Barbara Scherer - Chief Financial Officer, Principal Accounting Officer and Senior Vice President of Finance & Administration Greg Klaben - Investor Relations Kenneth Kannappan - Chief Executive Officer, President and Executive Director

Robert Crystal - Goldman Sachs Tavis McCourt - Morgan Keegan & Company, Inc. Mike Latimore - Northland Securities Inc. Gregory Burns - Sidoti & Co. Rohit Chopra - Wedbush Securities Inc. John Bright - Avondale Partners, LLC

Good afternoon, my name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 Fiscal Year 2011 Conference Call. [Operator Instructions] Thank you. Greg Klaben, you may begin your conference.

Thank you, Michelle. Joining me today to discuss our fourth quarter and fiscal 2011 financial results are Ken Kannappan, Plantronics President and CEO; and Barbara Scherer, Senior Vice President of Finance and Administration and CFO. I'd like to remind you that during the course of today's conference call, we may make certain forward-looking statements that are subject to risks and uncertainties, as outlined in today's press release. As we've highlighted before, the risk factors in our press release and SEC filings are not the standard boilerplate. We update these risk factors every quarter, adding and dropping language and changing the order depending upon the timing and potential impact of the concerns that we foresee. We believe forecasting results of operations is difficult, and we ask you to focus particular attention on these risk factors that could cause actual results to differ materially from those anticipated by any such statements. For further information, please refer to the company's forms 10-K, 10-Q, today's press release and other SEC filing. Please note that all financials, metrics and comparisons are stated in terms of continuing operations, which exclude Altec Lansing or the AEG division. The sale of Altec Lansing was effective as of December 1, 2009. Plantronics' fourth quarter fiscal 2011 net revenues were $173.1 million, compared to guidance of $167 million to $172 million. Plantronics' GAAP diluted earnings per share were $0.55 in the fourth quarter, compared with $0.49 the same quarter of the prior year. Non-GAAP diluted earnings per share for the fourth quarter were $0.61, compared with $0.53 in the prior year quarter and guidance of $0.58 to $0.62. The difference between GAAP and non-GAAP earnings per share from continuing operations for the fourth quarter includes stock-based compensation charges, purchase accounting amortization, including accelerating amortization due to the abandonment of an intangible asset, all net have associated tax impact and the tax benefit from exploration of certain statutory limitation. I'd like to remind you that on the Investor Relations section of our website, we have an updated PowerPoint presentation, as well as an analyst metric sheet with the financials and metrics released today. With that, I'll turn the call over to Ken.

Thank you, Greg. And thank all of you, for taking the time to listen to our call. Fiscal 2011 was an outstanding year for us in many regards. Including one of the best years of financial performance in our company's 50-year history. For the fiscal year, we achieved record earnings per share and record cash flow generation. Our gross and operating margins continued to exceed our target model, which we are raising. We continue to improve our capital structure through stock repurchases. Our philosophy has been to return cash excess to our operating needs to stockholders, and stock repurchase programs are an excellent means of executing on this philosophy. Our management team and board of directors have a strong conviction in our growth prospects, business model and cash flow generation capability, and believe that the stock represents an attractive value relative to our future outlook. We are, thus, substantially increasing our commitment to repurchase our stock, and today announced, the largest repurchase authorization in the company's history for 7 million shares. Given this transaction, I want to maximize transparency by flagging upcoming insider transactions. On August 23, 2007, we notified our employees that effective June 1, 2011 their 401(k) investments could no longer be held in the Plantronics stock fund. As of June 1, 2011, those holdings must be liquidated or they will automatically be mapped up to a default offering in our 401(k) plan. In light of that, all the employees' holdings in the Plantronics [ph] on will be sold during Q1. As of Friday, April 29, 2011, there were 165,000 shares remaining in the 401(k) plan, of which approximately 26,000 shares were held by executive officers. In addition, over the next few quarters, there's substantial holdings of nonqualified stock options that are set to expire. A group of our executive officers, including Barbara and me, currently hold a total of 482,000 stock options that are set to expire between now and November 1, 2011. We expect the holders of these options will be exercising and selling those shares in the open market, potentially in substantial numbers. In addition, between now and November 2011, both executive officers and employees will have shares of restricted stock vest, which they made them sell in the open market. Moreover, given the recent levels of the company's stock price, additional sales of the company's stock by employees and executives in amounts we cannot quantify are possible. Plantronics has transformed itself over the past year in preparation for the approaching opportunity of Unified Communications adoption. And what will be a significantly faster growth rate of our core Office business. We continue to believe that UC will double our addressable market in the Office segment and have updated our addressable market opportunities in our IR presentation. Barbara will discuss this further in her section. Among the major areas of transformation over the past year, first, we scaled our organization. Including significant new additions to our executive team and have bolstered our talent throughout the organization. Second, our operation team has improved the on-time delivery, without sacrificing inventory turns, while maintaining our exceptional quality. Last month our manufacturing operation in Mexico received the prestigious Best Place to Work award for the country of Mexico. Third, we improved our competitive position and market share during the year in our traditional markets, as well as in UC. In UC, our relationships with the top players strengthened notably. In fiscal 2010, we introduced innovative new products and services and also launched a vibrant new brand. We have a new vision and strategy called, Simply Smarter Communications. Simply Smarter Communications is reflective of what our brand offers and what our customers and partners are seeking from us. Communications opportunities are growing more complex, with the ability to text, email, call and video. To conference in multiple ways while sharing documents and desktops and with the use of multiple devices including PCs, for voice and video, they're still new for many people. Navigating and simplifying the use of all these modes makes communications complex, when people want it to be simple and intuitive. Plantronics is able to deliver this value. With our new sensor technology, we know when someone is wearing a headset. And if any device is ringing, we can automatically answer that device. We can transfer the audio based on what you are using. We can automatically connect you to conference calls without you needing to dial. Companies are seeking to extend their knowledge networks by creating more effective access to domain experts, and this depends on reliable presence. Today, systems may stop at the phone or PC, leading to over 50% of missed calls in many businesses, which can slow down an organization's overall pace. By extending presence information past the current endpoint to the person, we can incorporate knowledge beyond the UC system to improve mobile calls, other softphone clients such as Skype and location activity knowledge about a person. In short, we are able to add significant context to make the overall communication system more effective. Our partners in UC, Microsoft, Cisco, Avaya, Alcatel and IBM, are excited about how our technology adds value to their systems in this way. Since the end of fiscal 2010, we improved our profitability, lowered cash and short-term investment balance, lowered our inventory levels, bettered our on-time delivery rates, and most importantly, continued to invest successfully in the growing UC opportunity, and it is starting to pay off. With UC product revenues growing by 23% sequentially, and expects to continue to grow as an overall percent of our company's revenue. Our focus for fiscal 2012 is as follows: number one, win in UC; number two, improve our execution effectiveness; number three, deliver strong financial results. Plantronics is celebrating its 50th anniversary this year. It's a milestone obtained by few companies, and even more distinctive, in that we think the best opportunities ever are in front of us, and then we're better prepared than ever before. On May 18 we'll be celebrating our 50th anniversary, and holding an annual event and marketing launch from the New York Stock Exchange. If you aren't able to join us in person, we hope you'll be able to watch the webcast live. Now I would like to turn the call over to Barbara, to discuss the quarterly results in more detail.

Thanks, Ken. So we had a solid quarter with revenues of $173.1 million and non-GAAP operating profit of $39.9 million. Non-GAAP EPS is $61,000 toward the high end of our guidance range of $58,000 to $62,000. And remember, included in both our guidance and in our Q4 non-GAAP results, was a $5.1 million gain from a litigation settlement, which is reflected in our result as a separately reported line in OpEx. We were also strongly cash flow positive, generating approximately $72 million in cash flow from operations, in part due to strong execution of working capital. The strong cash flow allowed us to return almost $38 million to Plantronics stockholders in Q4, through previously authorized share buybacks in our regular quarterly dividend. Turning to revenues. Our total net revenues were up $10.8 million or 7%, compared to the fourth quarter last year. OCC revenues of $132 million, were up $20.1 million or 18% versus a year ago, while Mobile revenues of $28.1 million were down $7.7 million or 22%. As we have in each quarter, this fiscal year, we continued to grow OCC revenue in the fourth quarter at a double-digit year-on-year rate, with positive growth in every geographic region. In terms of products, both UC and traditional products contributed to the increase in OCC revenue from the year ago quarter. Total UC revenue was $16.6 million in the quarter, up 23% sequentially bringing fiscal year-to-date UC revenues to $53.2 million. And sequentially, our OCC revenues were up $9 million or 7%. Our Mobile revenues were down $7.7 million as mentioned or 22% from the year ago period, mainly due to overall weakness in the category, and the fact that Q4 for us last year was a 14-week quarter, making year-over-year quarterly comparisons difficult. When taking into account leaner inventory policies amongst some of our U.S. carrier partners, we believe our market share on a global basis was roughly flat versus the year ago quarter. We gained share in EMEA and Asia Pac, offset by some share loss in the U.S. On a sequential basis, our Mobile revenues were down $15.1 million or 35%, while a significant drop is consistent with the seasonal pattern we typically see going from December into the March quarter. Our revenue decline also reflects weakness in the overall category. Leaner inventories among U.S. carriers, and some share loss in the U.S. also contributed to the sequential decline. However, we believe we continued to pick up from share in the EMEA region. International revenue increased by 18% or $11.7 million, to a total of $77.2 million. This growth from the prior-year quarter was predominantly in OCC, so we did also experience some international growth in Mobile. Geographically, our mix was 55% domestic, and 45% international, compared to 60%, 40% in Q4 last year, and 57%, 43% sequentially. The 55%, 45% mix represents our highest ever international mix driven by revenue growth in EMEA and Asia Pac, for both OCC and mobile product categories. Our non-GAAP gross margin was 53.6%, up 0.4 points sequentially, down 0.9 points compared to year ago quarter, and in line with our expectations for the quarter. Please note that along with our customary GAAP to non-GAAP adjustment, this quarter's GAAP gross margin results also include $1.4 million of accelerated amortization charges that are not included in our non-GAAP gross margin. We had a non-GAAP operating margin of 23% in Q4, up from 22.1% in Q4 last year. The 0.9 point improvement is due to low OpEx as a percent of revenue, driven largely by the legal settlement that we received in the period. Our effective non-GAAP tax rate for the quarter was 24.7%, compared to 25.9% in the year ago quarter. And on a GAAP basis, our Q4 tax rate on income from continuing operations was 21.9%, compared to 21.6% in the prior-year quarter. The Q4 tax rate includes the benefit of $0.5 million from the release of tax reserves, due to the expiration of certain statute of limitation, and the year-ago rate also included a tax benefit of $1.1 million for similar reasons. Now turning to the balance sheet and cash flow highlights, our strong profitability and working capital management in the fourth quarter helped to generate the approximately $72 million in cash flows from operation I mentioned earlier. We also received proceeds of $5.4 million in cash from stock option exercises. Our primary uses of cash in the quarter were $35.4 million to buyback stock, $6.5 million in CapEx and $2.4 million in dividends. We ended the quarter with $430 million in cash, cash equivalent and short-term investments, which were up $15.7 million from $414.3 million in December and up $60.8 million from $369.2 million at the end of fiscal 2010. We also have $39.3 million of long-term investments up from $18.1 million at the end of December. Beginning in Q2, we began investing some of our foreign cash into financial instruments with maturities greater than one year, in order to improve the yield on this asset. Of the $430 million in cash, cash equivalents and short-term investments at quarter end, $143 million was domestic. DSO increased to 54 days from 49 in the fourth quarter last year and decreased from 55 days sequentially. Cash collections were strong and the quality of our aging continues to be excellent. Net inventories were down $7.6 million from December and non-GAAP inventory turns increased from $5.3 million in the December quarter to $5.7 million in the March quarter. This performance, in fact, was much better than anticipated and reflects continuing improvement in our working capital management. Turning to the CapEx. Our fiscal year capital spending was $18.6 million or 2.7% of revenue. Depreciation and amortization expense was $16.3 million for fiscal '11, which was down from $18.1 million in fiscal '10. So turning to the business outlook now. We've been participating very well in the ongoing economic recovery. Our OCC revenues were up 18% over last March. As a result, we regained the revenue peak of $132 million, originally reached in Q1 of our fiscal 2008. We expect OCC revenues to continue to grow in the coming fiscal year from the levels we achieved in fiscal '11. Seasonally, our OCC business tends to be flat to slightly up from the March quarter to the June quarter. However, we've had a noticeable slowdown in our OCC bookings just in the last week. We have incorporated all the bookings data for the quarter, along with other information as we regularly do when preparing our forecast. Our revenue guidance for Q1 reflects some caution that the recent depth in our OCC bookings may be a trend that could play out in the quarter. That said, we do expect UC to grow sequentially, especially with the Microsoft Lync ramp still playing out. For the first quarter of our fiscal 2012, we believe total net revenues will be in the range of $168 million to $173 million reflecting OCC growth in the 9% to 12% range versus the year-ago quarter. And as mentioned, roughly flat-to-down from Q4 of F11, instead of the more typical flat-to-up. The overall revenue range also seems continued category weakness in mobile headsets. Depending on the revenue mix and other factors, we believe non-GAAP operating income will be approximately $34 million to $37 million or about 20% to 21% of revenues. The outlook anticipates OpEx levels at or slightly below those seen in Q4, adjusting for the non-recurrence of the onetime legal settlement that upped from Q1 last year on increased investment in the long term opportunity. Before going into the EPS-based estimate, let me explain that we've prepared these estimates on the share count, prior to an accelerated pace of repurchase under the significant new authorization announced today. Specifically, we based these on 49 million diluted shares outstanding. Given the large authorization, actual count will almost certainly be lower, but as there are many factors which will affect the volume and average price, we are using our historical approach to estimating EPS at this time. Based on all of above, we currently expect non-GAAP EPS from continuing operations to be in the range of $0.52 to $0.56 a share. The GAAP charges we expect in the coming quarter include approximately $4.2 million in equity compensation expense. And $0.2 million in purchase accounting amortization, bringing total estimated GAAP charges to $4.4 million pre-tax in Q1 and $3 million or $0.06 EPS after tax. We thus expect GAAP EPS on continuing operations of $0.46 to $0.50. Beyond the outlook for Q1, we are also updating our target business model. For a number of years, we have believed that the right target business model for us was an 18% to 20% operating margin. We came out of the economic recession with a lean cost structure and have experienced a rebound of demand for our products as a result of stronger economic conditions, as well as the strength of our portfolio and our total value proposition. We exceeded the 20% target in fiscal 2011, even while investing significantly in UC opportunities. And we expect to exceed 20% again in FY '12, while continuing to invest for growth. We have updated our market and financial models and have concluded that a more appropriate target is a 20% to 23% operating margin. For further information on this, please see our new IR presentation available on our corporate website in the IR section. Finally, for FY '12 as a whole, our plan is to grow revenues and profits compared to F11. We expect revenue growth to be driven by OCC products generally, with a substantial amount of the growth expected to be driven by UC. As I've just covered, we're expecting operating margins for the year as a whole to be in line with our updated model of 20% to 23%. We're currently anticipating a 26% tax rate. Our CapEx plan is in the $18 million to $20 million range, with depreciation currently estimated in the $15 million to $16 million range. And with that, I'm going to turn it back over to our conference facilitator for the Q&A session.

[Operator Instructions] Our first question comes from the line of John Bright, from Avondale Partners. John Bright - Avondale Partners, LLC: First question is going to be on the guidance. Particularly for the June quarter, certainly very positive on the December -- on the March quarter results, but in the June quarter time period, Barbara, what is it that you're seeing particularly in the OCC segment? Because that sounds like where you're more concerned than the Mobile segment, that had you concerned at this point?

So I am going to take that one for a second, John. The fact of the matter is that we saw a slowdown in bookings, particularly just very, very recently. And there's a number of things in that. First, if I tell you what I'm hearing from our customers in our sales organization, it remains very positive on the outlook. This having come up and really -- just kind hit us very recently, we've not had a chance to thoroughly understand what is going on. As I think you know, sometimes, we'll take a dip in bookings during the course of the quarter, and we'll get a rebound, but sometimes it can be the beginning of something that is more worrisome. And at this point in time, we really don't know which. The most accurate models we have, historically, in forecasting our performance, are statistical, and they do use all the bookings data that we have. And therefore, we thought it was appropriate to bring down our bookings projection a little bit. John Bright - Avondale Partners, LLC: On the last call, I think, it was mentioned in the prepared text, that you expected inventory to actually be higher coming out of this quarter. Leaving this quarter, now that doesn't seem to be the case. What changed? Better operational performance, what took place there?

Yes, John. I did say that I thought it would probably be up a touch last time. And in fact, we did have much better operational performance. It's been a continuing trend, but it did get even better. So that's very good. We also had some mixed change in our UC, with heavier wireless and lighter quarter end forecast, which is also good in terms of the direction and the margins on UC. But that means some of the higher dollar items are out of inventory and you're moving out, received some of the things that are slowing down. So there were some forecast changes that we were actually able to respond to, and that also contributed to the inventory being lower. John Bright - Avondale Partners, LLC: Okay. Well, let's talk about UC for a second. The question I've asked in most of the past calls, I'll ask again Ken, surrounds the tax rate that you're experiencing today, relative to your expectations in cannibalization of your traditional OCC business? That's the first question. The two follow-ups of that are going to be, I heard you on the call say that you're going -- you expect sequential increase in UC sales in June over March. When, Ken, do you anticipate really to hit the open field and start seeing some much larger type numbers in UC? Is that something still expected within this year?

Okay. I'm going to try to remember those questions, John. And if I miss one, please just remind me. So first of all, as I've mentioned kind of previously, the tax rate does vary a little bit by the ecosystem vendor that we're dealing with. Those that are software-oriented, we see higher attach rates than those that are largely pushing the hard phones. I would say that in general, we have not seen a big change in the attach rate of mix. We continue to see that the hard-phone oriented solutions have a lower initial lift, but that there is growth and follow-on applications, video, web conferencing and so forth, that are leading to a subsequent lift in that attach rate. I would still say that in the initial deployment, in those sorts of things, it's kind of fairly of that constant 10% type of attach rate. And then over time, we are seeing that lift getting up into even the 20%-type of range in terms of attach rate. I would say that on the softphone, driven mix, where of course there are hardphone options as well that go into the software. In other word you combine the link, but you're still using a USB phone or some other kind of hardphone solution. We still think that we're seeing in the range of 50-ish attach rates in those types of installations. In terms of cannibalization, it's really kind of again a pure math type of thing, where if we have an existing penetration, call it globally, in the 7% range call it in the states, closer to 10%. And so very clearly, while we may accelerate the replacement, that percentage doesn't change, and therefore, if we've taken the example of 50% adoption situation, only 40% of that is incremental adoption, 10% of that are people that we already have. It may accelerate the replacement cycle, but doesn't lift the adoption. So that's the cannibalization answer. I think the next question you asked was about the pace of adoption and ramp up, and I would say that, one, we still don't know, okay? We are still perceiving very positive momentum with the launch of Lync. I think that there's a growing adoption, growing interest. In quite a number of cases, the software has been rolled out, people are using IM clients, but that doesn't mean that in all cases, that they have gotten to the point of rolling out the voice application very often. That legacy infrastructure is still in place, we still anticipate that there will be good rollout activity in the balance of this year. I would say that we -- having said those things to the positive, predicting the precise timing and scale of it is very difficult. We continue to see that most organizations when they're looking at this, are looking at reasonably extended rollout time frames. And if we look at Lync as an example, I mean, most organizations that -- it would kind of launch towards the end of last year, it wasn't really available until this March quarter for people to do. It takes a certain amount of time for IT to assess, begin the implementation, some of the front-end stuff, gateways and so forth can go a little bit earlier, but after that you're still assessing, putting in your rollout plan and then, putting it out over time. So we're expecting this to be kind of a large steady ramp than a sudden vertical ramp in terms of how it's likely to progress. Particularly given that the typical rollout will be over a period of many months, even perhaps the year. John Bright - Avondale Partners, LLC: Okay two final questions then, one, on the buyback. Any time frame associated with that? And Barbara the prepared comments regarding debt, I assume are in place, if you acceleratedx faster than you generate cash, is that fair?

Okay, so in terms of time frame as Barbara kind of covered, it's difficult to assess because things such as our liquidity, the stock prices and so forth will affect it. Clearly, this larger authorization signals an effort to be more rapid about the purchase of shares. But at the same time, it's hard to put a precise time frame on it. I think it would certainly be a hope, but not a certainty, but we would try to get much of this accomplished over the course of the year.

And on the revolving line of credit, yes, it's there to keep us flexible so that we can operate at an accelerated pace, and not have concerns about availability of cash. John Bright - Avondale Partners, LLC: And the tax rate going forward, what should we be thinking about for FY '12?

I think 26% is a good number. John Bright - Avondale Partners, LLC: Got it.

Your next question comes from the line of Travis Morgret (sic) [Tavis McCourt] from Morgan Keegan. Tavis McCourt - Morgan Keegan & Company, Inc.: Guys, it's Tavis. Barbara, first I wonder if you could just compete -- repeat the guidance you gave us -- the last couple of sentences of the script. I caught the EBIT margin of 20% to 23% for the year, but did you give a revenue guidance as well?

No. We just said that we expect -- we do expect to grow revenues and profits, we expect the revenue growth to be driven by OCC revenues. And within that, for that growth to be substantially driven by UC. But we didn't give a revenue growth target or number for the year. Tavis McCourt - Morgan Keegan & Company, Inc.: Okay. And the UC revenue was $18 million in the quarter?

It was $15.6 million, was up 23% sequentially. Tavis McCourt - Morgan Keegan & Company, Inc.: And you might have talked about is in the prepared remarks, but I'm sorry I missed them or at least the first part of them. I think you intimidated on the last call that those would be roughly flattish. What did you see in the quarter that allowed them to come in stronger than expected?

We were expecting some growth in UC in the quarter, and really, in total, the high-end of our guidance last time was $172 million, we're at $173 million, and we were very, very, very close really in all of our estimates and all the categories. Tavis McCourt - Morgan Keegan & Company, Inc.: Okay. And then Ken, last question on the recent weakness. Is that across all geographies or is it in certain geographies?

It was reasonably broad. I would have to say, probably emphasize a little more in some areas, but nonetheless so to speak, more broad than not.

Your next question comes from the line of Greg Burns from Sidoti & Company. Gregory Burns - Sidoti & Co.: Ken, in your prepared remarks, you had kind of mentioned an update on the UC outlook, and I don't know, I might have missed it. But Barbara, follow up, could you follow-up with some commentary about the outlook for UC?

Well, basically what I've said in the prepared remarks is that we've validated it and we've updated our operating margin as a result of going through and looking at the market opportunity looking at our plans, looking how we have actually been performing and the expectations around that going forward. So if you do go and look out on the IR deck, and we used to have calendar '09 to calendar '14, and now we've got calendar '10 to calendar '15, but they -- we still got basically a double on the global OCC market, going from an estimated $850 million to $1.7 billion over that calendar '10 to calendar 2015 time frame, with the gross predominantly from UC headsets and the CAGR [Compound Annual Growth Rate] on that is 15%. And those figures, in terms of the markets -- the doubling are very consistent with what we've had before. I would say that while the end result is very consistent, and we've always done a combination of bottoms up and tops down, we did do a tremendous amount of work on this. And used third-party sources and there is more data than there was a year ago, and so it was -- we expected it to be consistent, but we did take an enhanced approached to it, and in fact, it was consistent. So that was excellent. Gregory Burns - Sidoti & Co.: Okay so the incremental opportunity to use is still $350 million? Or has it gone up? And I guess, in that assumption...

It's still $350 million, because it's -- so we've reconfirmed, revalidated it, we haven't upped the number. Gregory Burns - Sidoti & Co.: Okay. And I guess, to get to that number, what kind of penetration rates in the office do you assume -- you know going from 7 to 10 to what kind of penetration rates get you that $350 million?

Well, basically, overall, when you think about the fact that it is the total addressable market is doubling. In total, it does require about twice as much. It is more than that, because the units are a lot higher, we believe, will be a lot higher on the lower end than the high-end. But when you translate that to dollars, it's roughly a doubling. Gregory Burns - Sidoti & Co.: Okay. And in regards to the buybacks, it sounded like there's a lot going on as far as shares and options to be exercised. I mean, is this going to -- how do you foresee the share count evolving? I mean, is this going to take the total share count down? Or just keep it flat? Or how should we think about that?

So 7 million shares is 15% of our diluted outstanding, and the fact that things are coming due and expiring, doesn't change what's already in your -- but it can change when it actually gets exercised, but using the treasury stock buyback method, they're already anticipated in the existing numbers. So no, when we get finished buying 7 million shares, we do expect a lower share count by a fair margin.

Let me comment on that for a second. I mean, the (401)k shares, of course, were already 100% outstanding. And the other shares, the stock option shares, as Barbara says are already outstanding based upon treasury stocks. There's only kind of a modest increment that would occur as they are exercised, we receive proceeds and so forth. But in any event, very, very small relative to the 7 million number.

Your next question comes from the line of Rohit Chopra, from Wedbush Securities. Rohit Chopra - Wedbush Securities Inc.: A couple of quick questions. First, I just want to get a sense of who or which company is driving the greatest strength in the UC business right now. Is it Microsoft or is it the Polycoms, the Ciscos the Avayas? Who's actually the biggest driver right now?

Well, I don't want to get into kind of competitive battles. But I would just say that the leading ecosystem players in my mind are Microsoft, Cisco, Avaya, Alcatel and IBM, and those are the leading platform vendors. Polycom is a little bit more like us, and I think re-labeled a lot of their video conferencing equipment UC. And of course, I'm sure that it is. But they are selling products that work on those basic ecosystem platforms. So who're the underlying system vendors, those are still kind of the big system vendors for UC. Now there are other players in the market. There's Huawei, there's players in the little bit more SME market, ShoreTel and so forth. So there's a variety of different players in this very large market, but the biggest players are the ones driving the greatest adoption of UC. Rohit Chopra - Wedbush Securities Inc.: Yes, we're just trying to think of who's helping you the most, that's all. I know who they are, I think we're pretty well aware of that.

They're all helping us, because we're partnered with all of them. And so again, they're all our partners. Rohit Chopra - Wedbush Securities Inc.: Okay. And then, I just want to get a sense, are there any or have you seen any supply chain issues in your business at all out of Japan?

So we've not been heavily affected by Japan in terms of supply chain issues. We have had some supply chain issues. I would say that we always do, and they come up and they get resolved and sometimes it's difficult the semiconductor is discontinued by the manufacturer, we have to reengineer it and find a new source or do a lifetime buyer, there's this added next component that for a variety of reasons, it's got issues. So we always have supply chain issues. We're always resolving supply chain issues, but I don't think that the situation as a result of Japan has been significantly changed. Rohit Chopra - Wedbush Securities Inc.: Right. So nothing incremental out of that. And then just last question, and I wanted to try and see if you can just help, just maybe some clarification would help. Would I be correct in assuming that the Mobile business has lower overall margins than the OCC business? Would that be correct?

Yes. Rohit Chopra - Wedbush Securities Inc.: Okay, so if I take out and we reduce Mobile as a big percent of the mix, compared to last quarter and even compared to last year, it's come down quite significantly and that's exactly what you guided. I would assume that the gross margin or even the operating margin ex the legal settlement, would go up a little bit more to really cut it out, the mobile side. Are there any other pressures on the margins in the non-mobile business? What's actually happening in the other piece that maybe capping gross margin or holding it back or whatever you want to call it? Does that make sense?

There's not a lot. I mean, there's, yes, overall, it's a little bit tougher, it's definitely a tougher environment for cost reductions, so cost reductions aren't coming at the pace that we were able to do in the past. Wireless products and new products in general, which obviously, would include UC products, tend to have a little more support costs, little higher. So that would be tech support, customer service, warranty rates, they're going to be a little bit more likely to go ? they have changes in them and to have those kind of small -- these are all very small, very small items, but there's not a lot.

Your next question comes from the line of Mike Latimore from Northland Capital (sic) [Northland Securities]. Mike Latimore - Northland Securities Inc.: Just a question on the bookings clause [ph] here. I guess, do you have a lull [ph] in bookings, say for a week, like once every quarter? Or is this unique in and of itself.

So let me make a comment on that. I would say that historically, and I am going back a little bit in time, our bookings in my mind were much steadier in terms of following traditional seasonal patterns. And I would say that we have seen a gradual increase in my mind in the volatility of the bookings. On the one hand within a quarter, but just sort of in general. What we've seen a little bit more of a roller coaster phenomena. Certainly, there are some changes that have occurred to our business over time. In particular, the contact centers is a slightly smaller percentage of the mix. Obviously UC is coming on as a percentage of the mix. You've seen greater growth internationally, and some of that maybe influencing some of it. But I think at the same time, we're also in a period of somewhat greater economic volatility, that's kind of added to that. I think that also a greater portion of our business is now going through 2-step distributors rather than single-step distributors. So there's a somewhat different slow that occurs with that. So all of these things together, have created a slightly greater level of volatility. So this pattern of kind of a slowdown, and then also at times we've seen a bit of an acceleration, as we did in the end of last quarter are occurring slightly more frequently than they used to. In general, I would've said, no. Now I would say, it's infrequent or less ? never doesn't never happen -- it happens on occasion, and that clearly is something that didn't use to happen as much. At this point in time, obviously, it was concerning enough for us, that we decided that it was appropriate to incorporate it into our guidance despite pretty strong enthusiasm by our go-to-market organizations. Because again, it's still affects the most reliable tool that we have for forecasting. Mike Latimore - Northland Securities Inc.: Okay, it's helpful. And then in terms of the Lync related revenue, was that sort of as expected in the March quarter? Or was it better or worse than expected?

I would say it was within line of our expectations. You know, we use this within the early into the ramp, and I want to be clear that that's Unified Communications, that's not just Lync-related -- there are definitely other UC ecosystem vendors. We've got vibrant business with them, and that business is also growing. Now Lync is more of a -- kind of a step function in terms of platform impact. But again, probably still at an early stage in terms of last quarter, and where was it relative to the launch of that platform and adoption from it. Mike Latimore - Northland Securities Inc.: I think Microsoft has some incentive to get Lync deployed by the end of June, and so do you foresee that having a solid impact on the business? Or is it one of these things where it might lead to kind of like you said, more "instant messaging sort of applications" initially and voice later, how do you think about that playing up?

So I think that's a -- I won't comment on your knowledge there. I mean, much of my knowledge comes under NDA, but I would say that it's not just about the incentives for the corporation. And clearly, it is easier to implement this for instant messaging, than it is to implement it for voice. For a large blue chip corporation, the communication system is a major critical platform. When you implement something like this, you got to look at your server architecture. You got to look at your end-user adoption, if you're implementing other things that involve process, changes, be it hot desking, hoteling, be it how you are deploying and managing remote workers. You have things that you've got to put into place. Particularly, if you're ripping and replacing and you're relying on this for voice, there is training and there's other things involved. So incentives alone and a push, can affect things a little bit, but at the same time, corporations as it relates to voice, have got to some degree, they're own timing as well. So I'm sure that Microsoft trying to push things will have an effect, I think it's ultimately -- there's no question that we're going to see adoption. How much that can be pushed, relative to this market, rather than both? We'll see. Mike Latimore - Northland Securities Inc.: It sounds like despite this week low in bookings, there's enough activity among all the different UC vendors that you see the June quarter continuing to be -- to show sequential growth in UC is that right?

Yes. We're projecting sequential growth in UC.

Your next question comes from the line of Rob Crystal from Goldman Sachs. Robert Crystal - Goldman Sachs: I had a question about working capital, as you sort of grow revenues this year, Barbara, what should we think about in terms of percentage of revenue that gets tied up in the incremental revenue there as working capital? And are there any puts or takes, let's say we think AR's a little bit higher than normal today and/or the same with inventory? Can you help us with that?

So let me do that in terms of the kind of metrics we regularly look at. So our DSO, we would expect to continue to be in the mid-50s, a range close to the 54-55, 53-55 kind of number. Inventory turns, in general, over the course of the year, I think will be in the range of 5. We do have a couple of last time buys we need execute on with some components for some of our products and that tends to drag things down a little bit. I can surf above that now, but around that, around that level -- and we typically have a little over a month, 45 days in accounts payable of cost. Robert Crystal - Goldman Sachs: So I guess, another way to think about it is, we should think about free cash flow, sort of slightly less than net income this year? And non-GAAP net income is that the right way to think about it as, I guess depreciation in CapEx are almost awash and then maybe there's a little bit of incremental working capital that gets tied up as you grow the top line? But free cash flow should be pretty close to non-GAAP net income is that correct?

It should be pretty close. Yes.

And we are showing no further questions. And I'll turn the call back over to Greg Klaben.

Thank you very much, Michelle. As Ken mentioned, I'd like to remind you that on May 18, we're going to be holding an analyst event at the New York Stock Exchange in New York City. It's going to run from 10 a.m. in the morning to roughly 2:30 in the afternoon. If you'd like to get more information, please, you can call me or email me. Thanks very much for joining us today.

This concludes today's conference. You may now disconnect.