This Yearly Technical Progress Report covers the period August 3, 1993 through July 31, 1994 for Phase 2 of the Advanced Turbine Systems (ATS) Program by Solar Turbines Incorporated under DOE Contract No. DE-AC421-93MC30246. As allowed by the Contract (Part 3, Section J, Attachment B) this report is also intended to fulfill the requirements for a fourth quarterly report. The objective of Phase 2 of the ATS Program is to provide the conceptual design and product development plan for an ultra-high efficiency, environmentally superior and cost-competitive industrial gas turbine system to be commercialized in the year 2000. During the period covered by this report, Solar has completed three of eight program tasks and has submitted topical reports. These three tasks included a Project Plan submission of information required by NEPA, and the selection of a Gas-Fueled Advanced Turbine System (GFATS). In the latest of the three tasks, Solars Engineering team identified an intercooled and recuperated (ICR) gas turbine as the eventual outcome of DOEs ATS program coupled with Solars internal New Product Introduction (NPI) program. This machine, designated ``ATS50`` will operate at a thermal efficiency (turbine shaft power/fuel LHV) of 50 percent, will emit less than 10 parts per million of NOx and will reduce the cost of electricity by 10 percent. It will also demonstrate levels of reliability, availability, maintainability, and durability (RAMD) equal to or better than those of todays gas turbine systems. Current activity is concentrated in three of the remaining five tasks a Market Study, GFATS System Definition and Analysis, and the Design and Test of Critical Components.