Greg Klaben - Vice President of Investor Relations S. Kenneth Kannappan - Chief Executive Officer, President and Executive Director Pamela J. Strayer - Chief Financial Officer and Senior Vice President Barbara V. Scherer - Former Chief Financial Officer, Principal Accounting Officer and Senior Vice President of Finance & Administration

John F. Bright - Avondale Partners, LLC, Research Division David M. King - Roth Capital Partners, LLC, Research Division Paul Coster - JP Morgan Chase & Co, Research Division Tavis C. McCourt - Raymond James & Associates, Inc., Research Division Rohit N. Chopra - Wedbush Securities Inc., Research Division Gregory Burns - Sidoti & Company, LLC Michael Latimore - Northland Capital Markets, Research Division

Good afternoon. My name is Shannon, and I will be your conference operator. At this time, I would like to welcome everyone to the Plantronics First Quarter Fiscal '13 Conference Call. [Operator Instructions] I would now like to turn the call over to our host, Mr. Greg Klaben. Sir, you may begin.

Thanks very much, Shannon. Joining me today are Ken Kannappan, Plantronics' President and CEO; Pam Strayer, Senior Vice President and CFO; and Barbara Scherer, Senior Vice President. 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 standard boilerplate. We update these risk factors every quarter for significant changes, adding and dropping language and changing the order, depending upon the timing and potential impact of the concerns that we foresee. We believe forecasting our 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 Form 10-K, today's press release and other SEC filings. We will be discussing non-GAAP measures during today's call, and we have reconciled these measures in our earnings press release and in our quarterly analyst metric sheet, both available on the Plantronics website on the Investor Relations page. Plantronics' first quarter fiscal 2013 net revenues were $181.4 million compared with guidance provided on May 1 of $177 million to $182 million. Plantronics' GAAP diluted earnings per share was $0.55 compared with $0.56 in the same quarter of the prior year and guidance of $0.50 to $0.55. Non-GAAP diluted earnings per share for the first quarter of fiscal 2013 was $0.63 compared with $0.62 in the prior year quarter and guidance of $0.58 to $0.63. The difference between GAAP and non-GAAP EPS for the first quarter consists of stock-based compensation charges and accelerated depreciation, both net of the associated tax impact. With that, I'll turn the call over to Ken. S. Kenneth Kannappan: Thank you, Greg. Before I get started, I want to introduce to you Pam Strayer, our new Chief Financial Officer. Pam joins us from Autodesk, where she was Vice President of Finance, Principal Accounting Officer and Controller. We found out through the search process that the position here is very attractive, and we had frankly very many outstanding candidates. Having said that, we thought Pam was, by far, the most talented in terms of her abilities and her potential. And we're really very, very pleased to have her on board as the successor to Barbara. I'd like to have Pam say hello for a second. Pamela J. Strayer: Thanks, Ken. Hello, everyone. I look forward to talking to all of you today. I'm happy to be here. S. Kenneth Kannappan: Thanks, Pam. So in terms of our results, there's really 3 key points that I would like to cover. The first one is that, relative to a pretty volatile economic environment, we had a good Q1. The second one is that the growing lead we've established in providing contextual intelligence with our UC solutions. And the third one is the positive response to our Plantronics Developer Connection, and how it adds value to our customers. First, as Greg covered, our financial results worked towards the high end of our guidance range. We did experience year-to-year and sequential growth in both OCC and the mobile product categories in Q1. We will remain cautious on our spending during Q2 due to macroeconomic concerns. UC grew by a healthy 48% from the prior Q1, although sequential growth was weaker than in past quarters. We attribute this lower sequential growth primarily to economic weakness and remain confident over the long term. On the mobile side, our market share remains strong in the U.S. It is improving overseas. Our share is much higher in our core area of voice communications and lower in Bluetooth stereo. During last quarter's earnings call, I mentioned a promising new product called the BackBeat GO. It's an extremely small stereo Bluetooth headset we started shipping this April, and it's helping us gain some share in the stereo Bluetooth market. Second, I want to mention the importance of our lead and contextual intelligence. One of the most important trends in the market include Big Data, cloud and BYOD or Bring Your Own Device. This creates an enormous opportunity and necessity to provide simplicity to all of the information and potential options you have. Contextual intelligence is about knowing what someone would like to do and processing the relevant information to proactively assist the individual, regardless of the device that they are using. We began pioneering this in our solutions well over a year ago. We have the best solutions for UC applications amongst our competitors. This has allowed us to reinforce the Simply Smarter Communications branding we introduced 18 months ago. Our partners, both major communications vendors, system integrators and independent software vendors, as well as our end customers, are increasingly recognizing the power of our solutions and how critical it is strategically to navigate the byzantine array of capabilities people have for their devices and working preferences. This is raising our importance as a partner and, almost by definition, forces deeper integration with our partner solutions. This leads me to my third point, which is the launch and positive reception of our Plantronics Developer Connection. While we could integrate with some of our partners, we don't believe the added expense we would incur in additional resources is the best approach. And even if we did add resources, in many case, development must still be done by our partners anyway. Accordingly, in May, we launched this new ecosystem. The Plantronics Developer Connection, PDC, provides programming interfaces, technical resources and forums, which serves as a community for developers to connect with Plantronics' engineers. The PDC also comes with an emulator that allows developers to test applications without a headset. It permits developers to combine contextual intelligence and smart communications with new and existing applications that can benefit from information, such as knowing the user's headsets state, communications capabilities, proximity and so forth. This is obviously valuable to communications vendors, such as our key communication partners, but it's also valuable for processing to linked communications or for applications such as ERP systems are also looking to speed cycle time and organizations in the field of CBP or communications-enabled business processes is still developing. While the PDC was launched only recently, the response of major players and independent software vendors taking advantage of its capability has been positive. In Cisco Live, the health care application was shown that can speed access to the right health care professional and improved quality of care. Further application that have been demonstrated improved conferencing, contact centers and the effectiveness of salesforce.com. We plan to increase the portion of our product portfolio that offers contextual intelligence and increase the amount of user context that we can bring to UC and other applications to ultimately improve workflow in organizations large and small. Our goals for fiscal year 2013 are to grow our revenues, strengthen our consumer business, fortify the value of our Simply Smarter Communications brand of solutions and improve our operational effectiveness. We believe focusing on these areas will increase long-term stockholder value and cash flow generation. Now I'd like to turn the call over to Barbara to review our long-term Unified Communications opportunity. As you know, this will be Barbara's last call with us, as she is retiring shortly. Let's take this opportunity to thank Barbara for 15 years as an exceptional CFO and business partner. As always, going above and beyond, I would also like to thank Barbara for her help in recruiting Pam and overlapping with her to ensure a very smooth transition. Barbara V. Scherer: Thanks, Ken. Hello again, everyone. Thank you for your support and interest in Plantronics and also very much to the relationship I've enjoyed with so many of you over the 15.5 years I've been with the company. I decided to retire from full-time CFO work to focus on board-level work and other interesting business opportunities, while enjoying a much more flexible lifestyle and that's time for family, friends and travel. I continue to be enthusiastic about Plantronics' market opportunities and therefore, its revenue and profit outlook. The markets we currently serve totaled about $2 billion in calendar '11 and are expected to grow at a compound annual growth rate of 8% to 9%, $3.1 billion by calendar 2016. Within that, OCC is expected to grow at 13% to 14% CAGR, driven by the growth of Unified Communications. Specifically, we expect the industry revenues for OCC products to grow from $920 million in calendar '11 to $1.7 billion by calendar '16. Fundamentally, the driver for that 13% to 14% growth is that the next communication platform for enterprise is the UC platform. CIOs are rolling out UC and the decision as to who gets a headset or other audio endpoint becomes a corporate decision. The CIO is making that decision and issuing headsets as part of the overall solution. Typically, 50% to 75% of knowledge workers are expected to receive headsets as part of a UC rollout. Our 5-year market model, which we discussed in our May year-end earnings call, assumes that by calendar 2016, that the installed base of active UC licenses supporting voice is 73 million. And 52% of those knowledge workers are using headsets or other audio endpoints, resulting in an installed base of audio endpoints of 38 million. This leads to an industry revenue from UC audio endpoint of $900 million in 2016. UC industry revenues of $900 million would support far more than $350 million in UC revenues for Plantronics in calendar 2016. 2016 is not the endpoint. Frost & Sullivan expects a percent of all knowledge workers worldwide, covered by a UC license, to grow from less than 20% in 2016 to about 40% in 2020 and to continue to grow after that to 70% by 2025. Why is this? UC is a communications technology that is inherently viral. As more players use it, others tend to. We have to use Adobe and Word and email and texting because others communicate to you using those applications. If your customers and partners expect to use and exchange presence information, desktop video and so forth, you need to use it, too. This sounds that many companies will not want to fall behind the curve on this technology. Finally, many enterprise communication vendors will begin to stop supporting their Legacy PBX systems. We can then see a strong growth driven by the paradigm shift to UC for well over a decade. As the number of knowledge workers covered by UC licenses grows, we believe the installed base and the revenues associated with the sale of audio endpoint, such as those we make, to grow even faster. The reason audio endpoint revenue growth should continue to grow strongly after 2016 include upgrades from the installed base should start to kick in, so that they're both new and replacement revenue in the revenue stream; deployment should begin to go faster, given all that will be learned during the first 5 years of UC and enterprise; and 3, value-add applications will be available to deliver on the promise of contextual intelligence. So this is my last conference call with Plantronics, but not yet my last interaction with the investment community representing Plantronics. Pam, Greg and I will be traveling to Boston next week for the Oppenheimer Conference and look forward to seeing you on Tuesday, August 14 in Boston. I very much look forward to introducing Pam to as many of you, who can make it as possible. I'm sure you'll be as impressed with her as I've been. She was my absolutely top pick of an outstanding pool of candidates. I particularly like her unique blend of deep financial strength, coupled with a strategic and analytical mind and her software background. Adding value through software is becoming increasingly important for many tech companies and certainly is very much part of the strategy for Plantronics. While we've added software engineers and other resources, having a strong CFO, who knows software and services, will be really valuable to the company as it moves forward, both in terms of managing the accounting and other intricacies of that but more importantly, providing experienced guidance to lead the company to continued success. In short, I'm excited about my future and the future for Plantronics. With that, let me turn it over to Pam. Pamela J. Strayer: Thank you, Barbara. I'm going to be turning back to financial results for the first quarter. I'd like to highlight a few key points. Our net revenues, operating income and EPS were all at the high end of our guidance. Our Asia-Pacific net revenues rebounded from the prior quarter, achieving historically high results, with growth in all product categories in that region. Our gross margin remained above our long-term target range, and our operating margin was at the low end of our long-term target range, as we continued making strategic investments in our long-term UC opportunity. We anticipate that our operating expenses will decline in Q2 as several sales, marketing and other events in Q1 do not recur in Q2. We also anticipate that our operating margin will remain within our long-term target range in Q2. We've recently completed our 1 million share repurchase program that was announced in March 2012, and we announced a new 1 million share program today as part of our commitment to return cash in excess of our operating needs to our stockholders. We expect that share repurchases going forward will be a more measured pace, given the 8 million shares purchased last fiscal year and the roughly 600,000 shares already purchased in the current fiscal year to date. Now turning to details on the quarter. Our first quarter net revenues of $181.4 million were near the high end of the guidance range we provided. Our non-GAAP operating income of $36.9 million was just above the high end of the guidance range, primarily due to our higher gross margins. Our non-GAAP diluted EPS was at the high end of guidance, constrained by a higher-than-anticipated tax rate. Before turning to revenues, note that beginning in Q1, we changed our geographical revenue reporting. The geographic region we previously called Europe, Middle East and Africa, or EMEA, no longer includes the Middle East subregion and is now called Europe and Africa or ENA. The Middle East subregion is now part of our Asia-Pacific, or APAC region, which will not be renamed. All historical results and comparisons have been presented in conformance with the current classification. Total net revenues for the June quarter came in at $181.4 million, which is up $5.8 million or 3% compared to the first quarter last year. While we experienced healthy growth in our Americas and Asia-Pacific region, our Europe and Africa region declined slightly year-on-year, primarily due to economic weakness in the region. Now I will cover net revenue results by key product line as they compare to Q1 of the prior fiscal year. OCC net revenues of $134 million were up $3 million or 2%. Net revenues from OCC products grew in the U.S. and also in Asia-Pac region but dropped in Europe and Africa versus the prior year. Net revenues from UC products grew $9 million or 48% versus the prior year. In the Asia-Pacific region, we had a good growth in traditional OCC and in UC products. However, in the other regions economically [indiscernible] affected OCC and UC faired better by comparison. Net revenues from mobile products were $36.2 million, up $4 million or 12%. We experienced growth in all regions from our mobile products with the strongest growth in Asia Pacific and the Americas. Our new products in this space continue to be well received by the market. Gaming and Computer audio products were down $0.6 million or 8%. As we discussed on our last call, we expect to refresh our gaming product line and are targeting future growth in this category. Geographically, our revenue mix in Q1 was 57% domestic and 43% international. Non-GAAP gross margin was 54.3%. Non-GAAP operating expenses were $61.5 million in the current quarter or 33.9% of net revenues. Our non-GAAP operating margin was 20.3% in Q1, down from 22.4% in Q1 last year and down slightly from 20.4% in the prior quarter. Our effective non-GAAP tax rate for the quarter was 27% compared to 25.7% in Q1 of the prior year. Our non-GAAP EPS guidance for the quarter was based on a tax rate of 26%. However, during [ph] the fourth quarter, we updated our views on the likely geographic income mix we will have for the full fiscal year and determined we needed to increase this rate to 27%, given the weaker conditions in Europe. As a result of all these items, our Q1 non-GAAP net income of $26.9 million was $2.8 million or 9% lower than the non-GAAP net income of $29.8 million in Q1 of the prior year. Our non-GAAP EPS of $0.63 is up by $0.01 or 2% from a year ago. It should be noted that the cumulative benefit of our stock repurchase programs over the past year contributed to a decrease in our weighted-average diluted share count of 11% compared to Q1 of the prior year. Now turning to balance sheet and cash flow highlights. We finished the quarter with $384.7 million in cash and investments, after expenditures of $16.5 million for repurchases of our common stock and $16.6 million in capital expenditures. We generated approximately $28 million in cash flow from operations in the first quarter and continue to have a strong financial position. Of the $384.7 million in cash and investments at quarter end, $13 million was domestic. DSO was 54 days, down from 56 days in Q1 of the prior year and down from 57 days sequentially. Net inventories were $58.9 million, up $1.2 million versus a year ago and $5.2 million from March. Inventory turns of 5.7 remain flat versus a year ago and slowed slightly from 6.1 in March. As we've disclosed in June, we purchased and are building out a new manufacturing facility in Tijuana, Mexico, which we plan to put into service early next summer. Once finished, this new site will allow us to exit our 4 leased manufacturing sites in Tijuana and consolidate into one facility with an anticipated annualized savings of several million dollars. The total cost for this project is estimated at $30 million. We closed on the purchase of the land and building in June for $11 million and are now under way with detailed planning for the renovation and expansion of the facility. Now that the purchase is behind us, we are incurring accelerated depreciation based on the remaining useful life of the asset in the existing facilities that will not be reused in the new facility. In Q1, accelerated depreciation amounted to approximately $200,000, and we currently anticipate approximately $0.5 million per quarter for the remainder of fiscal 2013 and $400,000 for the first quarter of fiscal 2014. In addition, we anticipate a one-time charge in the first quarter of next fiscal year of approximately $2 million, related to remaining lease charges on a daily move to new facility. Decelerated depreciation and the one-time lease charge have been and will be excluded from our non-GAAP presentation of results. Our full year estimates for capital expenditures is $47 million to $50 million, of which we expect approximately $25 million to be related to the new manufacturing facility. The remaining $5 million of the total $30 million facility cost is expected to be incurred in the next fiscal year. Turning to the outlook. Given the macroeconomic environment, we continue to remain somewhat cautious. The macroeconomic environment remains uncertain, and the market's volatility have continued to reflect that. With certain key countries in Europe in recession and the U.S. and China experiencing slower growth, we continue to be cautious about the impact the economy may have on our core OCC business. We believe total net revenues for the September quarter will be in the range of $175 million to $180 million. This range contemplates current macroeconomic conditions, which are particularly challenging in Europe. Depending on the revenue mix and other factors, we believe non-GAAP operating income will be approximately $36 million to $39 million or 20.6% to 20.7% of revenues, within our target range. Based on all the above, we currently expect non-GAAP EPS to be $0.63 to $0.68, on average diluted shares outstanding of $42.2 million. The GAAP charges we expect in the coming quarter include approximately $4.7 million in stock-based compensation expense and $0.5 million in accelerated depreciation or $0.09 to EPS. We therefore expect GAAP EPS of $0.54 to $0.59 for the September quarter. Although operating income estimate I've outlined are lower than Q2 last year, our plan for the entire fiscal year calls for an increase in net revenues, operating income and EPS. And despite the challenging environment, we continue to be focused on achieving these results, while making the right investments for the longer term as well. With that, I'll turn it back over to Shannon, the conference facilitator for the Q&A session.

[Operator Instructions] And our first question comes from the line of John Bright with Avondale Partners. John F. Bright - Avondale Partners, LLC, Research Division: First question is what's driving the continued outperformance in gross margin? And why is this not the new normal? Pamela J. Strayer: John, so our gross margin this quarter benefited from a lot of small improvement. So we had better freight costs. We also had lower returns, so our return reserve was down. We were also able to take advantage of some lower costs in our component parts. So we are expecting our gross margin next quarter to be about the same level, maybe slightly higher. S. Kenneth Kannappan: Maybe just talk to the long term, John, for a second. We still believe our long-term model is correct. At this point in time, we're still very early in what we think is something that's going to significantly increase the size of the market. And we just don't believe that over the long term, those sorts of gross margins are sustainable, and that's why we've got a lower number in the model. It's not a near-term signal that we see something moving, but it's just what we think is sustainable over time. John F. Bright - Avondale Partners, LLC, Research Division: And you mentioned in the prepared text, contextual intelligence, providing noteworthy product differentiation. Maybe put some tangible brackets around that. Give us some examples of this. And is that either impacting -- improving ASPs or helping with the gross margin? S. Kenneth Kannappan: So first part of the question was to give some tangible examples. In its course, we've introduced this to Europe now, and so some of them are already out in the market. Now I'll talk about some that are kind of coming so to speak. So things that are already in the market include things like our sensor that knows whether or not you've got the headset on. Therefore, when you put it on, it automatically answers the call for you. It automatically changes your default audio device to the one that is linked to that product you're using. It does a variety of other things. It pauses other applications for you. It makes sure the audio is routed to the device you're using. When you take it off, it does a variety of other functions for you. Distance is another thing that we've incorporated in there. If you're not near, we understand, you can't see the screen. That's an opportunity to change so that you no longer see a text message you're not within the range of. And you can put it over audio, so you can hear that. We've talked about -- in the call, I talked about at Cisco Live, where there was a customer talking about the integration with Cisco for health care application that enabled more effective routing of calls to medical experts. There are certainly other applications that we've talked about with contact centers: many times, they want to reach a particular expert and need to have better understanding of availability of the expert to route things, as well as in conferencing where you want to know whether or not someone is actually off-line for a moment in time. And so there's a variety of other vendors that are integrating some of the information that we provide in order to either route and reach people more effectively or to provide a more appropriate type of communications to the individual on the receiving end. This is kind of the early stage and what we think is a very long-cycle opportunity. I've talked about this before in terms of a simple search you do, whether it's on Google and you're looking for an Italian restaurant. And it gives you one where you're located rather than perhaps where your home is or where your office is, because that's what's more relevant to you. So this entire field of contextual intelligence is early and is getting more and more integrated with other people's information in order to provide you with what you want automatically and intuitively. And so that's kind of the strategic direction, and we have a lot of opportunities to add contextual intelligence, which we are looking to do and to integrate it with other people's information and applications, which we're also looking to do. In terms of the effect on margins, which was the second part of your question, it's very, very difficult to isolate a single element into a fail process, and whether you won because of this or whether you got a higher price than you otherwise would have because of this. We certainly don't think it's hurting. There are many companies out there that are deciding we're the right strategic partner of choice because of what we can offer. How much more we win as a result of that, how much more money we get out of that is really, really hard to isolate that elements from others, but we think it's helping. John F. Bright - Avondale Partners, LLC, Research Division: Final question on guidance. On the sales side, it looks like sequentially, it's slightly down. You mentioned concern on macro spending concerns. I've asked this question continually on the calls, Ken. Any signs of cannibalization on the office and contact center side from UC? S. Kenneth Kannappan: So unfortunately, I have to give you the same answer, which is we really don't believe that, by definition, it can be significant. It doesn't mean it's 0, but it's very small. And I -- this kind of reciting case, there's new people on the call. But if I had a company out there, if we had 100,000 people at the company, on average, on a global basis, we might have 7,000 people using headsets at that particular company. Now it might be a little higher in the U.S., probably be a lot higher with financial services, but that would be a reasonable answer. We might have somewhere around 1,400 headsets being purchased from us as a replacement flow per year, very, very steady, okay? A little over 100 a month. If we had to use the installation, we might get 50,000 headsets coming to us in the first year. We don't think the replacement cycle would be slower, if anything we think it might be faster. So what would I lose in the first year? Well, I would lose 1,400 headsets, okay, in the first year, but I gained 50,000. That to me is not a significant amount of cannibalization from a UC opportunity. Of course, it varies by vendor, and it varies by company. It's still fairly early stage, but that's why we don't think there is significant cannibalization.

And your next question comes from the line of David King with Roth Capital. David M. King - Roth Capital Partners, LLC, Research Division: I guess following up on John's question a bit on the gross margin, just trying to dig into that. Has there been any strengths, I guess, in any particular segment versus your expectations that's kind of driving this. I mean I understand some of this is freight cost this quarter, but I mean it sounds like some -- there's some other factors driving it. Is there any specific segment that you would point to? Pamela J. Strayer: No. I would say that our gross margins always vary based on product mix a little bit. And that's going to continue going forward. But the benefit we saw this quarter was really from cost management. It wasn't from a product mix or a particular segment doing better than another. David M. King - Roth Capital Partners, LLC, Research Division: Okay, that's helpful. And then, I guess, in terms of the second quarter guidance, you guided revenue down 2% sequentially, give or take. Any -- do you have any color as to how that might segment out, Pam? S. Kenneth Kannappan: Let me cover that a little bit. So I think that, from a geographic basis, obviously, the heart of our concerns are within Europe. And I would say that secondarily, and Pam didn't mention that, there's been increasing concerns over other economies as well, other leading major economies. So that's the source of our concern. It's not really on a business segment basis. It's more geographically driven by economic conditions.

Our next question comes from the line of Paul Coster with J.P. Morgan. Paul Coster - JP Morgan Chase & Co, Research Division: Turning to the UC segment first. So I mean, it feels a little bit disappointing. And normally, when you've got a massive opportunity of this nature emerging then it kind of grows and grows without too much of a cyclical kind of interruption. It -- so it feels a bit squishy at the moment. So is there anything you can say about the nature of the delays in kind of purchasing, Ken? Is it in certain geographies? Is it in certain segments of geographies, for instance, the enterprise versus SMBs and the financial vertical versus other verticals? S. Kenneth Kannappan: So I really think it has been driven by economic conditions. And you're right, sometimes, with new technologies, if there are a powerful point in the curve, they are able to drive right through that. We haven't seen that occur at this point in time. I think it may still be a little too nascent. We haven't hit the real strong part of that curve yet. I guess I would say that I -- beyond geography, I have not seen a particular vertical industry that's been able to kind of go forward despite this or be less effective. Really, it looks significantly more scattered from that. It's certainly more in the enterprise area, where we've seen some of those decisions come down for slowing, as opposed to the SMB. Paul Coster - JP Morgan Chase & Co, Research Division: Ken, when you talk about weakness in the region, I sort of get a sense that you're referring to probably the same news reports and data points as us, or is there something that -- are you really looking at internal data when you make that observation about weakness in Europe and some concerns elsewhere? S. Kenneth Kannappan: Well, actually, the data is heavily correlated. I think that our business has always been somewhat linked to economic activity, and I think psychology is also linked to it. When people read those same newspapers, they often decide, "Let's wait a little bit and see how things go." So it just reduces the urgency around the world economy. And where the headlines and fear is highest, it reduces the urgency even more sharply. Paul Coster - JP Morgan Chase & Co, Research Division: Is there anything you can say about your channel partners and the inventory levels that they're running with? And how many days of sort of sale inventory you think there is in the retail channel for mobile, for instance? Pamela J. Strayer: Yes. I don't think we've got the detail broken down by product group. I would say that weeks on hand, we're about 4.6 at the end of June, which was up slightly from the end of the March quarter and up slightly from about 4 weeks on hand at the end of June of last year. Paul Coster - JP Morgan Chase & Co, Research Division: Very good. And then my last question is sort of just trivial housekeeping, but I seem to get it wrong every quarter and that is your interest income. What kind of percentage interest are you earning on your cash balances? S. Kenneth Kannappan: It's very low. Pamela J. Strayer: It's closer to 0 than 0.5%. S. Kenneth Kannappan: The policy on that is that we really don't take risk on the cash. And so we are heavily reduced by the low rates on the risk-free securities.

And your next question comes from the line of Tavis McCourt with Raymond James. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Barbara, I get to ask you one last quarter. What was the cash flow from operations and capital spending in the quarter? Barbara V. Scherer: Oh my gosh, I don't even have those numbers right at hand. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: No worries, I can wait for the queue. Ken, on the -- on UC, I think there's a new version of Microsoft Lync launching some time in the next couple of quarters. I know on Wave 14, there was a little bit of hiccup in your business as that new version was launched. Do you expect anything similar this time? Or is the business just so much more mature now, you probably wouldn't expect that? S. Kenneth Kannappan: Well, it's always hard to tell how some of these things play out. There are new offerings from major enterprise vendors, Cisco recently with Jabber extending and certainly, Microsoft with the upgraded version of Lync coming. It's hard to say how -- to your point, I mean, this is so embryonic, and we haven't had repetition on this. How significant enterprises will take this, whether they will choose to pause with deployment plans as a result, and if so by how much in terms of new proof of concept in piloting. So it's a variable. We think -- to your other comment, though, we think probably the variable diminishes a little bit over time. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: And then I think you mentioned that Europe and Africa segment was down slightly year-over-year. How severely was it down, if at all, sequentially? And how did currency impact? And I guess talk a little bit how we should think that the recent decline in the euro will flow through the income statement. Did you feel that all in the June quarter? Or did that role in over a few quarters? Barbara V. Scherer: Okay, so it's Barbara again. First, let me cycle back first to your cash flow from operations question. For Q1, it was $28.2 million and CapEx was $16.6 million, of which $11 million was the building and land purchase that Pam covered. And on Europe and Africa, it was down 1.3% versus a year ago and 2.9% sequentially. That 2.9% sequential was about twice the decline that we experienced in the U.S., which is down 1.5% sequentially. With our hedging strategy, the FX doesn't catch up with us for a while, because we hedge 12 months out, 1 month at a time. So we have a window in front of us at this point in time of 12 months in hedged. And it's a costless collar. So we've got a floor and a ceiling. And so we really -- we did have some negative impact from FX in the quarter on the P&L. But in total, to the operating income line versus a year ago, it's very minimal, less than $0.5 million. Eventually, it would, of course, catch up with us significantly because most of our Europe and Africa revenue is, in fact, nominated in local currencies. Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: That really wouldn't hit you until this time next year because of the 1-year hedges? Barbara V. Scherer: Yes. It's -- some of those hedges -- the spot rates drop during the summer and so, not necessarily this time, probably more like June -- I'm sorry, April, May of... Tavis C. McCourt - Raymond James & Associates, Inc., Research Division: Next year. Barbara V. Scherer: Yes.

And your next question comes from the line of Rohit Chopra of Wedbush. Rohit N. Chopra - Wedbush Securities Inc., Research Division: Question on R&D. So it's been picking up just a little bit recently. I just wanted to get a sense, do you envision extracting some savings from the R&D line, as well as SG&A, as those one-time expenses come out of the sales and marketing line? Or is that mostly sales and marketing? That's my first question. Pamela J. Strayer: Yes. I would say it's mostly sales and marketing. I don't think we give a lot of detail by functional line item. But we expect total operating expenses next quarter to come down by $2 million in total. Most of that will come out of the sales and marketing line, but they'll be a little bit out of R&D because of one-time expenses. Rohit N. Chopra - Wedbush Securities Inc., Research Division: All right. And then just another question on the overall financial model. Because of Europe, should we just continue to expect around 27% on the geos -- just because of the geo split, 27% on tax? Pamela J. Strayer: Yes. That's our current best estimate for the rest of the year. That's the rate that we'll be using. Rohit N. Chopra - Wedbush Securities Inc., Research Division: All right. And then 2 other questions. One, I thought maybe, Ken, you can just talk a little bit about the competitive environment. Has that changed anywhere on any of the product lines, maybe UC being a focus? And then the last piece that maybe you can talk about is that new product, which is the stereo Bluetooth headset that obviously contributed to APAC. APAC was very strong. Is that more of a one-time thing, where you're getting the stuff into the market? Or should we continue to see some strength in the APAC region just because of this, the high adoption rate of this new product? S. Kenneth Kannappan: So -- okay, there are 2 different questions. We're going to try to remember them. But the first one, really in terms of competitive intensity, I would say, no significant change there. If anything, we've seen what I would call kind of a gradual, continued gradual increase in competitive intensity. I think that everyone sees the UC market opportunity and is convinced of it. But at the same time, the most of the market is yet to materialize. So while people are stepping up resources and increasingly, in response to our clear leadership in terms of value, we're seeing all the heavier price-cutting. At the same time, it's not a dramatic change that I could point to from period to period but rather something that's slight from period to period. I think that in terms of the growth in APAC, for sure, we just launched the product. For sure, it, therefore, ramps up some. And so, at least from the standpoint of that product, I don't expect the same sort of market share growth that we've had in the last quarter to continue. We think it will continue to sell well in the market and are still some share gain opportunities for us in some regions. But the primary incremental impact of that product was probably in the last quarter. Now there are other products that we intend to bring out into the Bluetooth markets, I don't want you to take something overly negative out of that comment that's not intended. But from the standpoint of that product, the primary lift in terms of sell-through has been achieved.

Your next question comes from the line of Greg Burns with Sidoti & Company. Gregory Burns - Sidoti & Company, LLC: Just a question about the consolidation in Mexico. What is the timing of when we should start to expect to see the -- some of the savings from that -- those moves? And is there going to be any period of duplicative costs as you're moving to a new facility? S. Kenneth Kannappan: The part of your question I didn't hear at the very end, but I'll cover the part that I heard at the beginning. So we are seeing an opportunity to reduce cost, really because it's actually difficult to manage with 4 separate operating buildings. So it's more difficult in terms of logistics, in terms of the management structure you have to have, in terms of material flows and so forth. So we can operate more effectively and at lower costs in a single facility than we can in 4 separate facilities. In addition to which, it just so happens that the property market there is relatively soft compared to where we have been before. And so we're able to take advantage of the opportunity to buy far cheaper than we could lease. And finally, we'll be putting in a solar infrastructure that also will save us some money in terms of operating expenses. So we expect that we will achieve most of the savings pretty rapidly after the facility is up in operation, which we expect to be early summer of next year. Now there was another part of the question I don't think I heard. Gregory Burns - Sidoti & Company, LLC: I was just wondering if there will be any kind of duplicate costs, as you're moving into new facility for a period of time? Or is it just kind of a clean... S. Kenneth Kannappan: So that's going to be a very small amount of undoubtedly inventory bulge and some one-time costs, but we don't think those are going to be significant. Gregory Burns - Sidoti & Company, LLC: Okay. And I just want to touch on the UC sales in the quarter, up sequentially, probably the lowest rate, I guess over the past year. So -- and you might have answered this. But is that just a function of the lumpiness of the business? Are you seeing sale cycles extend? Or if you can comment to that, that will be helpful. S. Kenneth Kannappan: Yes. We don't think it's primarily a function of lumpiness of the business. We think it's primarily a function of the economy. We have seen this slow before and then picked back up. In this case, we really do think it's up primarily due to economic factors.

And your final question in queue comes from the line of Mike Latimore with Northland Capital. Michael Latimore - Northland Capital Markets, Research Division: This I guess is on UC. So if UC is slowed a little bit by economic trends, should we assume -- I mean, part of your guidance was around factoring in economic trends. So should we assume UC stays kind of a little bit slower sequentially for a while? S. Kenneth Kannappan: Well, we don't go out beyond a single quarter, except when we go very far. And so I don't want to give you an assumption for the quarter after the coming quarter. But clearly, what we are trying to register with you is that our business in total, UC, consumer, Office and Contact Center, we think is being affected by economic factors and will be in the current quarter. Michael Latimore - Northland Capital Markets, Research Division: All right. And then in terms of the -- obviously, there's a number of Unified Communications platform that drive your headset sales. Has the order of those platforms, in terms of which one is the main driver, has there clearly been a number -- sort of #1 driver for a couple of quarters now? Or has the underlying UC platform shifted around on a quarterly basis? S. Kenneth Kannappan: It doesn't really shift that dramatically on a quarterly basis. Don't get me wrong. These vendors are fighting tooth and nail with each other for market share. And they may have shifts in their competitive win rate based on things. But the deployments from us tend to lag and tend to expand out over time, so we don't get the kind of radical shift, where we are from quarter-to-quarter in our market share mix. Michael Latimore - Northland Capital Markets, Research Division: So there's been a clear #1 driver for a couple of quarters now. S. Kenneth Kannappan: Well, I think that -- again, I really don't like to talk about our vendors, because I don't think they want to hear about my comments about their business. I think that the leaders in that market are pretty well known. We work with all of them. Again, I don't think there's been a radical shift over the last quarter. Michael Latimore - Northland Capital Markets, Research Division: And then how about just in terms of, like 6 months ago or so, you talked about order volatility increasing some. Are we still in the same kind of mode as we were 6 months ago or has it changed much? S. Kenneth Kannappan: We still think we have order volatility. I mean, if you look at the data, it's still not in my mind following with this high R-squared, so to speak, the historic trends that used to. We still have data moving out of the line and then sometimes coming back for the quarter as a whole. The volatility is probably a little lower. But for those of us dealing with it week by week, month by month, trying to forecast materials and supply chains and so forth, the volatility remains higher. Michael Latimore - Northland Capital Markets, Research Division: And just last question, you have not made many acquisitions. I guess any change in your view on acquisitions, more or less, likely going forward? S. Kenneth Kannappan: Well, we don't really have any plans for any significant acquisitions. There are very small things that we might do to add engineering capability or something else, but there's nothing significant that we have on the roadmap. Barbara, do you want to comment? Pamela J. Strayer: No. S. Kenneth Kannappan: Okay.

There are no more questions in queue. S. Kenneth Kannappan: All right. Thank you all very much. We appreciate your time. If you have any further questions, we're all available via phone. Thank you.

Ladies and gentlemen, this does conclude today's call. You may now disconnect.