At this time I would like to welcome everyone to the Adtran second quarter earnings release conference call. (Operator Instructions) During the course of the conference call Adtran representatives expect to make forward-looking statements which reflect management's best judgment based on factors currently known. However, these statements involve risks and uncertainties including the successful development, market acceptance of new products, the competition in the market for such products, the product and channel mix, component costs, manufacturing efficiencies and other risks detailed in our annual report on Form 10-K for the year ended December 31, 2008 and Form 10-Q for the quarter ended March 31, 2009. These risks and uncertainties could cause actual results to differ materially from those in forward-looking statements which may be made during the call. At this time I would like to turn the call over to Mr. Tom Stanton.

Thank you and good morning everyone. Thank you for joining us for our second quarter 2009 conference call. With me this morning is Jim Matthews, Senior Vice President and Chief Financial Officer. As in the last few quarters, I'd like to start by discussing the environment in the second quarter. I'll first remind you that Adtran is a book and ship business and any short term data is suspect in its ability to predict longer term results, but given the current economic environment, we feel compelled to add as much color as possible in regards to current customer activity. The environment for the second quarter was similar to the projections discussed during the first quarter earnings conference call with modest seasonal improvement across most product segments. Although activities around broadband stimulus package continued to increase through the quarter, we continue to see spending delays as carriers continue to contemplate potential stimulus projects. However, as expected, sales to the OIC's did increase through the quarter. In our Tier One accounts, the environment remained relatively stable to the first quarter with planned deployments and lab progressions continuing to advance. In general, carriers continue to progress towards increasing speeds for both wire line and wireless networks and they continued migration towards packet based technologies. In our Enterprise segment, which is predominantly focused on the SMB market, we saw significant increase in activity which we attribute mainly to success around our efforts in carrier channels. Although it is yet unclear to see how much of this increase is due to underlying market improvements versus market share gains, it is clear that our internetworking products are gaining momentum. From a product perspective, our growth areas turned in a solid revenue performance with broadband access growing 41% sequentially, internet growing 33% sequentially and optical access growing…

Revenue for the second quarter was $121.5 million compared to $131.2 million in Q2 of '08. Broadband access product revenues for Q2 of '09 were $31.4 million compared to $31.3 million for Q2 of '08. Optical access product revenues were $13.5 million for Q2 of '09 compared to $13.4 million for Q2 of 2008. Internet working product revenues increased 28% to a record $20.4 million of Q2 of '09 compared to $16 million for Q2 of '08. Carrier systems revenues were $56.2 million for Q2 of '09 compared to $57.7 million for Q2 of '08. Business networking revues for Q2 of '09 were $26.4 million compared to $21.8 million for Q2 of '08. Access revenues were $38.9 million for Q2 of '09 compared to $51.7 million for Q2 of '08. HDSL product revenues were $34.3 million for Q2 of '09 compared to $45.3 million for Q2 of '08. The decline in HDSL revenues is primarily the results of variations in customer order patterns quarter to quarter. As a result of the above, Carrier networks division revenues were $91.8 million and Enterprise networks division revenues were $29.8 million for Q2 of '09. International revenue was $6.4 million for Q2 of '09 compared to $7.8 million for Q2 of '08. To review the reporting in each of these categories we have published them in our investor's web page at Adtran.com. Gross margin was 58% of revenue for Q2 of '09 compared to 60.5% for Q2 of '08. The decrease in gross margin is primarily attributable to start up costs related to VDSL 2 products and higher transportation and expediting costs in the quarter. Research and development expenses were $20.7 million for Q2 of '09 compared to $20.2 million for Q2 of '08. Selling, general and administrative expenses were $24.9 million for Q2…

I think we're ready to open it up for questions now.

(Operator Instructions) Your first question comes from Vivek Arya – Bank of America, Merrill Lynch. Vivek Arya – Bank of America, Merrill Lynch: Tom, the very sharp drop in HDSL, can you give us some more color around that. I think you mentioned it was one customer. From what I recall from the Q1 earnings call, this was somewhat of a surprise so if you could just elaborate on that.

It was definitely one customer. In general I think the market, we have some customers that were slightly up, some that were slightly down, but in general I would say flat except for one customer, and as I mentioned on my previous comments, that customer had a very strong first quarter. So we do see that from time to time. In fact we saw this happen with this exact same customer in the second half of last year, so it's something that was, we didn't expect it to drop necessarily to that level, but we also didn't expect it in the first quarter to be as high as it was. Vivek Arya – Bank of America, Merrill Lynch: How do you see HDSL trends in the second half of this year?

It's always, one of the comments I made was the 12 month view of HDSL which is kind of what we've been trying to get people to look at, and that is more from a longer interval term level because we do see inventory fluctuations and we do see project that tend to affect HDSL over any short period of time, but in general things tend to even out. So we're still expecting, we've been talking about being down single digits for HDSL for the year, and that's still where we're expecting to be. Vivek Arya – Bank of America, Merrill Lynch: On broadband access, the pick up that you're seeing, I guess broadband access and optical, the pick up that you saw in Q2, is that more related to the IOC's or is it some improvement in Tier One spending also?

In the broadband access piece, it was both. We have some Fiber to the node built outs that cover the Tier One space as well as we saw a pretty good uptick in the Total Access 5000 space in the IOC's. And in the optical space, I would say in general, it was all markets but we did see a pick up at some of the Tier One's that was fairly strong. Vivek Arya – Bank of America, Merrill Lynch: Last quarter there was a $3 million or so I think investment loss that was taken out of non-GAAP. This quarter there is I believe about $1 million in investment gain. Should we exclude that also when we look at non-GAAP performance?

It's certainly not operating performance, but what it relates to is a single security that we've owned for quite some time and we had the opportunity to sell some shares in the second quarter that related to that piece of other income. Vivek Arya – Bank of America, Merrill Lynch: So the tax rate going forward, should we assume it's the normal 35% level or is it 33.8% or 34% level that we saw in Q2?

As far as the tax rate going forward, probably something in the range between 34% and 34.5% would be an appropriate planning range.

Your next question comes from [Mark Sue – RBC Capital Markets] [Mark Sue – RBC Capital Markets]: Tom, understanding your revenue guidance, what are some of the qualitative comments coming from your customers about linearity, business confidence and also their willingness to plan for longer than one quarter?

I would say in general the environment is very similar to what we saw in the first quarter, that they are as focused on particular projects as they have ever been, and they are still watching their spending. I think maybe the difference we saw in the first quarter, specifically in the IOC market, there was a reluctance to spend on any project because they were really trying to understand what would be stimulus potential and what would not be, and we saw them loosening up on that kind of stance going into the second quarter and as we progressed through the second quarter where it became more clear what would and would not qualify, and we saw some jobs actually being released. And that was probably the biggest difference from Q1. With the larger carriers, everything that we have been working on is still progressing and progressing at about the same rate as what we were expecting. [Mark Sue – RBC Capital Markets]: On the topic of broadband stimulus, anything else that the carriers are pondering? Is it really about what fits in terms of qualification, or is it magnitude or is it timing? Any thoughts on what they're saying about the stimulus?

In general, I would say most of them are positive. Most of the ones that are planning on applying stimulus dollars are still planning on applying, and I would say that the dollar amounts that we have heard with the various carriers seem to be consistent with what they were planning in Q1. So I think it's a matter of getting all the paperwork together and getting them submitted and then moving forward which of course we're expecting to be more prominent in 2010 than in 2009. I think we're just going to be up against pretty tight time windows to try to get any real spending this year, but we're hopeful. We'll see what happens. [Mark Sue – RBC Capital Markets]: So next quarter and then maybe into the back of this year, just more fine tuning and continue discussions is how we should be expect things to go.

I think we're down to the point now of people actually doing planning and engineering work on what they want to submit and what they hope to get. But we don't expect a strong stimulus uptick in 2009.

Your next question comes from George Notter – Jefferies &. Co. George Notter – Jefferies &. Co.: Just expanding on the discussion around the broadband stimulus plan, I guess for one I was wondering how you expect the trajectory of spending activity from the IOC's to be impacted by the stimulus plan, I guess more specifically, it sounds like you're seeing some loosening here in Q2 and perhaps even more in Q3. Do you think as we get closer to the stimulus money actually being available, you start the IOC's again kind of clamp down on spending, spend less money and try not to have projects around that would get grandfathered out of the stimulus plan in Q4? Does that trajectory make sense for you?

I could understand the thought process behind that. I don't get the sense that that's, or at least my hope is that's not what's going to happen. I think what's happened this quarter, it become more clear what would and what would not qualify and there are things that they just want to get done that will not qualify that they started releasing money on. And so I think as we move into the year, or into the second half, I would say what doesn't qualify still won't qualify and our hope is that they would still release those funds and let us start building those out. I don't sense that there will be a pull back. I think as we move forward in time, that they are just more understanding of what it is they need to get done outside of the stimulus package. George Notter – Jefferies &. Co.: Do you expect any relief let's say between now and the end of the year for the projects that do qualify for the stimulus or do you think all of that just stays turned off all the way through when the money starts becoming available?

There's some debate on that, and there's some discussion because you could potentially get some type of credit for some of the dollars that you spend, but we're not expecting that. What we're kind of staying is stimulus projects are in one bucket. Ongoing activity is in another bucket. We see the ongoing activity actually loosened up in second quarter. We're still viewing the stimulus bucket as kind of a separate animal. George Notter – Jefferies &. Co.: When you look into next year, once those monies start coming available, any sense for how much of those dollars would be incremental versus what these guys are otherwise spending? Is it all incremental or partly incremental of what you expect otherwise next year? How do you get your arms around that?

We don't have broad visibility into that. We have specific account visibility. As you can imagine, the stance that carriers would probably take would be its stimulus dollars which be definition are for incremental build. They are things that we wouldn't do on our own, so whatever we were going to do on our own; we're going to continue to do. So the definition almost leads itself to purely incremental type analysis. I would tell you that the ones we do have visibility to, that is the way they're looking at it, but I can't tell you that everybody's really in that same boat. George Notter – Jefferies &. Co.: Can you remind us exactly what amount of the revenue stream right now is IOC's?

That's not a number that we disclose, but maybe it's a number that one might be able to back into while realizing that customers like Windstream and what used to be Embark logistics did have a reselling distribution arm that sold to Tier Three. It's always been a hard number to peg for us because of that.

Your next question comes from Paul Silverstein – Credit Suisse. Paul Silverstein – Credit Suisse: Could you tell us the 10% customers and the contribution?

There's four 10% customers this quarter. Quest came in at 20%., Windstream at 11%, Verizon at 13% and AT&T at 16%. Paul Silverstein – Credit Suisse: Quest I assume was largely FTTN?

Yes. A meaningful portion of that revenue is FTTN, yes. Paul Silverstein – Credit Suisse: If I've got the math wrong I apologize, but your HDSL business was down 5% which would be in that single digit range that you referenced. That would suggest that you guys are thinking that in the second half of the year your HDSL is going to be up a tick. It comes out to about 1% or so. Is that the way you're thinking about it?

The way we're thinking about it over the 12 months 2009, to get back to what we said, we think it will be down single digits. Where exactly that will fall, we don't know. Again, Q1 was unusually low for a particular customer and perhaps in two. Historically, we've seen some level return in the following quarter in the same sort of way that what happened in the later part of last year. Q3 was high. Q4 was down and then Q1 was unusually strong for us. Paul Silverstein – Credit Suisse: I just want to make sure I understood. I thought the reference about one of your Tier One's being down was Q2. Was that also Q1?

No. That customer was actually strong in Q1. Paul Silverstein – Credit Suisse: You had a good Q1. You've seen the numbers. Q2 you had one particular Tier One that was down, but if you do the math, your first half over the first half of last year was down almost 12% so if I flatten out the strength in Q1 and the weakness in Q2, again that suggest you're thinking the second half of the year is actually going to be up not down.

You remember we had a weak Q4 also with HDSL which was after a strong Q3 in HDSL, but we had a weak Q4. So the comps at this point don't worry us that much.

Your next question comes from Amir Rozwadowski – Barclays Capital. Amir Rozwadowski – Barclays Capital: We've seen a lot of releases out of you folks recently about traction on the TA 5000. I was wondering if you could give us an update in terms of the carrier acceptance and perhaps progress on the platform. And if you could give us any color in terms of what contribution of revenues, that would be helpful.

Let me just comment on the press releases and what we're trying to do and then maybe Jim can comment on the contribution. Needless to say, we believe that there's a strong potential for an uptick in spending in the IOC market as we move out of this year and definitely into 2010 and we believe we have the right platforms to do that. The reason for the press release is simply to try to communicate with the Tier Three market on the success that we're having and try to get just as broad of acceptance of that product line as we can. So in an of themselves, every individual press release may not be a large dollar amount, but what we're trying to do is just communicate to the end user. That's what that whole thing is about. By the way, the 5000 did have a good quarter.

The 5000 did have a good quarter in Q2 and a large part of that growth if you will was coming from the third tier carrier area. In relation to the carrier service to the announcements, again as Tom said, one specifically, obviously they're meaningful customers to us, but in terms of each one individually driving that number, it wasn't a meaningful amount. Overall we had good activity across the Tier Three carriers in the second quarter. Amir Rozwadowski – Barclays Capital: Any levels in terms of revenues that we can work with or are you not disclosing that at the moment?

It was greater than 5%. Amir Rozwadowski – Barclays Capital: If we look at your growth products as a whole, certainly this quarter we've seen a marked pick up from a year ago period. How should we think about the progression through the course of the year? Do you feel better in terms of the progress and acceptance of some of these products than we were three months ago?

We feel pretty much in line with what we were thinking. We did see a pick up in the 5000 activity. We were kind of hopeful of a pick up and we just saw it materialize and we would expect 5000's to continue to pick up through the year. Seasonality in the fourth quarter still always affects us, but we would expect a stronger Q3 than Q2 in the 5000. Fiber to the node, there are specific projects that are going on and some of those projects kind of dominate the numbers in Fiber to the node, so I would say a steady Fiber to the node type activity. Optical, we expect it to continue to gain momentum through this quarter, and I would expect a stronger performance in Optical than we actually saw in Q2. HDSL is the one that we're expecting, because historically when we've seen a weak quarter, we see a stronger quarter the following quarter. We would expect that to happen with HDSL. Whether or not getting to the previous questions, as to whether or not it bounces back a proper amount, we can't tell you specifically, but we would expect a stronger quarter there. Enterprise has got a good run definitely with the networking products and we would expect continued strength there.

Your next question comes from Todd Koffman – Raymond James. Todd Koffman – Raymond James: Just a clarification on the Total Access 5000, were revenues up sequentially in the second quarter?

Yes. Todd Koffman – Raymond James: In that product category, can you give a general split as to what chunk of that TA 5000 revenue came from Tier One's versus Tier Three's?

In general I would say it was larger in the Tier Three's than the Tier One. Todd Koffman – Raymond James: When you make the comment on you expect TA 5000 revenue to ramp through the year, do you expect the Tier One's to come back and represent a bigger part or are you expecting that to be driven by IOC's?

Let me just comment on the third quarter. We expect the Tier One contribution in the third quarter to be over the second quarter.

Your next question comes from Jim Suva – Citigroup. Jim Suva – Citigroup: I think you did a great job of addressing the broadband stimulus package so I want to switch gears here a little bit. I wanted to ask a little bit about AT&T's been talking a lot about reducing the number of suppliers that it deals with. Can you talk about, has Adtran been notified or confirmed as a continuing partner or any discussions going on there that you can help give us some comfort on?

I'm going to have be a little careful here just because the program isn't fully announced. It's really up to them to announce what they want to announce. What I can tell is you that the existing developments that we've got going on and projects, as you know, we won several pieces of business with our Total Access 5000 platform within AT&T, that those existing projects are all continuing on and are as aggressively being pushed as they've ever been pushed. We'll continue to work with them. I think the real question is later on, what kind of impact does that have past the 2011 type time frame and there will be areas of us. In fact, there have been areas for us to actually partner with vendors on business that we would not have been able to get on in and of ourselves because of the product line that we have. So our first blush so far has been positive and we'll just kind of see how that turns out over the future and how the program itself kind of changes form over the next few years. Jim Suva – Citigroup: Is it correct to classify that more as a partnership opportunity rather than a big fear of being completely designed out?

I will tell you that's the way we're taking it, and so far with us embracing it from that perspective, it's been a positive thing for us. Jim Suva – Citigroup: On your guidance, which I believe it was 3% to 5% for Q3 if I heard correctly. Typically, if I look back over the past several years, it was closer to up 6% or 7%, so I just want to get a little bit of notion of color from you. Is this being a little more conservative? Of course the environment is a little bit more challenged today, but is there something that we should think about with that disconnect there?

We had a little stronger Q2 than we had expected and we're trying to take that into account. On top of that, we also have the situation that one of the other callers mentioned which is there's still a lot of uncertainty about what's going to happen in the IOC market, whether or not there is some pull back there. There is some uncertainty about the snap back in HDSL and how big that will be. So I think we're giving it the best realistic spin that we can given the environment that we're in. We're not trying to hold anything back nor are we trying to be too aggressive. We're just saying with all of these things, assuming half of them will go your way and half of them won't, where do you end up? It's not a typical environment today so I wouldn't be surprised if a typical seasonal uptick don't necessarily play though in this environment.

Your next question comes from James for Kenneth Muth – Robert Baird. James for Kenneth Muth – Robert Baird: Just returning back to the stimulus, can you touch on the expenses side of that and the expenses associated with [audio break 38:01 – 38:44]

market that we've been trying to penetrate with these new products, so not a big change there. We have done a relatively substantial amount of marketing to this group. We talked about the press releases, but we've also done shows here at the facility where we're trying to bring in literally hundreds of IOC's and let them really get a better sense of what it is that we can do. But those are basically in the noise. In general I would say the answer to that question is no.

Your next question comes from Greg Mesniaeff – Needham & Company. Greg Mesniaeff – Needham & Company: I was wondering given the strength in internetworking and your gradually increasing focus on the Enterprise space, what will that mean in terms of recalibrating you sales and marketing organization if at all, and what kind of impact that may have on your SG&A line going forward?

We don't expect any change in the profile of our Enterprise SG&A or for that matter our SG&A in general through this year. What we have historically tried to do is live within the means that we have in the market conditions that we have. So far, in the Enterprise space, that has put us still in a position to continue to get market share. We have, if you've followed us, we have become more and more focused on particular areas like carrier channels and we have shifted resources towards making that successful, and it has been successful so far. But we don't really see a change, a reason to substantially the overall model of the company in order to successful there.

Your next question comes from Nikos Theodosopoulis – UBS. Nikos Theodosopoulis – UBS: On the internetworking business, you had a very strong performance. You mentioned the distribution of carriers and VAR's. What changed this quarter? Those relationships? This business has been around for several years. Was there some kind of inflection this quarter? Did you add any significant new large channel partner? What kind of changed?

I don't think there's been any overnight change in that space. We've actually commented, internetworking even through this downturn has done well. It hasn't necessarily set records every quarter, but it's come pretty close when it hasn't and we've just seen a gradual build up of momentum. The change that we really made was probably closer to two years ago, two and a half years ago where we really started focusing much more on the carrier distribution channel as being a very good adjunct, and potentially a leader for us being able to get into a stronger way into the VAR base. You're really just seeing I think momentum building in that space. There really was no particular item that changed. Nikos Theodosopoulis – UBS: On gross margin, you mentioned start up cost for VDSO and expediting costs. How does that factor into the rest of the year? Are we going to see the VDSO start up costs continue? Do they kind of mitigate and margins should improve again? What's your view on that?

We continue to believe that our gross margins for the remaining quarters will be in the high fifties and we will probably incur more normal expediting costs as compared to Q1 for example, than we have in the past and again, we're thinking more in the high fifties for the remaining quarters. Nikos Theodosopoulis – UBS: So the VDSO start up cost wasn't that material and going forward it doesn't really swing things?

It does. It was a decent cost that we incurred in the second quarter, but we have product mix things that affect us from time to time. There are times where we're in the 59's or even in the 58's where it wasn't a particular product start up cost. So the cautiousness you see around that is just give us a little bit of leeway there because product mix changes from time to time and you just incur different things, so just saying high 50's is something we're comfortable with. Nikos Theodosopoulis – UBS: On the guidance for the third quarter, if I listen to the commentary in the call, namely HDSL should be down single digits for the year. That would imply for the next couple of quarters a meaningful improvement and the comments about internetworking and Opti doing better, it seems like the third quarter revenue guidance of 3% to 5% seems low versus. Even if everything stayed flat and the HDSL business recovered, that would get you to above that guidance. I'm trying to understand the comments on the HDSL and then the third quarter guidance, don't seem to be connecting.

The one thing we don't have is a perfect crystal ball so although we can relay to you the general sense of the different product areas and the direction that the momentums on the different sets that they have today, we can't tell you for sure where they're all going to come out. So as I mentioned to a previous questioner, we're just taking a look at the overall picture and saying okay, not everything is going to turn out exactly the way we hope, and some things may turn out a little bit better than we hope, and where do we end up and it was really built that way. As you know, we have some customers that have shown a propensity to stop spending all of a sudden, much more in this environment than we had say two years ago. So we're always watchful for that too and that's a real situation. I'm not aware of anything like that right now, but I'm typically not aware until they stop. It's just getting a sense for the environment and what's reasonable.

Your next question comes from Blair King – Avondale Partners. Blair King – Avondale Partners: I was just going to return back to the internetworking and Enterprise subject. I know you just touched on it a little bit, but to me it seems surprising given the strength in both internetworking and Enterprise legacy mix, the environment that you're in and was just curious if you could help us understand what's driving the momentum. I get the strength in channel distribution, but have you noticed Enterprise spending to be increasing or is it still a difficult environment, or are you gaining share there? Can you help us think about how we trend that out for the balance of the year?

I touched on those in my comments because we've had a lot of discussions here and really trying to understand how much the share gains or is there really an underlying change in the market there. Let me comment on the piece that we do know. We do know that we were gaining market share and that we've actually been approved in certain areas that we may not have been approved a year ago. So there is this just general sense that we've picked up market share. I would say in the channel itself, I do think we went through a period of time where there were inventory reductions going on and although I don't think inventories have built up at this point, I do think the reductions have probably ceased. So I think you're probably seeing more now the underlying demand than you may have saw let's say six months ago. I think that played itself. It could have had an impact both on our internetworking product segment and our legacy product segment which we do not expect to grow in any meaningful fashion. In fact, we expect those to tail off over time. So I wouldn't say that the market has gotten more robust. I would say that maybe it has shored up and people are feeling more confident about where the bottom is, and because of that, they're willing to drive inventories to a lower level.

Your next question comes from [Andy Shobek – Netmag Securities] [Andy Shobek – Netmag Securities]: How much of the international business is still tied directly to Telstra or in Australia in general?

It's a fair percentage actually. Telstra continues to be a good customer and a growing customer, so it's a fair percent. [Andy Shobek – Netmag Securities]: So we really haven't seen a lot of increased penetration into other international markets yet.

I'd say that's fair to say, yes. [Andy Shobek – Netmag Securities]: On the stock buy back, it appears to me that you have not bought any stock back in either the second quarter of this year or last year. Is that correct?

I know for a fact that we did not repurchase shares the second quarter of this year. In terms of last year, I'm not sure. [Andy Shobek – Netmag Securities]: I'm just looking at the cash flow statement. Any comment at all about the general buy back strategy now in terms of continuing to go forward? I'm not sure what authorization remains.

I think it's fair to say that we will be opportunistic. About 3.5 million shares remain on the current program.

Your next question comes from Simon Leopold – Morgan Keegan. Simon Leopold – Morgan Keegan: I wanted to quickly revisit the gross margin discussion and get a better sense of what maybe happened in the mix this quarter. Given the strength in internetworking, I would have thought that would have been a favorable element and obviously there's some moving parts, but maybe if you could shed some light on what mix is doing to your gross margin.

I don't have that level of detail before me, but I can tell you that the larger drivers on gross margin in the quarter were in terms of DVSL 2 start up cost and expediting costs. In terms of product mix driving any significant changes, I don't see it because the vast majority of our products have consistent gross margins. Again, the major things that drive margins from quarter to quarter are things that we saw in the second quarter, and it's more than to have expediting costs because Q1again, we were very fortunate in terms of the timing of our customer order delivery requirements with our production schedule, and again, that is not the norm. So we could potentially have other start up costs as well on new technologies and new projects that could impact gross margins. But again, we believe that we'll be in the high 50's.

Your next question comes from Lawrence Harris – C.L. King. Lawrence Harris – C.L. King: Looking toward the broadband stimulus and the key products, would it be fair to assume given the press releases and such that the Total Access 5000 would account for maybe a majority of your sales in that area where say the Total Access 1100 might be just project specific for FTTN? How should be thinking about what types of product you would be selling going forward?

We're confident that the 5000 will play a big role in the broadband stimulus piece. There are I think, pretty significant projects that the 1100 series products are focused in on, and if those get approved that will drive that percentage in a meaningful way. So at this point in time, I would say that the majority of the carriers, if you look at just the number of carriers that may apply for broadband stimulus, the majority of those would be 5000 related. But I can't tell you the dollars will end up that way because some of the Fiber to the node issues are a fairly large size. Lawrence Harris – C.L. King: I know it's sometimes difficult to ascertain, but sequential decline in HDSL this quarter, was it perhaps back related or was it enterprise type projects? Do you have any sense from an application point of view where the decline was this past quarter?

We did ask a lot of questions about what was happening in HDSL and the general sense that we got back was there has been no big change in deployment initiatives where HDSL will factor or in which HDSL will be impacted. So we did think there was some upward movement in HDSL definitely in the second half of last year due to wireless spend. That probably impacted the number more than any specific change in the SMB market. Going into this year, right now the general sense we have is there's been no change and we're just seeing quarter to quarter variation. We have seen an uptick as you know, and we're expecting continue uptick in our fiber access products which will be used in many cases in back haul. But the general sense is that it's not impacting the number in any significant way when you look at that versus the Q1 to Q2 downturn.

Your next question comes from [Bill Deselum – Titan Capital Management] [Bill Deselum – Titan Capital Management]: Relative to the increase in the account receivable that you had, is that an indication to us that your business accelerated in the month of June?

I think that's fair to say. The linearity on revenue were higher in the June month. [Bill Deselum – Titan Capital Management]: And that acceleration in June, is that just a normal phenomenon within the June quarter or is that potentially not for sure, but potentially an indication that spending is loosening up a little bit?

I don't think that we're ready to say that spending is loosening up a bit. Many times, particularly in the second and third quarters, the linearity can be a bit random, and I think we're at the point of saying that that's the driver basically, is randomness and order flow as we went through the quarter. [Bill Deselum – Titan Capital Management]: Jumping to the internetworking, to what degree do you think the economic benefit or the benefit that that group is seeing from the economy? It seems as though that would be most of your businesses, most driven by the economy and yet we're not sensing that the economy is improving. Are you seeing something there?

We're not sensing the economy is improving either. My sense is, and just with people that we have talked to, is that there just seems to be more of a belief that there's some level of stability that there are projects that just have to be let go and people are moving on some of those projects both on the carrier space and the enterprise space. I wouldn't say that there's a large turnaround. We don't have perfect visibility into that, but we're cautious about saying that the enterprise market and the way that we address it has changes substantially. We're more confident in saying that we picked up market share and we do know that probably inventory levels have stabilized somewhat. [Bill Deselum – Titan Capital Management]: If we heard correctly, the TA 5000 revenues currently more than, there are more Tier Three TA 5000 revenues than there are revenues to the Tier One's and assuming that we did hear you correctly, when would you anticipate the Tier One TA 5000 revenues to overtake the Tier Three?

First of all, that was true for the second quarter. That hasn't historically been true. So there have been quarters where Tier One revenue was ahead of Tier Three revenue. Over the long term, the stimulus package throws in a different twist on it. If you would have asked us in 2010, do we think Tier One revenues will be larger than Tier Three revenues, the answer would have been yes. The stimulus package has the potential to impact that in a meaningful way so I think at this point in time, you will see quarter by quarter variations. We're very confident that Tier One revenues will be up in Q3 versus Q2 but that will be on a quarter by quarter thing for a period of time, definitely when you throw in the stimulus piece. [Bill Deselum – Titan Capital Management]: Following up on your last comment about 2010, the Tier Three being larger, is that actual incremental business or is that business that was pushed out in your opinion of 2009 and it will fall in 2010?

That's somewhat like the previous question which is the stimulus package itself all incremental. Do they do projects that were contemplated as 2009 pre stimulus now going to be moved to 2010 and be called stimulus. My guess would be there's a mixed bag in there, but in general the people that we've talked to tend to view those as separate buckets and that's probably one of the reasons we saw a rebound in Q2 in that IOC marketplace, because people were releasing thing that were not going to be stimulus qualifiable. I would view it and I think the intent of the legislation is for this to be incremental spending, and I would say that that's still the majority of that we're seeing, and the thing that we can put hard numbers around is incremental spending.

Your next question comes from Joanna Makris – Brigatine Advisors. Joanna Makris – Brigatine Advisors: With Embark having ticked down this quarter sequentially, can you talk a little bit about that relationship and the potential relationship with Century Tel going forward?

We're very optimistic about that relationship. Century Tel has been a good customer to us and has been a customer that has actually utilized products like the 500. Embark as you know, we have a very long history with and has adopted many of our products including the 5000, and we feel we're in a very good position there and that's a relationship that we've worked very hard to get and secure and to keep. So I do not view the performance of this quarter at Embark as any sign of what the future potential is for us at Embark or the new Century link.

Your next question comes from [Tony Row – Eastshore Partners] [Tony Row – Eastshore Partners]: In a prior answer you touched a little bit on your Fiber Access and how they're going to play a significant role in fiber based at bay stations. Can you elaborate a little bit more on what types of products would fit into that application?

The main product that we push is our Opti 6100 series. We are of course putting in Fiber Access capabilities and Total Access 5000, but I would call that very early. So where we're seeing the benefit today is with our 6100 products and we sell that to all the major carriers, AT&T, Quest and Verizon, although not the telecom piece with Verizon, but we do sell to Verizon wireless as well as the majority of the Tier Two's and many of the Tier Three's. [Tony Row – Eastshore Partners]: It sounds like to me when I look at the 5000 that that would be a natural application for that product.

That is a very good application for that product. It's a good application when you start talking about a more Ethernet centric fiber deployment versus a product deployment or even an Ethernet over sonic deployment and the majority of the carriers aren't to that point yet. So when they're adding capacity today, by far the majority is sonic based capacity which is why it's benefiting the 6100 more than the 5000 at this point. [Tony Row – Eastshore Partners]: You're planning, there's competing camps out there, but there's a belief that Ethernet over fiber will be the choice down the road at some point so is that what you're trying to get in front of the curve on with the 5000?

We are very, very big believer that Ethernet will rule the day at the end of all of this, or at least for the foreseeable future and Ethernet over fiber is a very key area that you would expect us to move into. [Tony Row – Eastshore Partners]: The 6100 would not be applicable in that application.

The 6100 is much more sonic based. It has Ethernet but Ethernet over sonic. [Tony Row – Eastshore Partners]: On the TA 5000, can you give us a little bit of a feel from an application standpoint of what applications may find its way into Tier Three type carriers and are they different applications than they would be at the Tier One's?

Today, the answer is probably more yes in that the Tier One's where we're selling into, we sell into several different applications, but the bigger Tier One's it's been more Ethernet or Ethernet transition or Ethernet aggregation where in the Tier Three there's much more broadband DLC or high speed DSL. So there is overlap in most of the Tier Three. We feel confident we will win those Tier One applications in most of the Tier One's. We feel like we will win those Tier Three applications or may have and they're just different points in the deployment line, but at this point in time there is a difference. [Tony Row – Eastshore Partners]: On the TA 5000, on the Tier One's, when you've already gone through such lengthy evaluation periods and qualification for certain applications, when you then move to a new application even if it's in a different group within the carrier, would you say that that makes it an easier job for you to have them look at the prior qualifications maybe within divisions within the company?

It definitely helps, but the amount of that help is dependent upon the particular operating system or OS or EMS that is used for that particular application. It's definitely a help and sometimes it can be a very, very big help if it happens to be under the same OS umbrella, and sometimes it's less. I think that was the last one because we have overrun our time. Thank you everybody for joining us. Sorry we didn't get to all of the questions, but we look forward to talking to you again at the end of next quarter.