Good morning, and welcome to the Zebra Technologies 2011 Second Quarter Earnings Release Conference Call. Joining us from Zebra Technologies are Anders Gustafsson, CEO; Mike Smiley, CFO; Mike Terzich, Senior Vice President, Global Sales and Marketing; and Doug Fox, Vice President, Investor Relations. All lines will be in a listen-only mode until after today’s presentation. Instructions will be given at that time in order to ask a question. At the request of Zebra Technologies, this conference call is being recorded. Should anyone have any objections, please disconnect at this time. At this time, I would like to introduce Mr. Doug Fox of Zebra Technologies. Sir, you may begin.

Thank you. Good morning. Thank you for joining us today. Certain statements made on this call will relate to future events or circumstances, and therefore will be forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Words such as expect, believe and anticipate are a few examples of words identifying a forward-looking statement. Forward-looking information is subject to various risks and uncertainties, which could significantly affect expected results. Risk factors were noted in the news release issued this morning and are also described in Zebra’s 10-K for the year-ended December 31, 2010, which is on file with the SEC. Now, let me turn the call over to Anders Gustafsson for some brief opening remarks.

Thank you, Doug and good morning, everyone. Today, Zebra reported another quarter of solid operating results. Specifically, we delivered 58% growth in earnings from continuing operations to a record $0.60 per share and $0.12 growth in sales to $245 million, also a record. The second quarter marks Zebra’s eighth consecutive quarter of sequential sales growth. We achieved improved operating leverage with continued high gross margins and effective control over operating expense growth. Further, we maintained our aggressive buyback programs with a repurchase of 1 million shares of Zebra stock. The increasing success of our investments, strategic investments was complemented by a continuing favorable environment for solutions driving greater efficiencies in global supply chain. Zebra’s growing presence in emerging regions or step-up cadence or new product introductions together with expanded relationships with new channel partners enable Zebra to reach more customers more broadly and deeply in targeted vertical industries around the world. This progress is built on Zebra’s scale and leading global brand. It has positioned the company for further shareholder value creation by fortifying Zebra’s competitive advantages and enhancing our ability to serve more of our customers’ needs for greater visibility with actionable outcomes, improved operational efficiency and enhanced customer loyalty. I would now like to provide an overview of the highlights for the quarter. Now with 60% of sales outside North America, all international regions experienced strong growth. Participation was broad with 17 countries registering year-over-year sales increases of 20% or more. Our geographic expansion efforts paid off several countries across new sales thresholds aided by the additional Zebra sales representatives placed in emerging regions over the past year and the tight strategic alignment between sales and marketing. Sales in those regions with this increased representation were up an aggregate 25% for the second quarter. In Asia-Pacific, we are…

Thank you, Anders. Let me highlight some of the key components of Zebra’s results for the second quarter. Our comments will principally focus on year-over-year changes and the performance of Zebra’s continuing operations, which have been adjusted for the sale of Navis in the first quarter of this year. First, sales came in at the midpoint of our guidance range and brought strengthening in international regions. Second, the gross margin improvement of 4.1 percentage points resulted primarily from lower material and freight costs and favorable foreign exchange rates. Third, we achieved further operating leverage with a lower growth rate in operating expenses and sales growth. And fourth, we brought back 1 million shares of stock. Let’s take a look at sales. For the quarter, sales were up 12% from $219 million last year to roughly $246 million. On a constant currency basis, sales increased 8%. By region, Asia-Pacific sales advanced 50% for the quarter aided by the broader coverage of more Zebra sales representation in the region. Sales to customers in manufacturing, retail and government were particularly strong. The key region has been an important element of the Zebra growth story. The region accounted for more than 15% of total sales for the second quarter, up from 9% only five years ago. In EMEA, nearly all subregions contributed to the 20% rise in sales. The territories saw a continued strong channel demand including sales of high performance tabletop printers for manufacturing applications in Germany. Large deals in the retail, healthcare and government applications augmented this robust run rate business. Latin-American sales also maintained a favorable growth profile of 25% from a year-ago. A rebound of manufacturing in Mexico complemented continued growth in Brazil. The other parts of the Latin American region, Central America and other countries in South America were…

Thank you, Mike. Results for the second quarter and first half of 2011 demonstrated the success of our strategy to drive higher growth and increasing returns. Most recently, we accelerated the placement of Zebra sales personnel in territories that offer the highest risk adjusted growth opportunities based on big market research and analysis. We supported these investments with new innovative products that are expanding the range of applications in which we can enable mission-critical information of our assets, people and transactions. Finally, we focused our business on core printing, RFID and location solutions to build on the multiple competitive advantages that has led to clear industry leadership. Our success to date gives us confidence in Zebra’s future and that the strategies we are pursuing will lead to creating greater shareholder value. As we look through the second half of 2011 and into next year, we will continue to invest in those areas of our business that will deliver the highest risk adjusted returns. Mainly first, driving growth by more deeply penetrating North America and parts of Europe in key verticals with new applications. Second, maintaining our intensity on product innovation and superior product development. And lastly, expanding into emerging regions around the globe or into a business intelligence that aligns the most promising industries and applications with a correct channels, sales and marketing strategies. Let me elaborate. We will continue to develop stronger and broader relationships with channel partners to serve more customers in targeted verticals around the world. At the same time, we have programs under way that are designed to penetrate verticals more deeply with a broader set of applications in established regions such as North America. We are building on our early efforts with independent software vendors or ISVs to be coming to the fact of standard…

Thank you, Anders. Before we open the call to your questions, let me ask that you limit yourself to one question and one follow-up. In addition, Mike and I will be available after the call for any further discussions. Finally, please mark your calendar for the next quarterly conference call which is currently scheduled for Tuesday, November 8. Okay, we are now ready for Q&A.

(Operator Instructions). Your first question comes from the line of Paul Coster with JPMorgan. Paul Coster – JPMorgan: Thank you. Good morning. I think most of your – so approximate competitive advantage have been posting growth in North America or even associated with Rico market. So I think that’s what folks are going to focus on say from a negative perspective. As much let’s get out of this quarter admittedly. But can you elaborate please on what happened a year-ago and why it’s down and what gives you the confidence of North America is back on track. I mean the underlying concern here is that maybe to focus on internationally (inaudible) goes through our – focus on Internet domestically and perhaps your losing some using market share?

Well, first in North America, we have the great strength in our traditional markets of manufacturing and warehousing. That led to very rich mix of tabletop printers. We had record revenues of high-end printers into US. Sales through our distribution partners continue to be very robust. And this favorable trends are offset by a weakness in retail. But even so we had a healthy deal activity throughout the quarter. We just didn’t have as many large deal as we would normally see. And in retail, we will say that the high-end retailers continue to outperform most of the other one. And we are quite confident that we are maintaining and expanding our lead in the industry and not losing any share. If you look at little more on the outlook for North America than for us, we have developed a robust set of growth strategies for the region that we feel are all very compelling. We are building a more strategic sales capability. We are developing new types of partnerships that can take us into new verticals or new applications through ISVs and system integrators. Over the last several years, I guess the backdrop in North America has been there. There has been a big shift from the manufacturing jobs or manufacturing opportunities for us outside of the US to Asia. So fortunately, they landed with us in those regions. We certainly pick them up there. But we have seen a substantial shift in our business where the breadth of our product lines, channels and so forth has really helped us grow very, very healthily in new markets like health, government, direct store delivery even retail. And into the second half of the year, we feel that our pipeline in North America is promising and we are working very hard to make sure we can deliver consistent growth trajectory for the region that is clearly one of four priorities. Paul Coster – JPMorgan: So your business, so your hardware business lease is pretty cyclical and were all picking up this negative points at the moment. Can you just comment on what you are seeing from your customers in terms of the economic cycle and the risk associated with the slowdown?

Paul, this is Mike Terzich. That question specific to the North American market? Paul Coster – JPMorgan: No. It’s more generic.

Well, I think generically speaking, I think our business – I think the diversity of our business and from both the global perspective and the application perspective has been very healthy. And clearly when you look at all of the news that is around at those at the current place and timing. So little bit we’re sensitive to it. We haven’t seen that reflected in the base of our business. I want to reinforce one of the principles of the technology that we felt which is we are in efficiency, productivity technology. And we intend to be a little less sensitive to the immediacy of the macroeconomic indicators in the marketplace. People deploy our technology to improve productivity, efficiency of their business. When they have economic challenge in their business, they deploy our solution. So we have been a little bit less – we have been more insulated for some of that. And we expect that, we can’t predict the future but in the short-term I think the general state of our business has been pretty healthy. Paul Coster – JPMorgan: All right. Thank you.

Your next question comes from the line of Anthony Kure with KeyBanc Capital Markets. Karl Ackerman – KeyBanc Capital markets: Good afternoon, gentlemen. This is Karl Ackerman filling in for Tony.

How are you?

Hi, Karl. Karl Ackerman – KeyBanc Capital markets: Good. Yeah, I was just curious as ScanSource continues to add the international footprint, do you see Zebra utilizing them at the same penetration rate and say, Europe and Brazil as much as North America?

Karl, this is Mike Terzich. I will take that. The business does materially change in the international market I’ll try to explain. Certainly in North America, it’s a homogeneous market. They have very strong position, they curved out a strong position in Europe as well. One of the challenges in the European market and in the balance of the international markets, four broadline distribution is that there is a fair amount of regional royalty that occurs with the distributors and reseller relationships they have. So they certainly bring scale to the international business but at the same time there is a lot of local loyalty. The bottom line is the Italian resellers and France resellers like to buy through some local distribution and that has always been a place in the market. So I think as they continue to scale, they are going to continue to be effective for us and we expect that relationship will continue to be successful, but it’s a different market internationally because of the local culture and the local customs and the local relationship. Karl Ackerman – KeyBanc Capital markets: Okay. And just one more question. I noticed that you know you guys did have 75 ISVs joining the program today and that’s great. You’re continuing to accelerate the build of your go to market channels. Just wondering if you could provide some color on those – are those primarily concentrated within emerging markets. And then also, how long it will inevitably take some of them to come on board and then may be considered fully productive?

First the ISVs that we have signed up so far has primarily been in our more developed markets, so in North America and Western Europe. It is a wide variety of vertical focus or application focus. So they give us a much better breadth as they emphasis. And they help us really get into new areas that we otherwise wouldn’t really have the same penetration. And we can compete by getting designed into the application versus having to compete at the tailend by speed some price. How long it takes to ramp, it those text it varies quite a bit. Some of them are already most familiar with our space and what we do. They can be up and running very quickly and some of them takes a bit longer to figure it out. But I would say on average, it’s probably maybe fee bonds or so to get through that. Karl Ackerman – KeyBanc Capital markets: Great. Thank you, gentlemen.

Your next question comes from the line of Keith Housum in Northcoast Research. Keith Housum – Northcoast Research: Thanks, guys. Thanks for taking my call. And my question pertains to the foreign exchange benefit, if you guys just discussed a little bit about where the foreign currency translation benefit was originated. If there’s more on EMEA region or Latin America? And perhaps secondary, how much of that perhaps stops the bottom line.

What we had – this is Mike Smiley. Just give you an answer that we had look over year-over-year, we had basically about $7 million – just sort of $7 million operating profit benefit from the foreign currency. And it’s basically a whole lot of EMEA. Of all intend and purposes, we sell almost entire US dollar except in EMEA where we’re selling dollars, pounds and euros. And so the primary impact to our P&L is in Europe and it is an euro. So it’s basically – again the growth rate would have been 8% versus the 12.3 for the year-over-year and we had the benefit about $7 million – just assured $7 million to our operating income from that. Keith Housum – Northcoast Research: Okay. Thanks.

Yep.

(Operator Instructions). Your next question comes from the line of Tim Mulrooney with William Blair. Tim Mulrooney – William Blair: Yes. Good morning, gentlemen. My question is regarding ASP. I have noticed that ASP was up 10% year-over-year and also up sequentially. I was wondering if that was a function of new product introduction or what’s driving that?

That is a really good question. We do put out the ASP statistic, we have done that historically. To be honest, this is a challenge that numbers is really a function of mix. And so, depending upon the period like I think we mentioned earlier, tabletop is higher. Tabletop products sell at a much higher ASP. So depending upon the mix that will change that, so I would not look at that too closely to sit there and try to get an indication of how the business is going because balance of the year pricing has been really, really stable. We don’t, we are not seeing a lot of price pressure – we see very little price pressure to be honest. So it is not really an indication of price pressure, its mix. Tim Mulrooney – William Blair: Okay. That’s very helpful. Thank you. And then secondly, in terms of your G&A, I’ve noticed that’s down about 2 million from the first quarter to the second quarter. Is that a function of seasonality or how should we think about that going forward?

It’s primarily related – it is seasonality in the sense that when you come to the top where you top up 401K type stocks and both security types of stock, vacation or those types of things. So you will see that in the back off of our yearly benefit from that kind of stuff versus the first half. So when we have this call at the end of the fourth quarter, and we will tell you the first quarter is going to step up, it is going to be the offset of the situation we’re experiencing here. Tim Mulrooney – William Blair: Okay. Thank you.

Yep.

(Operator Instructions). Your next question comes from the line of Jason Rodgers with Great Lakes Review. Jason Rodgers – Great Lakes Review: Hi, guys.

Hi, Joe. Jason Rodgers – Great Lakes Review: Just a follow-up on the ScanSource, do you have a percentage of sales that ScanSource was through the quarter?

We do have 19% which is about consistent with our last quarter. Jason Rodgers – Great Lakes Review: Okay. And looking at North America, are you facing the tough comparisons in retail for the third and fourth quarters as well?

Not (inaudible) something, we are more normal I think if you go forward. Q2 was a more tougher comparator. Q3 and Q4 I think are – let me consider a more normal. Jason Rodgers – Great Lakes Review: Okay. That’s helpful. And then just to be clear on the component cost related to the Japan situation, you expecting them to pretty much double in the current quarter and then I guess, tail offer and following it.

Yeah, we I think – that sort of two areas where we have the primary costs associated. One is, we are reintroduced to the market, our desktop printer that we have been selling in the past to help alleviate the demand for another printer that’s was using a certain – some components by the Japan. And to encourage that transition to the newly introduced product we’re giving more of a prior rebase not extraordinary. And the other thing is we’re using – we’re spending a lot more, not a lot more but more in freight as the air freight start to meet customer demand. So it is stepping up. So actually I’m glad you asked that question because if you really take the impact of roughly $5 million of the Japan crisis in most of that goes to gross margin. And you adjust our gross margin projection for that 5 million, you’re going to say, we have a very robust gross margin sort of, I will call it a pro forma number, if we didn’t have the Japan thing. But even work to Japan, we have a very strong gross margin. So this goes back to the question of our price. Our prices are good. Business is going well. We’re just reacting to the situation in Japan and trying to not trying, but we are addressing our customer’s needs by these actions. Jason Rodgers – Great Lakes Review: Okay. That sounds good. And then looking at the ERP implementation, just wondering how that is progressing?

Its progressing well. We went live in Europe, in Q1 at the end of January in Q1. We had no major system issues. We worked for the last five, six months to optimize the system to make sure all the people are using it are properly trained. And I think it is a big change to implement the new ERP system like as for the – effort along training and other things has been substantial. So we feel we’re making good progress on that and are on plan to go live in North America beginning in next year. Jason Rodgers – Great Lakes Review: Okay. And then finally, what are the expectations for CapEx and D&A for the year?

It’s – I would say it is going to be down a bit. We typically don’t give beyond the quarter but we expect sort of the third quarter to be similar to the second quarter as far as CapEx goes. Jason Rodgers – Great Lakes Review: Okay. Thank you very much.

Your next question is a follow-up from the line of Paul Coster with JPMorgan.

Hey, Paul. Paul Coster – JPMorgan: Talk a little bit about the direct door delivery and mobile solutions opportunities that lies ahead of you? Obviously, you provide the printing part of the solution. Are there any partners, you’re going to market with where you have the other products and solutions whether it’s the GPS technology or the data capture technology. And all your disadvantages by not having a sort of complete set of solutions there?

No, we don’t think we disadvantaged. We have some very strong value to resellers and other partners that are focused on this space. They tend to pull in other hardware or software vendors to offer that complete solution. And we tend to be a very prominent investments. I think our market share in that area is very good. Paul Coster – JPMorgan: Okay. Thank you.

(Operator Instructions). Your next question is a follow-up from Tony Kure with KeyBanc Capital Market. Anthony Kure – KeyBanc Capital Market: Hello, gentlemen. Yes, I was just wondering if you can provide any commentary around what you’re seeing from a demand perspective within distribution. You said that was relatively stronger in the quarter. I’m not sure of – it appears that some peers have said there was a modest build in this recent channel. I just wondered if you have missed the any trends in that in the latter part of the quarter.

Tony, it’s Mike Terzich. We will break this into two pieces. North America, we measured our distribution on a number of metrics. We recorded revenue on a sales out basis. We watched very closely their performance on a sales out basis, we watched their inventory levels very closely. I can tell you that on our salesout basis, the business was healthy in Q2. It was a nice business resolved, which for us is important because that the distribution channel is really a parameter for broader health of our North America business. It crosses multiple verticals, multiple application spaces. So we like the result inventory levels right where we want them to be very consistent to what we’ve seen in the past. Internationally, our business was very strong internationally. So our distribution results are (inaudible) were better than they were in the US, which was very good. So again, the quarter was a quarter that I would characterize as very strong run rate business, which is typically aligns well with a distribution performance. And we’re a little bit lighter globally on some of the large deal opportunities besides of the last deal. So the distribution channel have performed very well for us. Anthony Kure – KeyBanc Capital Market: Okay. If I may just piggyback on the last comment. You did not witness may be some of the larger deal activities that you normally would. Are those primarily concentrated in manufacturing in Asia Pac and may be retail in the US or the other end market verticals that maybe you didn’t notice service amount of large deal activity that you may normally would.

Well, what we saw was deal activity. The volume of deal activity was consistent to what we have seen in the prior quarters. The value of the deals tended to be a little lighter in the second quarter. And because of the global reach and the diversity of our business, we look at deal activity. It’s generally well balanced between manufacturing some of the field mobility applications that we talked about earlier as well as the retail space and the government space particularly outside the United States for government. Anthony Kure – KeyBanc Capital Market: Great. Thank you very much, gentlemen.

Yep.

And there are no further questions at this time.

Okay. Well, everybody, thank you very much for joining us today. Again our next regularly scheduled conference call for the quarter will be on Tuesday, November 8. And Mike Smiley and I will be available for the rest of the day, if you have any further questions. Have a good day. Thank you very much.

This concludes today’s Zebra Technologies second quarter 2011 earnings release conference call. You may now disconnect.