Our discussion today will refer to certain non-GAAP financial measures. A reconciliation of these non-GAAP measures has been provided in our earnings press release financials. Please note that this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statement contained in the earnings press release and the slides published today for a more complete description.And now, I will turn the call over to Ahmad Chatila, our Chief Executive Officer. Ahmad R. Chatila Thank you, Chris. Hello, everyone. For the last 3 years, the company has been focused on 3 strategic priorities: First and foremost, revitalize our core Semiconductor business. Our market share has windowed to near 4% in Q1 2009, from 12% in 2005. In 2009, we were at the risk of becoming irrelevant, and our fear was that at some point, customers would simply remove us from the list of suppliers to be qualified for new process technologies, which would lead to even further declines in market share over the long term and eventually, the need for us to exit the business. Second, sharply reduce our Solar Materials costs through aggressive productivity programs, heavy investment in differentiated R&D and advanced facility investments. We were well aware that our solar wafer was a singular commodity, meaning it is defined by one product specification, a pure commodity, very different than Semiconductor wafers, which are defined by 3,000 products. In commodity businesses, there's a real reward for the deep customer relationships we have in Semiconductor business. But in the solar wafer business, the modus operandi is that we have, "What have you done for me lately?". Having spent years in R&D in the Semiconductor industry, my view was simple. 30% gross margin for module players cannot be sustained over the long term because the technology is less complex than what a contract manufacturer does with PCBs. And those companies live on less than 10% gross margin. Supplying wafers to such customers while having no internal wafering capacity and smaller scale polysilicon capacity will be difficult and eventually untenable with the business as usual.
Furthermore, in 2009 we could see the emergence of nonmarket forces that could impede our polysilicon from reaching key cell and module manufacturers, and we made a decision to move downstream with our acquisition of SunEdison while creating a supply chain network that would be flexible in nature and support our needs to grow downstream with a cost roadmap visibility.And third, review the solar PV opportunity holistically and drive towards absorbing maximum gross margin from the total profit pool that was accumulating in the value chain. This was in part a hedging strategy in case our cost reductions had not materialized in time, but more importantly, an effort to firmly place the company in the critical path of where long-term value would accrue with the downstream customer that would appreciate our ability to support their needs. This thinking really drove the acquisition of SunEdison, firmly establishing us with the downstream customer. In second half 2011, we reassessed our positions, reviewed our past decisions and with deep intellectual honesty, came to the following conclusions and go forward plan to improve MEMC. Our Semiconductor path is straightforward. We must improve our EBITDA and free cash flows. We were able to gain share and become a solid #4 at 11% market share, while increasing pricing in most quarters. Our 300-millimeter investment in Korea has improved our positioning there, and we've seen recent share gains with key strategic partners. Without our ability to generate substantial productivity improvements to date, the earthquake in Japan last year and the current industry downturn would have had a much greater negative impact on MEMC. Nevertheless, we haven't gone far enough. Since Q4 2007, prices are down 35% while our costs are down only around 20%. In response, in 2011, we launched a major cost reduction effort which helped us substantially reduce labor and other costs and increase our throughput. These productivity efforts will continue through 2012. Read the rest of this transcript for free on seekingalpha.com