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

John Bright - Avondale Partners Reik Read - Robert Baird Tavis McCourt - Morgan Keegan Ingrid Ebeling - JMP Securities

Welcome to the Plantronics fourth quarter fiscal year 2008 financial results conference call. (Operator Instructions) Mr. Klaben, you may begin your conference.

Joining me today to discuss our fourth quarter fiscal 2008 financial results are Ken Kannappan, Plantronics President and CEO, and Barbara Scherer, Senior Vice President of Finance & Administration and CFO. I would 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, adding and dropping language and changing the order depending upon the timing and potential impact of the concerns that we foresee. We believe forecasting the results of operations is becoming increasingly 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 filings. Plantronics fourth quarter fiscal 2008 net revenues of $208.7 million compare with $194.7 million in the fourth quarter of fiscal 2007, and were above our guidance of $195 to $205 million. Plantronics GAAP diluted earnings per share increased 71% to $0.36 in the fourth quarter compared with $0.21 in the fourth quarter of fiscal 2007. This compares to the GAAP EPS guidance we issued on January 22 of $0.17 to $0.24. Non-GAAP diluted earnings per share were $0.43 compared with $0.28 in the fourth quarter of fiscal 2007, exceeding the previously provided guidance of $0.24 to $0.32. The primary difference between GAAP and non-GAAP earnings per share for the current period is the cost of equity-based compensation. Now I will turn the call over to Ken.

In our fourth quarter of fiscal 2008, our revenues were up 7% while non-GAAP operating income grew 63% from Q4 a year ago despite a weak business environment in North America and in the financial services sector, which comprises the largest industry segment of our revenue. For the full fiscal year, our revenues were also up 7% while our non-GAAP operating income grew by 37%. While we expected just a modest improvement in revenue growth and profitability in fiscal 2009 given the slowing US economy, we are more optimistic about our longer-term outlook. And we have set a goal to significantly increase our operating income by fiscal 2011 as outlined in our updated corporate presentation on our Investor Relations website. For fiscal 2009, we are redoubling our efforts in R&D to continue to lead with products that are unmistakably better than the competition. We continue to leverage our R&D efforts with continued investment in offshore R&D while maintaining our investment in US R&D team. In fiscal 2009, we will also continue our focus to improve corporate efficiencies as well as make substantial progress in returning our Audio Entertainment division back to profitability. Let me review each of our markets and business units. In the Office and Contact Center market, we continue to increase our profitability. We’ve also continued a long series of market share gains, which has been over 10 points a share against a competitor over the past decade. I want to emphasize that our principal goal has not been to gain market share. Rather it has been to profitably grow our business and provide exceptional value to our customers. As a side effect of this success, we’ve seen our market share grow. Looking forward, we believe our long-term business prospects are improving in the Office and Contact Center market. We have an excellent product portfolio under development and believe that the deployment of voice within unified communications over the coming years will provide a catalyst to increase the adoption headsets in the workplace. As unified communications relies on the PC or laptop for communication, it is clear why the need for a headset is so strong. Most laptops and some PCs have microphones and speakers, but they are not suitable for high quality telephone conversations. In addition, the built-in microphone and speaker is the same thing as having every conversation on a speakerphone, which obviously provides little privacy. Headsets, either corded or cordless, offer a generally preferred solution. They’re hands-free, so you can use a keyboard, increasing productivity and comfort, and provide better received quality than you would get through PC speakers. Of course they provide privacy and they have many conveniences, such as call control and remote answering on a headset. The bottom line is that if you’re going to use voice in a unified communication environment, you need some type of audio input/output, and a headset provides a great solution. Besides a high-quality call experience, IT managers prefer a unified communications that converges a voice and data network, lowers costs and allows a single group to manage the data and voice communications. IT managers see substantial opportunities for productivity gains through more effective communication that integrates voice, data, real time and asynchronous communications. A recent report from IDC suggests that deployment of unified communications, which is primarily non-voice at this stage, will experience a 38% compound annual growth rate through 2011. We don’t have voice deployment statistics, but we do expect that to increase as well. In the Bluetooth mobile headset market, we continue to face a very tough industry structure. However, despite intense competition and aggressive pricing, our market share and margins have improved. Our losses in the Bluetooth segment declined over the past year to the point that on a standalone basis the Mobile Entertainment division achieved a positive direct operating margin. Our existing product line consists of premium headsets, which primarily target the high-end to mid market. And their acceptance among consumers continues to improve. As a result, we’ve taken the number one position in terms of US retail sales so far this calendar year, and believe that the retail market is increasing as a channel for Bluetooth sales as a result of the increasing consumer familiarity with the category. We believe that the overall Bluetooth market will continue to show healthy growth in fiscal 2009, and we are in a very good position with our existing product line and product pipeline. Besides our design and sound, we are the only vendor that offers a full array of solutions from corded to wireless: VoIP solutions, high-end, mid-range, entry level, multi-point, multi-modal, performance, fashion, in-car solutions. The major risks in addition to competition are substantial increase in cars that will be coming downstream with built-in Bluetooth technology for voice. This is likely to create a substantial shift in the market from voice-only purchases to purchases that consider multiple applications, in particular music, gaming, and VoIP. We believe that we are very well prepared for this shift as we are already a leader in these emerging applications, and the Altec brand is well received by our partners and customers. In addition to entertainment, we expect that hands-free driving legislation will continue to benefit the category. Our Audio Entertainment group has made concrete progress on key milestones to return to profitability. During the year, we hired outstanding leadership for the division, outsourced manufacturing, reduced the cost structure through a restructuring, and most importantly, we have designed a product line-up for the fall, which is being well received by key partners and is designed well from a cost standpoint. We believe this will provide significant momentum and move the division toward our long-term profitability objectives of a 5% to 10% operating margin. We expect positive comparisons going forward and expect to achieve profitability in this December quarter, assuming reasonable economic conditions. We intend to reach the target AEG non-GAAP operating margin range of 5% to 10% by fiscal 2011. Our confidence is increasing as a result of the emerging placement opportunities our new products provide as well as the excitement that our new products are creating. In addition, the actions taken in the December quarter has significantly improved our margin structure. For fiscal 2009, we’ll be focusing on maximizing the long-term sustainable revenue and earnings growth rate through strengthening the brand values of sound, style, and simplicity, growing profits from our Office and Contact Center business, improving the profitability of our consumer businesses; and configuring the company to deliver maximum profitability by focusing on fewer objectives, which we execute better; reducing our supply chain costs; and continuing to improve our new product development programs. We are confident that the fundamental opportunities for profitability remain intact. We are also confident that we’re on the right path and we intend to reach our corporate target model with 15% to 18% non-GAAP operating margin by 2011. With that, I would like to turn the call over to Barbara, to cover the results in more detail.

Q4 was a strong quarter for us with revenues, GAAP, and non-GAAP EPS all better than the fourth quarter last year and above the high end of the guidance we provided in January. While our North American B2B business was affected by the US economic slowdown, EMEA’s B2B revenues were somewhat better than anticipated. Our Bluetooth market position continued to improve and our Bluetooth revenues were up very strong. AEG revenues also came in somewhat higher than we had anticipated. In addition, we operated on modestly lower expenses than plan, and benefited from a lower tax rate as well. We earned $0.43 non-GAAP, $0.11 above the high end of our guidance forecast, with $0.07 of that attributable to higher operating income on the strength of higher overall revenues and lower expenses, and about $0.05 attributable to the lower tax rate. Other income was about $0.01 lower than we expected. The Audio Communications Group’s revenue of $185.4 million was up approximately 7%, or $12.1 million, compared to the fourth quarter last year. The growth was driven primarily by our Bluetooth headsets for cell phones, with revenues up 40% or $11.9 million from a year ago, as well as office wireless systems up 5%, or $3 million. Clarity up 19%, or $0.9 million, and that was offset by a decrease of 5% in our professional grade corded headset revenue. So the revenue highlights were that the Office and Contact Center revenues were $125.4 million, down 1% from fourth quarter a year ago. Mobile, $46 million, up 32%, that includes the corded products as well as the Bluetooth. Computer and gaming, $8.4 million, was up 24%. But that increase is almost solely due to the transfer of certain PC headsets that have been managed by AEG to ACG. A year ago, AEG had about $2 million of such headsets in their revenue, and finally, Clarity at $5.6 million. Geographically, ACG’s growth in net revenues was up 8% domestically and up 5% internationally, and that resulted in a 61:39 domestic to international mix. The domestic revenue growth was primarily due to strong demand for our Bluetooth headsets. Our domestic Austin call center revenues were down compared to the fourth quarter last year. In the US, sell-through for our commercial distribution channel was down 1% sequentially and down 10% year-over-year. The US commercial distributors who report this sell-through information to us represented 30% of total ACG segment revenue for the March quarter. Distributor inventories were also down slightly at the end of March compared to the end of December. It’s great to be able to report that ACG’s non-GAAP gross margin was 45.5% compared to 45.1% in the March quarter last year especially given a less favorable product mix compared to the fourth quarter last year. For example, Mobile was 25% of revenues compared to 20% in the fourth quarter last year. And Office and Contact Center revenues were 73% of segment total last year, down to 68% in this fourth quarter. We were able to overcome this mix shift and post a higher gross profit margin by improving profitability in each major product line itself and improving operationally in areas such as E&O, warranty, and overall manufacturing effectiveness. For the full year, non-GAAP gross margin improved from 44.2% to 46.3%, resulting in a 2.1 percentage point improvement year-over-year. And then operating expenses on a non-GAAP basis compared to the year-ago quarter increased approximately $2 million, or 3.8%, but declined as a percent of net revenues from 30.6% down to 29.7%. As a result of all of the above, ACG’s Q4 non-GAAP operating margin was 15.8% compared to 14.5% in the year-ago quarter. Our target model for ACG continues to be 45% to 48% gross margin and 18% to 20% operating margin. In fiscal ‘08, our goal was to increase operating margins compared to fiscal 2007 as a whole, and make progress toward our long-term target. Relative to that goal, we made really good progress coming in at 17.4% operating margin for fiscal ‘08, up from 14.6% in fiscal ‘07. A summary of the Audio Entertainment Group, AEG segment revenue was up approximately $1.9 million compared to the same quarter a year ago. With almost all that increase coming from the docking audio line, which saw strong 49% growth compared to a year ago, primarily as a result of continued success with the iM600 in the Americas. This strong growth is partially offset by Altec PC headsets, which were transferred to ACG from the second quarter of fiscal ‘08 forward. Compared to a year ago, gross margin improved by 21 points from a negative gross margin to a positive gross margin of 15.6%, primarily as a result of the initiative to reduce surplus inventory through a concerted sales effort. Gross margin was also positively affected by more effective management of net pricing as well as the manufacturing restructuring initiative taken in the fall. The manufacturing restructuring initiative added nearly two points to gross margin compared to the fourth quarter last year. Operating expenses were down 1.8%, and the management team is working hard to reduce costs, clearly, and return the division to profitability. The non-GAAP operating loss for AEG was nearly cut in half from $10.5 million in the year ago fourth quarter down to $5.5 million this quarter. And on a consolidated basis, below the operating income line, we had a $0.5 million in other income compared to $1.3 million in the fourth quarter last year, and this is primarily as a result of foreign exchange losses realized in the quarter. Our consolidated effective tax rate for the quarter was 12.8% on a non-GAAP basis compared to 15.7% in the year ago quarter. This is obviously much lower than the 24% we had anticipated. The reasons for the change was the even higher shift in profits to lower tax regions outside the US than we had anticipated, and the release of certain tax reserves resulting from the expiration of statutes of limitation, and the closure of certain tax audits during the quarter. So as a result of all of the above, our Q4 consolidated non-GAAP net income increased 58% compared to the same quarter last year, from $13.4 million to $21.2 million. Foreign exchange did help our results, with the weaker dollar against the Euro and pound helping revenues and gross margins, though also increasing expenses in our hedge loss. The dollar weakening against the Chinese yuan and Mexican peso, however, negatively impacted gross margin. All in, we estimate that our results were favorably affected by about $0.02 in the fourth quarter due to FX. I want to talk about our business outlook for a moment. To develop our guidance for the first quarter; we’ve considered the historical patterns that we typically see in the June quarter, our revenue, quarter-to-date bookings, and backlog position, and input from our channel partners. We have built in some risk of a continued slowdown in the US economy. And please also remember that with our book and ship business model, conditions can change rapidly. With those caveats, we are anticipating revenues to be flat to up for ACG, and down a little for AEG in the June quarter. The typical seasonal pattern for AEG in the June quarter is for revenues to be down. We are anticipating Bluetooth revenues to be up and remain strong and to contribute to a less favorable mix than we had in Q1 last year. As a result, we currently expect gross margin to be slightly down sequentially and probably about flat compared to Q1 a year ago. We also expect AEG’s loss to be higher than the March quarter on the lower revenues, but substantially lower than the June year ago quarter, and we’re currently forecasting a non-GAAP tax rate of 23%. Based on all of that, we’re estimating a consolidated net revenue range of $205 to $210 million, with non-GAAP EPS of $0.33 to $0.36. We expect equity compensation expense in accordance with FAS 123(R) to reduce income by approximately $4.4 million, or about $3 million after-tax, resulting in a GAAP EPS range of $0.26 to $0.30. In terms of the balance sheet, cash, cash equivalents and short-term investments decreased by $6.5 million sequentially and increased almost $60 million since the end of our last fiscal year-end. We ended the quarter with approximately $163 million in cash and cash equivalents. On a year-to-date basis, we’ve generated over $100 million in cash provided by operations, and approximately $15 million from stock option exercise and the issuance of employee stock purchase plan shares, used $23 million for capital expenditures, and $9.7 million for dividend payments. We also reclassified $28 million of Federally backed student loan auction rate certificates to long term investments from short term investments, net of an unrealized loss of $2.9 million. Our inventory turns were flat at 3.8 compared to the same quarter last year, while our DSO increased from 53 days to 57 days. Our inventory at year-end includes approximately $5.5 million in safety stock of the chipset used in our wireless office headsets. We intend to continue to increase the level of safety stock of these chipsets over the course of fiscal ‘09 and then consume that in future years. If we hadn’t needed to put the safety stock in place, our inventory turns would have been 4.0 compared to 3.8 in the fourth quarter last year. Capital spending was $6.4 million, lower than deprecation and amortization of $6.8 million in the quarter, and capital spending as a percent of revenue was 3.1%. I think our focus on asset utilization over the course of fiscal ‘08 paid off with net property, plant, and equipment up only $1.3 million compared to a year ago and net intangible assets and goodwill down approximately $12.2 million. And finally, I want to wrap up by commenting on our longer-term growth prospects. The markets we serve are large and growing, the secular market compound annual growth rate of 9% to 12%. Our target-operating model, as we’ve discussed, is 18% to 20% for ACG and 5% to 10% for AEG. Assuming the US economy rebounds and that the global economy doesn’t go into recession, we believe we can improve our overall company profitability in fiscal ‘09 compared to fiscal ‘08. And that we should be able to achieve our target business model of 15% to 18% operating margin by fiscal ‘11. The payoff from achieving those targets can be substantial. We’ve updated our corporate presentation and it’s posted on our website. We encourage you to review it soon. On Slide 4 of that presentation, we showed that we can see revenues of $1 billion to $1.25 billion in fiscal ‘11, assuming the markets we serve continue to grow as most analysts forecast they will, despite what promises to be a relatively slow period over the next 12 months. At the low end of our target model of 15%, we estimate we would earn approximately $2.25 non-GAAP EPS in fiscal ‘11, up 33% from our fiscal ‘08 results. Getting to 17% operating margin, not all the way to the high end of our target model, on $1.25 billion of revenues would enable us to earn $3.60 non-GAAP EPS, up 113% from fiscal ‘08. We hope you agree that would be a pretty terrific result. We appreciate your interest and your support and look forward to discussing our results and prospects with you further. And with that, let me turn it back over to Jennifer, our conference facilitator, for the Q&A session.

(Operator Instructions) Your first question comes from John Bright - Avondale Partners. John Bright - Avondale Partners: Bluetooth sales in the quarter, very strong, I do think that’s the story. I think the gross margin improvements where you were able to keep the gross margins on the ACG group in line, impressive. Is that sustainable? And what’s going into that really strong performance this quarter?

So actually, in each of our product lines, we are improving profitability. So the profitability on Bluetooth is getting better. So even as it’s increasing in the mix, the fact that its profitability is increasing is helping us keep our gross margins up where they are. In total, we’re basically in the range that we’ve indicated the 45% to 48%. We are expecting to be down a little bit sequentially in Q1 with a further mix shift with we’re estimating the B2B business will probably be down a little bit further and the Bluetooth business we expect to be up again. But in general, as we work through all our opportunities and work through the module, it’s improving the product line profitability and then improving all the things that are between standard and gross margin, excess and obsolete inventory as manufacturing variances. It’s warranty. And each and every one of those areas has multiple teams, dedicated to reducing those costs and improving the effectiveness. So yes, in general, we very much believe that we can operate in the target model for gross margins for ACG. John Bright - Avondale Partners: Do you think, Barbara, you saw any benefit, it’s probably early, but any benefit from the California Hands-Free Law expected in July?

We don’t think we’ve had significant benefit to this point in time. I will say that we did do a study and were slightly surprised to find the degree to which people did not know when the law was going into effect. Some of the people actually already thought the law was in effect. Many people did not actually know about the law, surprisingly. So we may have had a small pick up, but I do want to put into context that in reality California and Washington are a fairly small percentage of our global markets. We don’t think that it was a big lift effect from that. We think that the principal factors related to the very good acceptance of some of our critical products, and particularly within the retail channels, where we saw very good sell-through. John Bright - Avondale Partners: There are two thoughts out there that people talk about often in Plantronics right now, Ken, and Barbara, one on the mobile or also on the Altec Lansing side, the gaming computer side, the macroeconomic forces and what’s taking place. Any color first there why you seem immune, particularly on the mobile side in this quarter, and certainly it did well on the Altec and Gaming computer. And then the second thing a lot of people talk about is the financial industry has run into difficulty, and that’s been a good source of sales in the Office segment, your thoughts there?

Well, let me hit the second one first because I remember since you did it last. The financial industry, we do think, has taken a hit, there’s no question about that. And to be clear, we found this just not in the US, but some of the outsourced contact centers overseas and VPO have also been affected in terms of their demand. I think that, we believe during the course of the March quarter, while we had some weakening there, there were also some deployments, which were already scheduled and weren’t completed. And that’s the reason we expect we may see some further weakening in that market in this quarter. However, we’ve also seen some offsetting benefit to that, including really continued strength within the European economy, some deployments in other US businesses that are somewhat less affected by that. And we’re also anticipating that we’re going to start seeing the early tip of the iceberg in terms of voice integrated within unified communications, some of which are fleet going forward. So overall, we still think that the environment, although perhaps harder to read in this current scenario, is going to be reasonable even if not great for the B2B business measured globally. Coming back to the first one, I think the question was on the immunity of the business. We tend to be, number one, an inch deep and a mile wide. We talk about a little bit more penetration on B2B and financial services. But with respect to Bluetooth, as an example, this is a category that is still, I think, on the upswing within the US market. We had some significant opportunities for market share gains where we were. We thought we had a very strong portfolio of products, and again they’re just being really well received in the market. On Altec, again on the docking side, we had a very good growth in our business. This was offset a little bit because we were pruning some product customer situations where we weren’t making money, trying to really improve the profitability in advance of having the right products in the portfolio. But I think at the end of the day, it’s that balance. We’re actually in some pretty attractive overall segments of the market with pretty strong portfolios, and so that’s giving us at least some level of resistance. John Bright - Avondale Partners: Barbara, on OpEx control, good in the quarter, anything happening there with headcount? And then on the long-term goals that you alluded to in the release, remind me, is the 2011 timeframe, that’s a new statement on your part, is that correct?

Well, it’s the first time we put a timeframe around achieving our target model. So the target model has been there, and we hadn’t associated it with a specific timeframe. And what we’re doing now is putting a stake in the ground and saying, “We believe we can – that we’ll be there in fiscal ‘11.” Let me talk about operating expenses. So we had concern back in the fall that the economic headwinds were looking pretty stiff, and that we could be looking at a recession coming. And so we worked with the management team to think about how best to manage the business, given that likelihood. And, of course, in AEG, we’re really working to cut expenses. And so everything there is more dramatic than on the ACG side. But on the ACG side, we basically decided that we would have almost no operating expense growth in our plan for fiscal ‘09, and the growth that we do have is very carefully targeted to selected initiatives. There are a few net new positions for really key roles, but by and large, we went through and cut where we could cut. There hasn’t been anything major with respect to headcount. But it’s really looking at discretionary spending, and stopping it, and/or allocating some of it so you have bigger pots of money on fewer initiatives, more focus, and a greater ability to manage and execute well, and move the ball forward. So it’s a mindset that we put in place, and actually, that helped reduce costs in Q4. And it’s not a lot, but it’s just a little bit here, a little bit there. And we’re getting to be a big enough company that it all adds up, and it’s pretty meaningful when it gets to the bottom line.

Your next question comes from Reik Read - Robert Baird. Reik Read - Robert Baird: Can you talk a little bit about Bluetooth? With your comments, Ken, that the US market is on an upswing, I look at the numbers there, and it looks more like a re-acceleration to me. What do you think the factors are that are driving that, and what component of that growth do you think were the share gains that you talked about?

I’m not 100% sure I know what the difference is between an upswing and a re-acceleration. But my general thoughts are that the market has shifted very, very heavily to the acceptance of Bluetooth headsets instead of corded throughout the US market, and so that is what the bulk of the market is at this point in time. I think that further gains in fundamental attach rate will have to be driven by either hands-free laws or applications such as mobile gaming, such as music, such as the VoIP, multi-modal use, that type of thing. Because, again, I think the category acceptance has, at this point in time, gotten pretty broad. In terms of the market share gains, again, I think that, one, it is a volatile market. And we can still see volatility due to competition, due to pricing, due to promotions and other things. But I think that the market has matured more to the point where many consumers are now going back for a second purchase. They’re becoming more knowledgeable about the products. We have for a very, very long time had a dramatically lower, as we understand it, return rate on our products than all other vendors, and that’s associated with it a better level of satisfaction. So we believe that the consumer preference for those who are knowledgeable and have had experience is weighted towards our brand.

In particular, Reik, we’ve really seen our position in retail improve strongly. And retail is also a much bigger channel for the industry than it was a year ago. So many of the major retailers in the US have been building a portfolio of Bluetooth SKUs and offering the category. And according to NPD Intellect, we’re actually above 30% market share in US retail in the March ending quarter. And we did include a slide in the updated presentation with that data in it. So it’s a new channel for the industry and we’ve gained share in that channel. Reik Read - Robert Baird: Barbara, you touched on this a little bit, but I want to ask on the gross margin, how much of what you’re seeing, is obviously very good growth in that space with Bluetooth. How much of the margin improvement is driven by leverage and how much of it is maybe some of these other things that you’ve been talking about? And I know in the past you have talked about inventory obsolescence having been an issue. Can you address where that is at this point?

It’s a little hard to split between what you’re calling leverage. Let me just see if I can answer a couple.

It is definitely a blend of all of the items. We certainly, we do get a benefit from volume, no question about it, in terms of utilization of the facility, and in the effect on the fixed OpEx cost. But I think that a lot of it has been the improvement in standard margins, which has been partly a function of the products that we’re bringing out, their architecture structure, cost structure, as well as a lot of work on the warranty and the E&O. Some of the E&O benefits, independent of managing the product in the channel come from the platforming structure that we’ve taken. The variances have also been improved. We’ve been on a multi-year design for excellence program that has helped on that as well. Of course, we’re still hoping for further benefits. So with that comment, I’m going to see if Barbara is ready to try to address that.

Yes, Reik, I talked about the overall mix shift has obviously been negative. But within each of those, we’ve improved the standard margin on Bluetooth, for example. But so on E&O, fourth quarter a year ago, it was 1.4% of ACG revenue. It’s only 1% this quarter and our plan for next year is to come in at under 1% for the year as a whole. So almost by itself, that 0.4% could theoretically explain the improvement in margin. But there are many puts and takes, and it really is the whole picture, if you will. What we call our manufacturing variances; those are down close to 20% from a year ago. So as we’ve increased the utilization of the China plant, we’ve in-sourced various things that we used to use third parties for. We’ve improved the productivity of direct labor. And including in PLAMEX, reduced scrap and many other things, and so those variances are down substantially. On the other hand, freight costs are much higher than they were a year ago, with fuel costs being up. And the fact that we’re distributing our products from more locations than we were, so we used the East Coast, we have a warehouse on the East Coast that we share with Altec Lansing. So there are puts and takes. I hope that gives you a flavor for it. But the specific other areas are coming down as a percent of revenue. Reik Read - Robert Baird: Barbara, because I was trying to ask a little bit too on just Bluetooth specifically. It sounded like utilization certainly was helpful with the volume that you had there. But can you also address the inventory obsolescence issue that I think has plagued you in past quarters. And I take it from your comments that that’s getting materially better.

Yes, it is. And I don’t actually have Bluetooth just for the quarter right now. Yes, it’s definitely significantly down from where we were last year. But I don’t have the specific just for Bluetooth handy.

Your next question comes from Tavis McCourt - Morgan Keegan. Tavis McCourt - Morgan Keegan: Ken, could you talk a little about the Office and Contact Center market as they differ in the quarter between the US and EMEA. And, if you had to guess, I know you’ve taken share over a long period of time. But over the last couple quarters, do you think you’re still taking share or has it stabilized and are your trends pretty much matching what you expect the overall market is doing there?

We don’t intend to trust quarterly measurements a great deal for a couple of reasons, including the fact that you can get inventory changes in the channel, and so we tend to try to look at that over a longer period. A couple of the things that vary significantly are, as we all know, the currencies in Europe have appreciated substantially. And ironically that’s one that over this last decade if currencies would have been neutral we would of gained two more points in market share then we actually did. So that’s just another point relative to it. In general, we don’t think there have been any radical shifts. They tend not to be genuine radical shifts over short periods of time because these markets tend to be a little bit sticky and not at the forefront of everybody’s decision making. So I would say, generally speaking, we don’t think we’ve observed anything radical over the last few quarters. Of course, our primary competitor has not put our their numbers yet. So the market is absent that data to actually know. Tavis McCourt - Morgan Keegan: And in terms of what you saw in the US versus other geographies in the Office and Contacts Center market, is it fair to say it’s a lot weaker in the US? And would you clarify it as being relatively stable overseas or are you starting to see a declining trend over there as well?

No, it has been up. So there are OCC revenues, they are up maybe about 10% versus a year ago in Europe, many about that, or a little bit less than that in some of the other geographies, and we’re down in the US. I think we said it’s 5% down versus the year ago. Tavis McCourt - Morgan Keegan: And then increasing your inventory, and I think you classified it as safety stock on some Bluetooth components, if I heard that correctly.

No, there are not Bluetooth components. These are the chipsets that are used in our wireless office headsets; those are DECT-based chipsets. This is an issue we flagged; I want to say, maybe last September. That we had a risk on this because we needed to make a last time buy. And we’ve successful working with the supplier, launching the PO, getting initial deliveries; we still expect to get a heck of a lot more. We’re putting in place years of supply, we do have long product live cycles, and so we have this $5.5 million in inventory and safety stock as of the end of the year. Tavis McCourt - Morgan Keegan: Are there going to be suppliers in the future supplying DECT chips?

So there’s a next generation wireless office system that is in development that uses a new chipset that ultimately, over many years, will replace the CS family line, and then other subsequent generations, but they’ll co-exist in the market, we believe, for many years. And we’ll have adequate supply of these chipsets so that we can go through what we think would be a very normal type of product transition. Tavis McCourt - Morgan Keegan: So you don’t want to redesign mid-product cycle, basically?

No. Tavis McCourt - Morgan Keegan: And then in terms of the AEG improvement in gross margins, sequentially, I know a lot of moving parts there, but shocking given the lower revenue level. Should we view this as a reasonable base to build our analysis in terms of not having any excess inventory write-downs or excess promotional pricings or allowances or whatever it may be? So that we can start to get a better sense of, okay, what revenue levels does this business need to get back to operating margin breakeven?

I wouldn’t want you to go all the way to the Q4 levels of 15.6% in your models going forward, because one of the things that happened here in Q4 was that not only, in the fourth quarter a year ago we had products that we couldn’t sell. So we had excess inventory, and needed to take allowances for that, reserves for that. And in this fourth quarter, we actually managed to finish selling one of those products in particular that had been reserved nine months to a year ago, and it just took a long time to sell it through, but we actually had reserve releases. So that actually helped the margin, which is great to be able to sell it and get cash. But we’re not quite at the point where 15%. Tavis McCourt - Morgan Keegan: So 15% is a little inflated on a $23 million quarter run rate for that business?

Yes. Tavis McCourt - Morgan Keegan: You mentioned 30% market share in the retail Bluetooth market, I assume that was a US figure. Can you give us some clarification on where that was in the year ago period, or maybe it’s just a rough guess?

First of all the data that Barbara’s citing is from a third party source, it’s NPD Intellect. There are some limitations that I just want to cite on that data. In particular, it only includes participating retailers, in general. That means that it excludes Wal-Mart from the direct retail channel. And it also excludes the carriers which are very large in this business, as well as other markets outside the US. In general, we were about 20 points of market share four quarters prior. So this does represent a gain for us. Tavis McCourt - Morgan Keegan: And in terms of operating expenses, Barbara, for the AEG segment this year, would you expect those to ramp up with normal seasonality? Or are you going to have the similar type of cost controls on that side of the business as.

No. We’re actually expecting, in total, to reduce operating expenses in AEG for fiscal ‘09 relative to fiscal ‘08. And in addition, we’ve reduced the expenses that affected the cost of goods sold. So, with the restructuring alone, versus fourth quarter a year ago, it was about a $425,000 savings in the fourth quarter. That’s going to continue to increase throughout ‘09 because there’s still some cost that we have over there, some of the leases that we couldn’t get of, some people that we need to stay and help us with the liquidation proceedings, and the final audits, and the like. But ultimately, we’re looking at getting that up to about $800,000 favorable a quarter, up in cost of goods sold. But operating expenses, we’re looking to bring that in a bit lower than last year, and it’s just really, really tight cost control.

Your last question comes from Ingrid Ebeling - JMP Securities. Ingrid Ebeling - JMP Securities: I wanted to ask about the drivers of demand in the OCC market, particularly some of the wireless products. And if you could give us an update on how the try and buy program is progressing and how the pricing environment is holding up overall?

Well, first of all, at this point in time, let me just say honestly that try and buy is a smaller portion of sales. Try and buy is really in the early stages of people getting used to and trialing the product. It’s not to say that people are not still doing that, because our partners are certainly engaged in that on occasion, but it’s a smaller part of the business activity as more and more organizations have begun to accept them, and accept the benefits of the product category. I don’t think that the overall pricing has evolved significantly. Ingrid Ebeling - JMP Securities: And on the AEG side, has the iPhone product gotten off to a good start, and how have the retail channels been embracing it? And then, speaking of the iPhone and other music phones, how do you think that these products are driving Bluetooth sales overall at this point?

So our speaker dock for the iPhone has actually done better than we expected. This is a category that we were very conscious about being early to the market as an emerging application that we had fundamental, long-term confidence in. At the same time, we all understood that some of the early products there had some limitations from a music standpoint, lack of it to be and other things that inhibited the actual use for wireless, stereo and other applications in the mobile phone in and of itself has a different in-home usage characteristics than an iPod. So characterizing that we were recognizing that we were early in the evolution of the category, nonetheless, its sell-through has been better than we expected. And we do still believe that this is a very good long-term category, and maybe we’re traveling on the road a little bit faster than expected. Ingrid Ebeling - JMP Securities: I was just curious overall how music phones in general have been driving Bluetooth sales?

I would say music phones in general, when I characterized Bluetooth sales as voice communications, has not had an impact as a result of their music on Bluetooth sales. Most Bluetooth is still voice Bluetooth at this point in time. We do have stereo Bluetooth products out there; there are other people out there with stereo Bluetooth. But still, the overall attach rate of music accessories is a little bit lower compared to the really significant volumes on voice side. We still think this is a chapter in the book that is primarily in the future rather than the present.

We have no further questions in queue.

I’d like to thank you, Jennifer, very much, and thank all of you for attending the call. As always, we’re available if you have additional questions. Thank you.