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The length of the call will be 60 minutes. And now I would like to turn the call over to Eric Meurice for a brief introduction. Eric, please.Eric Meurice Thank you, Franki. So good morning, thank you for attending our second quarter 2010 result conference call. As usual, Peter and I would like to provide an overview and some commentary on the quarter. Peter will start with the review of the financial performance and we’ll add comment on the short term outlook. We’ll complete the introduction with some further details as to the current position and as we close the second quarter and how the balance of 2010 will evolve. Following this introduction we will open for question. So Peter, if you will? Peter Wennink Thank you, Eric and welcome to everyone. As Eric mentioned I would like to take a moment to share observations on some of the events of last quarter as well as some details on our second quarter results. Our second quarter sales were EUR 1.69 billion, further 742 in the first quarter which was just above the range of our guidance. We shipped a total of 43 systems, 35 of which were new. Our new system ASP remained strong at EUR 25.6 million and it reflects the continued demand for leading edge lithography. Our net service and field option sales came in at EUR 146 million, driven by an increased demand for our holistic lithography and service products. The company’s second quarter gross margin was 43% versus just over 40% in Q1. The gross margin improved due to volume-driven coverage of our fixed manufacturing cost, cost reductions and a better mix of higher margin products. We continued our immersionary re-product developments with an R&D spend of EUR 125 million in the second quarter. SG&A came in at EUR 42 million, both slightly higher than Q1 but as guided.
Higher sales and improved gross margin in Q2, operating income significantly improved to 27.4%, up from 18.5% in the first quarter and the second quarter’s a new high for the company.In the second quarter we generated EUR 193 million in operating cash flow and after deducting the CapEx spend and the dividend payment we added a EUR 100 million to our cash line ending just under EUR 1.2 billion at the end of the quarter. Second quarter net bookings came in at 59 systems valued at close to EUR 1.2 billion. Net immersion bookings of 25 systems demonstrated again a continued focus on technology investments. But in addition, we also saw KrF bookings of 27 systems indicating an increased need for more non-critical systems in support of the leading edge production ramps which may then happened in the non-memory applications. Second quarter bookings moved our backlog 200 to just over 100 systems in total, valued at EUR 2.4 billion. We continue to be encouraged by the success of our immersion products demonstrated by the fact that there are 58 immersion systems in the backlog, the 38 of which are our newest immersion product, the TWINSCAN NXT 1950i. As for our outlook, we continue to ramp factory production capacity in order to meet the growing demand as indicated by our increasing backlog. And our net of outlook indicates bookings in Q3 to be at around 1.3 billion. With this level of bookings and the ramp-up of our production capability, we now see our 2000 sales exceeding our previous peak of EUR 3.8 billion by about 10 to 15%. For the third quarter of 2010, we expect NXT sales to be about 1.1 billion. Gross margin for the second, for the third quarter is expected to be approximately 43%. With R&D expenses rising EUR 237 million, which is basically to enhance the support of the EUV infrastructure. And SG&A rising to EUR 50 million supporting the growing level of sales anticipated through the balance of this and next year. However we have made sure that the increase of our cost structure remains flexible and have therefore managed 80% variability in our OpEx and manpower increase. With that commentary, I would like to turn it back over to Eric for more on our view of the coming few quarters. Eric? Read the rest of this transcript for free on seekingalpha.com