration in Europe as it has been before. The second point is because there are a lot of inverter companies in Europe which are pretty small, but they have been enjoying a very nice environment and ratcheting back these kind of tariffs may leave them in a kind of shaky situation. It may open up for us some kind of inorganic growth potential so all in all it's more positive than negative. As far as the semiconductor business is concerned, I think we feel we see a pretty strong growth in the second quarter. As far as the second half is concerned, my personal view is that they are kind of slowing down, not necessarily because there is not enough demand for it, but there is an interesting dynamic behind that just looking at the lithography because the lithography is kind of stalling and a dampening factor because of the most of the lithography of ASM lithography has been sold out for years. So people are waiting to get lithography equipment in order to build and equipment the new FABs. So it's not a decrease of falling off a cliff in the second half, but it may be some kind of flowing down.

And with respect to the balance sheets of the China companies, I think what we've seen is there's certainly government money, government funding, and subsidies and the like in China to support the growth of the companies in China because what you're seeing as an activity is China's growing an industry within the country to service the market, these emerging solar arrays for the years to come. So it's certain that these big arrays are going to have a China content and there's going to be a money supply for them to emerge as players not in the next — they'll install the equipment now and as they bring that equipment online they'll work the bugs out of it over the next couple of years and then they'll be ready to supply the local market, probably less as an export market and more as a consumption market within the country.

Thank you so much.

Your final question comes from Edwin Mok from Needham & Company. Connor Irvine - Needham & Company: Hi, guys. Congratulations on the quarter. This is Connor Irvine calling in for Edwin. Recently there's been some chatter of component shortages and I'm wondering if A, if you guys are seeing the shortages, and if so does that impact the lead times of any of your business lines or your cost structure as maybe a result of expedited fees?

So the first half of the question, we do see some kind of shortage in supply, but the good news is all of the suppliers see the same thing so there's no loss of business because of that, but of course it's some kind of delay in the revenue stream. On the other side, in some way we have to carry a bit higher cost because of expediting fees, but it's not really severe and the good news is really because everybody's affected by the same thing so we don't lose business because of that. Connor Irvine - Needham & Company: Okay. And on the solar side, do you guys have any update on when that 250 kW inverter will be qualified in California?

We've got the product offered for marketing right now and I think we're on pace to — I think we're actively selling it in the market today. Connor Irvine - Needham & Company: Okay. Got it. And regarding applied PBD tool in the flat-panel display market, do you have any update there on the progress of getting qualified?

We're still working the lab qualification. Connor Irvine - Needham & Company: Okay. And my last question, maybe you guys could provide maybe some detail regarding the LED opportunity for Advanced Energy and if there's any way to maybe quantify the size of the opportunity in 2010?

So it's hard to quantify the opportunity, but we are working on a new product, a new generation of products which may increase productivity on the MOCVD side which is the core element on the LED. And at the same time there's not only the MOCVD which is the device for the active layers, but there are also passive layers and conductive layers which we can deal with, with the same piece of equipment, which is a so-called remote plasma source approach. And I think we are pretty confident because the entire technology at this point in time is ranging years back. So there's no new developments being made and we are looking very carefully in order to grab part of this market. Connor Irvine - Needham & Company: Great. Thanks so much.

There are no further questions at this time. Mr. Firestone, I turn the call back over to you.

Okay. Thank you, operator, and thanks, everyone, for joining the call. We look forward to seeing you at all the future events. Thank you.