Good day, and welcome to the Aviat Networks Fourth Quarter and Fiscal 2014 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Peter Salkowski. Please go ahead, sir.

Thank you, Elizabeth. Good afternoon, everyone, and welcome to Aviat Networks preliminary fiscal fourth quarter 2014 results conference call. I’m joined today by Chuck Kissner, Executive Chairman of the Board; Mike Pangia, President and Chief Executive Officer; and Ned Hayes, Senior Vice President and Chief Financial Officer. During today’s call, management may make forward-looking statements regarding Aviat’s business, including statements related to the projections of earnings and revenues, business drivers, the timing and capabilities of new products, network expansion by mobile and private network operators and variations of economic recovery in different regions. These and other forward-looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. Please note that these forward-looking statements reflect the company’s opinions only as of the date of this call and the company undertakes no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. For more information, please see the press release and filings made by the company with the SEC. These can be found on the Investor Relations section of Aviat Networks website at www.aviatnetworks.com. In addition, during today’s call, management will be referencing both GAAP and non-GAAP financial measures. A copy of the press release and financial tables, which include a GAAP to non-GAAP reconciliation and other supplemental financial information, is available on the Investor Relations section of the company’s website. In late July of this year, Chuck Kissner transitioned into the Executive Chairman role for Aviat Networks. In this new role, Chuck will kick off today’s call with some opening remarks. Chuck?

Thanks, Peter. It’s only been a few weeks since I was appointed as Executive Chairman. I wanted to take this opportunity to emphasize that my expanded role is to support Mike and the entire management team at Aviat. What you’ll hear today is that in the midst of an improving but challenging market, they’ve made progress in the fourth quarter in stabilizing revenue, growing bookings, reducing OpEx, and rebuilding the cash balance. I’m sure most of you listening to this call are probably aware the Board and Mike asked me to spend more time in the company to help management fine-tune the company’s near-term business improvement tactics, its longer-term product and services planning and to work closely with them on the company’s strategic direction. Before providing comments later regarding the future direction of the company, Mike will share highlights from the recently completed fiscal fourth quarter and the fiscal year, highlight the performance of our two largest geographic markets and provide an update on our product initiatives. Ned will then review the preliminary fiscal fourth quarter and full-year financial results as well as to provide guidance for the fiscal first quarter of 2015 with some visibility into the year. Mike?

Thanks, Chuck. I’ll start my prepared remarks by stating how delighted I am to have Chuck working closely with the executive team. Now is an optimal time for Chuck to take on this new role, enabling him to have a more direct impact, and for him to build on our recent progress. I believe Aviat and its shareholders are going to benefit from his extensive knowledge of the wireless transmission industry. With that I’d now like to turn your attention to our preliminary fiscal 2014 fourth quarter and full-year results. Total revenue for the fourth quarter was $85.9 million, resulting in a non-GAAP loss of $0.13 per share. Sequentially, revenue was up $4.5 million while non-GAAP operating expenses declined by approximately $2 million. As a result of these improvements, our cash balance increased by $2.4 million in the quarter and we ended the year with cash and equivalents of nearly $49 million. While encouraged by the sequential revenue and cash improvements we made in the fourth quarter, I’m even more encouraged by the signs of an improving pace of business that we experienced from a bookings perspective. Our fourth quarter book-to-bill ratio was substantially above 1, and as a result of two consecutive quarters of higher bookings, our backlog has increased considerably, leading to an enhanced line of sight for fiscal 2015. Ned will discuss our fourth quarter financials in more detail in a few minutes. Turning briefly to our full-year results. Fiscal 2014 revenue was $346.5 million, resulting in a non-GAAP loss per share of $0.57. Fiscal 2014 revenue was impacted by reduced spending by two of our largest existing customers. Earlier this year, we took actions to improve our cost structure and focused on generating cash and operating leverage under a wider scenario or wider range of scenarios.…

Thanks, Mike. Aviat's preliminary GAAP financial statements, along with a reconciliation of non-GAAP financial measures, are included in the company's press release issued today, following the markets close. I'd like to take a few minutes to summarize our preliminary non-GAAP financial performance at a high level. The key figures were; for the second quarter in a row, our fourth quarter book-to-bill ratio was substantially above 1. In fact, fourth quarter bookings were the highest they've been since the December 2013 quarter, and in North America, the bookings were the highest since the June 2008 quarter. What contributed to the bookings strength in North America was the $19 million purchase order Mike mentioned earlier that we received from a large U.S. County. We also saw improved bookings out of Africa. Excluding the North America purchase order, the fourth quarter book-to-bill ratio would still have been above 1. I want to remind everyone that it can take three to four quarters for public safety bookings to be recognized as revenue on our income statement. Given the strong bookings performance in the last two fiscal quarters, the company's total backlog has increased considerably year over fiscal year. This was driven primarily from the North America sector, as previously mentioned. The company ended the fourth fiscal quarter with the cash and equivalents balance of $48.8 million, up from $46.4 million in the third fiscal quarter, thanks to very strong cash collections and tight working capital management. The cash and cash equivalents balance of the quarter excludes $1.1 million worth of restricted cash related to our self-insured disability plan. We ended the quarter with net cash, which is cash less debt, of approximately $43 million, or approximately $0.70 per share. This compares to net cash of $40.4 million at the end of the fiscal third…

Thanks, Ned. So as you just heard from Mike and Ned, things are improving, not only in the microwave market but also in Aviat's operations. I expect we're going to do reasonably well during this business cycle. We do have the best balance sheet metrics among the independents. We’ve got great customer loyalty and continuing profitability improvement plans and a good pipeline of new products coming out. But we want to do more. We need to do it faster. So for example, like others in our business, Aviat's gross margins don't currently support how we operate. They create growth without equivalent profitability. One thing that impacts gross margins is commoditization. Given that, we have been and continue to be open to consolidation for the right opportunity. In fact, we've done three major consolidations during my tenure. However, even the right opportunity has risks and may not result in the desired outcome. Aviat will continue, as we have this year, to seek the opportunities and increase the most value for the company and its shareholders. So, what else are we going to do? First as Mike and Ned have said, we've been structuring the business to continue to generate cash and be profitable under a conservative set of assumptions. As evidenced by the results today, we've made some progress here. Although we've made progress, we believe there are additional opportunities to improve our structure and processes by further reducing complexities in the business and subsequently lowering facilities, systems and product costs. It's even clear to me now that we have assets, technologies and competencies that have the potential to create a significant longer-term opportunity. A number of months ago, Mike asked for my support regarding our future products. We formed a small team to look at the evolving network requirements of our customers with a focus on providing our clients more valuable solutions. The progress here is encouraging. I really think this has the possibility to be another innovation that can lift the company in the future like some of the others of the past with a stronger business model. We're going to continue to work this, and we’ll update investors as things progress. Meanwhile the team is clearly focused on results. The management team and the Board are active and aligned around these priorities no matter what it takes. I'm encouraged by the near-term results and look forward to working with Mike and his team to leverage the company's recent progress. I'd like now to turn the call over to the operator to begin the Q&A session. Operator, the call is now yours.

Thank you. (Operator Instructions) We’ll take our first question from Rich Valera with Needham & Company. Please go ahead, sir. Rich Valera - Needham & Company: Thank you. Congratulations, Chuck, on stepping into an operating role again. Best of luck.

Just to be clear, I’m not running the company, I'm helping. Thank you. Rich Valera - Needham & Company: Re-engaging more, if I rephrase. So, impressive strides, it sounds like you're making on the revenue outlook and 1Q should have a very nice OpEx level relative to your prior guidance. I just wanted to get your sense on gross margin. I was under the impression that with your OpEx reductions to the $27 million or below per quarter, that you might have a breakeven level around $90 million. But to have that, you'd need to have a gross margin pretty darn close to 30%, which is a long way from where you were this quarter or it sounds like you'll be next quarter. So, can you talk about how you view gross margin, and should we still think about this as a 30% gross margin company? And if so, when could you get there?

So I’ll just start it out. Ned, if you’ve got something to add. First off, we do expect to see our margins improve, and when we talk about cash breakeven, Rich, we have several elements of our P&L that are non-cash oriented. So, our cash breakeven level is different or better than what we’d normally see on the P&L. Notwithstanding that, we're also striving to be profitable on the P&L as well as we move through the year. Ned, did you want to add on the gross margin getting to the 30%?

: The non-cash elements, as we do these product transitions, we do have P&L costs. Those are non-cash in terms of P&L, but they certainly do impact the GAAP and non-GAAP earnings. We'll continue to try and manage those as best we possibly can. But I think quarter-after-quarter, seeing modest improvement in topline is going to allow us to see modest improvement in gross margins, especially as we see traction with the new platforms coming to market. Rich Valera - Needham & Company: I appreciate that. Is there any color you're willing to give on and when you might hit that non-GAAP breakeven as opposed to cash breakeven? Is that something we would expect perhaps in the second half of the fiscal ’15 year or you're not willing to get that specific at this point?

I don't think we're willing to get that specific at this point but I do believe that we do have a line of sight to being profitable on the P&L statement and we'll continue to work to strive to that, and we would expect to be there this fiscal year. Rich Valera - Needham & Company: And then with respect to the CTR, it sounds like you're making some nice progress there, engaging both existing and new customers. Anything you're willing to say in terms of what percent of your total bookings or revenue might come from the CTR, perhaps within this fiscal year or exiting this fiscal year, just to give us a sense of how significant an impact we might expect that to have this year, and presumably having a positive impact on the gross margin line as well.

Yeah, absolutely. So we would expect CTR to begin to start ramping up in the next couple of quarters in terms of volume and by the end of this fiscal year, we’re probably going to be in the range of approximately 30% of our indoor units that we ship out internationally, roughly in that range, we would expect to be CTR, and that will continue to ramp sequentially as we move into the next fiscal year. Rich Valera - Needham & Company: So, say by 4Q ‘15, you would say maybe 30%. Is that fair?

I'm talking about shipments as a percentage of our indoor units, Rich. So I wouldn’t be including, for example, our IRU 600 in North America nor would I be including our all outdoor IP products, and that's shipments. So bookings could end up being at a higher level than that, but I can't give you color on that at this point in time. Rich Valera - Needham & Company: And then you made reference to the pick-up in African business, or you had a little bit this quarter and it sounds like you're expecting more. The CapEx, half-over-half CapEx projections for MTN are actually quite dramatic, not sort of gradual, but kind of plus 50% or better in the second half versus first half. Do you see perhaps upside to your relatively modest expectations of steady sequential improvement from Africa or do things just not necessarily trickle down that quickly to you, even if they do spend their full year CapEx budget?

So, on the positive side, the slow recovery in MTN has actually really put us in a position of being very motivated to drive other business and we've been successful in other accounts there, and our improvement in our bookings in Africa has pretty much come off of the other accounts, even with MTN still being slow. Absolutely, if MTN were to get anywhere near the levels that they’ve allocated, we would see some upside. So we're planning our views, as Chuck said earlier, under more conservative assumptions moving forward. Rich Valera - Needham & Company: And then, is there anything you can say, in North America, there was one large bid in particular on the cellular side that's been discussed quite a bit, and I think you made reference to it in your prepared remarks, saying you thought you were still in the running for a couple of large bids in North America. Is there anything else you can say on that front, potential new business in North America on the cellular side?

Just like I said, we're still in the mix on a couple -- two large opportunities with national carriers in the U.S.

(Operator Instructions) We’ll take our question from Aaron Yu with Singular Research. Please go ahead.

Hey, guys, sounds like some good progress was made in the quarter, so it's certainly encouraging. Question on the North American business, it looks like you guys are getting some good traction, both in the public sector and elsewhere, and just wanted to kind of dig into that. Is that sort of a function of the macro spending picking up, or is it more sort of a result of sort of the CTR and other product lines that you guys are going to market with getting new accounts and traction in that aspect?

So specifically referencing our North American business, CTR doesn't really have a big play there in the near term. That will come eventually, but our IRU600 product is our flagship product in North America, which is one of the top products in North America with respect to what it provides to public safety as a vertical as well as others. Usually in the public safety domain, these deals can take any anywhere three years plus in terms of the sales cycle. So, you do see things early and so it's really more of a function as we said earlier. Last few quarters there was a slowdown in terms of the decision making cycle in some of these bids. Ultimately, we've seen them close and we've got a line of sight to further opportunities moving forward. So it’s just a matter of timing on these large deals.

But again, Aaron, I do want to reiterate what I did say in our prepared comments. These are relatively long implementation execution cycles. It generally does take three to four quarters to fully roll these out. So it's not as if we're going to see quick realization here in one or two quarters especially along the lines of a $19 million purchase order we talked about.

I just wanted to confirm that all of the restructuring has taken place, and there's none left for ‘15?

There is still work to be done. That work will be accomplished under the existing and already approved 2014, 2015 restructuring plan. In our K, you will note that we have actually taken an additional step in impairing some additional space in the Santa Clara headquarters building, but again that's more of a facilities based charge as opposed to the headcount charge, but the additional headcount actions that we have contemplated will be covered under the existing restructuring plan.

And with no questions remaining, I'd like to turn the call back over to Mike Pangia for any additional or closing comments.

Thank you, operator. So even with its challenges, the backhaul space remains attractive. To maximize our opportunities, we will continue to diligently focus on profitable growth and to work closely with Chuck and our Board of Directors to tactically and strategically steer the company. We are encouraged by an improving visibility provided by our strong bookings and improving backlog, sequential revenue growth, positive cash generation, and the traction our new products are receiving. As we strive for profitable growth, we are increasingly optimistic that we'll be able to generate cash in fiscal 2015, thereby further improving our liquidity position and strong balance sheet. Generating cash is a major focus for us in fiscal 2015. Now I'd like to turn the call over to Peter for a final wrap-up. Peter?

Thanks, Mike. Before closing the call, I’d like to remind everyone that Mike and Ned will present tomorrow at the Drexel Hamilton Technology, Media and Telecommunications Conference being held in New York and will be presenting at the Singular Research Conference in Los Angeles later in September. I want to thank everyone for your participation today and thank you for your interest in Aviat Networks. This concludes our fiscal fourth quarter 2014 earnings call, bye-bye for now and have a great rest of your day. Thank you.