Ladies and gentlemen, thank you for standing by and welcome to the MKS Instruments first quarter earnings conference call on the 22 of April 2010. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. (Operator Instructions) I will now hand the call over to Mr. Ron Weigner. Please go ahead, sir.

Good morning everyone. I am Ron Weigner, Vice President of Finance and Treasurer and I'm joined this morning by Leo Berlinghieri, Chief Executive Officer and President and Seth Bagshaw, Vice President and Chief Financial Officer. Thank you for joining our earnings conference call. Yesterday after market close we released our financial results for the first quarter of 2010. You can access this release at our website www.mksinstruments.com. As a reminder, various remarks that we make about future expectations, plans and prospects for MKS constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements, as a result of various important factors including those discussed in today's press release and in the company's most recent Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q, which are on file with the SEC. In addition these forward-looking statements represent the company's expectations only as of today. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. Any forward-looking statement should not be relied upon as representing the company's estimates or views as of any date subsequent to today. Now, I'll turn the call over to Leo.

Thanks, Ron. Good morning everyone and thank you for joining us on the call today. I'll give an overview of the first quarter 2010 as well as our outlook. Following me, Seth will review our financial results and guidance, and then we'll open the call for your questions. As we exited the second half of 2009 we reported seeing signs of rapid recovery in our business and these conditions continue to accelerate in the first quarter of 2010. We saw substantial growth in many of the markets we serve and I am pleased to report today that our Q1 revenue increased 33% to nearly $200 million which approaches our peak 2006 and 2007 quarterly revenue levels. I am also pleased to report that due to improved operating leverage and continued cost control, we achieved operating profit of approximately 22% and sequentially our non-GAAP earnings increased 87% to $0.58 per share. As a result of continued focus on working capital management, our cash and short-term investments net of debt increased $16.6 million to $275.5 million. As we have said on previous calls, we have taken a number of actions to improve our financial performance during both the downturn and this upturn and as a result we are pleased to report the strong level of performance for our first quarter and are optimistic that business will remain robust in 2010. As I have communicated a number of times before, our broad technology portfolio opens opportunities for us in many advanced and growing markets, including LEDs, medical, biopharm, environmental, thin films, solar and more. I’m pleased to report, this quarter we’ve reached $75 million in sales to these additional markets, a 34% rise quarter-over-quarter increasing even more than the fast ramping semiconductor segment. Our long term goal is to achieve at least 15%…

Thank you, Leo, and good morning everyone. As a result of our continued rebound of sales to many of our advanced technology markets in the first quarter, we achieved better financial performance in our guidance for revenue, gross margin and operating results. First quarter revenue increased 33% sequentially to $198.1 million. Gross margin increased to 44.7% as a result of increased volume, a more favorable product mix than expected and improved manufacturing overhead leverage. Non-GAAP net earnings were $29.2 million or $0.58 per share representing a sequential increase of 87%. Even at these higher volumes, we continued to maintain tight control over our expenses and further improved our operating leverage in the quarter achieving operating profit of approximately 22% of sales. GAAP net income for the first quarter was also $0.58 per share and included a gain of approximately $700,000 on the sale of a previously vacated facility. We further increased our cash position as we continued to focus on managing accounts receivables, day’s sales outstanding, improving inventory turns and controlling costs. Cash and short-term investments, net of debt increased $16.6 million to $275.5 million. Day sales outstanding were 62 and inventory turns improved to 3.3 turns. Capital additions for the quarter which includes additional manufacturing capacity for new opportunities in our growing and local market were $3.3 million and deprecation expense was $3.2 million. In the first quarter, we recognized higher than expected shipments to the semiconductor market as well as to customers across a variety of additional, advanced and growing markets. In the first quarter, sales to semiconductor OEMs increased 37% and sales to fabs increased 12%, representing a combined increase to the overall semiconductor market of 32% sequentially. Sales to our additional advanced and growing markets increased 34% sequentially. As a result of our strategic focus along…

(Operator Instructions) Your next question comes from Jim Covello, Goldman Sachs.

Just a question about kind of if you can breakdown in the various products categories the lead times, the response times, we are at the point in the cycle where you think customers are worried about delivery times, has the supply chain just been able to respond so that the things haven’t over heated in that regard like they might have in previous cycle? Thank you.

I think lead times are obviously a little bit longer for the products that we provide than typical, but I don’t think things have been as emotional as other cycles. I think we mentioned on previous calls that the supply chain was tight for parts, which is not unusual when you go through such a severe downturn and quite the recovery that we’ve all experienced. But I think if anything, things are getting a little more comfortable in the supply chain and we would expect lead times to become more normalized. So I don’t think we have customers or supply chain that’s over reacting and I think some other shorter cycle times and things like that, I mean just the better discipline has helped that out. There are particular suppliers here and there, we have some trouble with delivery, but in general, I think the supply chain is getting a little better than it was a quarter or two ago.

What would account for the supply chain maybe being better than it was a quarter or two ago?

Well, I think if you look like us, the number of people that have been added to get the output levels to the new levels, I mean things were down so low, spare parts were, as you know, stories about cannibalization, minimizing the orders of spare parts, all of that have sort of come back now to normalized levels for that and I think just ramping up. You’ve got this time lapse from the time the business goes from a very low number to a much higher number to kind of fill the pipeline with both materials and people to produce some. I think in general equipment was probably not an issue and facility capacity was not an issue, but I think materials and people were probably the two issues that take some time to get back up to some normalized rate.

Your next question comes from Krish Sankar, Banc of America.

My first question was, in the past, early in the ramp, you inventory restocking portion that helps you have much stronger revenues in your OEM customer. Is it fair enough to assume that is behind us at this point and your revenue should track the OEM customer shipments on a one-to-one basis?

I wish I was as good as I hope I could always be in terms of understanding exactly where work in process inventories were in the supply chain, but I am in good company in not understanding that I think. But I think in general what happens obviously is, if you go to our customers, there’s probably more equipment being built on the factory floor today than you saw a few quarters ago. So obviously the WIP levels have increased. I'm not sure about raw materials for everybody in the pipeline, we tend to turn raw materials pretty well, I think throughout the pipeline or it’s getting much better. So I don't think that usually the issue. The issue is you fill the factory floors at these new rates with new WIP levels and so I think as you sort of flatten our growth or come to more moderate growth you should have gotten some of that inventory caught up, you shouldn't have to build from the levels they were at two quarters ago to a much higher level. So theoretically at least, you would think most of the build of inventory is behind us, but impossible to know by customer and how they manage their supply chain and everything else. But theoretically you would think that in a downturn inventory shutoff quickly and in upturn inventories increased quickly just because that’s how the systems work, but that doesn't mean, that's what really happens, but theoretically I think you're right.

It seems like you guys did a little over $15 million in Q1 solar sales, I mean it seems like most of the solar shipments seem to be front half loaded, so I’d like to get your viewpoint on how you think solar sales will trend for the rest of this fiscal year?

As I mentioned in the call before the questions, our solar business tends to get lumpy and part of that reason is there’s a number of customers who have projects at different times and it's certainly not as mature an industry as sort of the semiconductor and display industry where you have some regular rates going on that kind of smooth out some of the quarter-to-quarter lumpiness, but at solar it gets lumpy. So delay of a project by one quarter could make the second half a real exciting quarter. So I don't know if I would say that it’s front end loaded because we understand it that way. I think that we have some customers and we had some new customers that we have to get some equipment out to quickly and primarily the new things were in Asia, but we also anticipate some additional orders later than the first quarter and it depends on whether those customers hold the order rates. As I said they tend to be lumpy because their plans change very quickly. So I don't think -- for us we don't believe that the solar shipments are over by any means, we think there’s still a reasonably good year in solar for us.

My final question is, I mean you guys seem to be executing very well on your operating model at this point, generating cash, any improved appetite for share buybacks at this time?

That’s something that the Board always examines, but I don’t believe there’s anything today that we could comment on relative to that.

Your next question comes from C.J. Muse, Barclays.

Hi, this is Srini calling for C.J. Muse. Just wanted to now, how do you see the semiconductor, trajectory over the rest of 2010 and what is your visibility like at this point?

I think for us, we’ve given this information before Srini to C.J. and the rest of the group here, but our lead times are typically very short. So visibility for us directly is very short term, but so what we rely on is a lot of the public information that you either produce or people like yourselves produce, or what we hear on other calls as our customers announce their plans. I think, to think that we’re going to see 30%, 40% growth a quarter like we just saw I don’t think we’re putting that in our plans. So I think that we would see things kind of moderate in the semi side, we’re pretty excited about the global economies recovering and would expect as that continues to happen that we get some benefit in the other markets that we serve. So should semi sort of flatten out or grow at lower rate, we would expect that if the global economy keeps growing as it’s planned to be, we get some benefits on the other side to help offset some of that.

More specifically, do you see that first half would be around the same levels of the second -- like second half would be at the same levels of the first half?

No idea right now, I guess we would be surprised if we saw any significant difference in the second half of the year.

What about the adjacent growth opportunities like especially the LED market, is that going to take off more in the second half?

We would expect that the other advanced growing markets and we have a lot of different opportunities in a lot of areas, because the technology portfolio was so deep. So we see in all of these markets I commented today, there is upside opportunities in each of these. The timing varies, because there are so many different markets. So if in the case of Krish’s comment that will solar be a little slower in the second half, we don’t know; we’re not anticipating that, but then will medical be higher, or will LED be higher. So I think in general we feel that these are growth markets, they don't quite have the cyclicality of the semiconductor industry that we’ve experienced and when you have enough of them, hopefully you dampen sort of the effective any one delay by one by something else picking up. So I think we’d expect that these markets will be stronger as we keep going forward.

Your next question comes from Michael Bertz, Kennedy Capital. Michael Bertz – Kennedy Capital: Just a couple of things here. So again coming back sort of discussion around inventory in the supply chain and understanding the limited visibility you have there, but for MKS specifically, do you think you can run sort of at these levels of inventory to service another 200 to 200 plus type range. What do you think you will need to effectively (inaudible) lead times you sort of need to have for your customers?

I think our anticipation is that around the levels we’re at, if business was to remain at these levels and not increase significantly higher that we’re kind of in the right inventory range. I mean as you know by part it varies, but overall I think we feel that we don't have this big drained pipeline in front of us that we’re looking to fill. So I think it's reasonable and I don't think we’re sitting with anything that so significant that we’ve got to bleed off quickly. So I think you’re correct in sort of -- the answer is yes, what you've said is probably right. We’re probably at a level that’s reasonably close to the run rate we are at. Michael Bertz – Kennedy Capital: Then I know (inaudible) talking about in terms of you looked at every development programs you had internally on ROI basis during the downturn and basically shook things out. As you look going forward here, I'm in where do you see yourselves making the spending decisions? If you can parse it by, I’m sure a lot of it is in the emerging technologies, but sort of where are you placing your investments for the future and so how much do you think that we’re going to need to see R&D increasing over the next year or so?

Well, a good point. I think we did a very good job of analyzing all projects as we got into restructuring the spending in the downturn. We’re using the same philosophy in the up turn. I think we’re sitting down as a group looking at all projects, looking at which customers, which markets. The direct development investments in the other markets were fortune enough to able to be apply a lot of the technology we have in the semi to these other markers. That doesn't mean we don't spend some level of R&D in modification or some sort of specialization for market, but we don't have to start from scratch or bet a large chunk of engineering dollars or doing something that may or may not happen. So I think in general, we don't have to do a radical shift in R&D spending, we would expect to try the hold the line as much as possible in terms of R&D spending although we’ve added some this year, I think we commented in a few particular areas. We’ve increased our R&D budget in the terms of operating expenses other than those that are sort of around medical benefits and wage increases, any headcount pretty much has been in the R&D area. So the increase in operating expenses outside of sort of the wage increases and medical expenses or other fringe benefits, any headcount change has been around R&D pretty much, so we’ve made some of that investment in the last two quarters increasing R&D. I don’t see a significant shift as we look forward to the next few quarters. Obviously, we’ll have to look again as we get towards the later part of the year to see how 2011 looks and where we might want to dedicate that. But typically, it’s been balanced between semiconductor new applications and then modifications or specials or some adoption into another market, so I think nothing radical there in terms of changes you should expect. Michael Bertz – Kennedy Capital: Just to kind of close the loop back to sort of the M&A parts and how you guys are looking at that and then coming back to how you are looking at spending R&D. Maybe you can just sort of talk a little about sort of criteria you’re using to examine this and how much emphasis or weight do you place on kind of the R&D expected expenditures you’d have with the given acquisition versus the revenue level you think that’s going to provide to you? I mean, is there some balance, you’re looking here to try and sort of hold the current model the company is operating at, or I guess can you guys just talk a little bit about how that looks for you guys as you examine where that should be targeted?

Yes, I would say some of the major criterias, I’m not going to get into the details of the line items within a possible acquisition, but certainly our focus is around technology. So that’s using one of the significant criterias. How do they add to the technology portfolio, which is strong, well-protected technology. The second would be, how does it fits our business model in the sense of the returns we look out in investment, overall not just the R&D, but how does it look overall as far as accretive, and how does it fit within our model? How do we leverage either our sales channels and service channels and operations for this new business, or can we leverage theirs in some cases for our business in other markets. So I think that’s more around the criteria than just focusing on their R&D budget and spend and how we can hold the line.

(Operator Instructions) There appear to be no further questions, sir. Please, go ahead with any other points you wish to raise.

The global economy is recovering and we are benefiting from the resurgence of many of the advanced markets which depend on our technology. We’re pleased to report the strong results for the quarter. It’s a great start to the year. Q2 should be another good quarter and we’re optimistic and look forward to a strong 2010. Again, thanks for joining us on the call this morning.

Ladies and gentlemen, this concludes the MKS Instruments’ first quarter earning conference call. Thank you for participating. You may now disconnect.