Good afternoon, my name is Michelle and I will be your conference operator today. At this time I would like to welcome everyone to the ADC first quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer session. (Operator Instructions) Thank you Mr. Borman, you may begin your conference.

Good afternoon and thank you for joining us on today’s call. Bob Switz, ADC’s President and CEO as well as Jim Mathews, ADC’s CFO are with me today. Before we get started I need to caution you that today’s conference call contains forward-looking statements and that future events and results could differ materially from the forward-looking statements made today. Actual results may be affected by many important factors including risks and uncertainties identified in our earnings release and in the risk factors included in Item 1A of ADC’s annual report on Form 10K for the fiscal year ended October 31, 2007 and as may be updated in Item 1A of ADC’s subsequent reports on Form 10Q or other reports filed with the SEC. This earnings release can be accessed at the investor relations section of ADC’s website at www.ADC.com/Investor. ADC’s comments will be on a continuing operations and GAAP basis. Bob will provide an update of ADC’s strategic direction. He will then turn the call over to Jim who will cover the financial results and provide forward looking financial guidance. I will now turn the call over to Bob for the rest of the call.

Good afternoon everyone. I’m pleased to see that 2008 started strong as we continue on our momentum from 2007 in making significant strides in building ADC’s long term value as a leading global network infrastructure company. In our first quarter of 2008, we continued to execute successfully our strategic plan to grow sales and operating earnings while better positioning ADC for global fiber connectivity leadership, a new generation of wireless capacity and coverage solutions and expansion into developing country markets. We are also very pleased with the progress of our recent acquisitions of LGC Wireless and Century Man as well as our competitive transformation initiative, a multiyear program designed to serve our customers better, achieve significant competitive advantages and establish cost leadership in our businesses. Let’s now review our four strategic growth initiatives. Global fiber connectivity leadership, new wireless capacity and coverage solutions, growth in developing country markets and competitive transformation. Our first strategic growth initiative, global fiber connectivity leadership. ADC has achieved strong growth as a result of our aggressive steps to bolster our leadership position as a provider of high performance fiber connectivity solutions. Across the globe deployments of fiber intensive broadband networks are accelerating to meet market demand for enhanced communications services. In the first quarter of 2008 sales of global fiber connectivity solutions increased 20% year-over-year primarily due to strong growth in central office and data center deployments. This compares favorably to overall fiscal year 2007 when sales of global fiber connectivity solutions increased 13% year-over-year. There are three key drivers to our strong growth profile in our global fiber connectivity business. First, demand is being fueled by our customers’ need to provide greater bandwidth. One of the biggest drivers was the growth in video on Internet which doubled in 2007. Second, the race to provide…

Good afternoon to everyone. It’s my pleasure to share with you the highlights of our strong first quarter operating results. First, our sales of $339 million came in stronger than expected and were up 14% year-over-year and up 3% from the fourth quarter of 2007 excluding the $24 million in first quarter 2008 sales from the LGC Wireless and Century Man acquisitions, first quarter 2008 sales were up 6% year-over-year and were down 5% from the fourth quarter of 2007. This 5% sequential decline from the fourth quarter is at the favorable end of historical seasonality between our fourth and first quarters. Second, gross margins were very solid at 36%. This compared to 34.5% in the fourth quarter and even more favorably to the 31.9% in last year’s first quarter. Third, our operating income was up 156% year-over-year. Fourth, GAAP diluted loss per share was $0.24, this included however $0.52 per share of charges for a non-operating securities impairment, restructuring and operating impairment charges, purchased intangibles, amortization and stock option compensation expense. Lastly, total cash provided by operations activities from continuing operations were $6 million in the first quarter of 2008 and $127 million in the last 12 months ended February 1, 2008. Now, let’s go over those consolidated earnings in a bit more detail. Our GAAP diluted loss per share from continuing operations was $0.24 in the quarter which compares to a $0.06 loss per share sequentially and earnings of $0.08 last year. This quarter’s $0.24 loss per share includes $0.52 of charges which comprise $0.43 per share for a non-operating securities impairment charge, $0.01 per share of restructuring charges, $0.07 of purchased intangibles amortization and $0.01 of stock option compensation expense. As Bob mentioned earlier, gross margins of 36% continue to outperform expectations which is largely attributable to…

(Operator Instructions) Your first question comes from the line of Tal Liani.

My question is regarding your organic sales growth in fiscal 2008, if I were to exclude the roughly $125 to $150 million that you would get from your two acquisitions in fiscal 08, just looking at what they did in the last 12 months, the remaining sales from my calculations are probably going to be flat to slightly down year-on-year. So, first I want to confirm that math and if that math is right why are we seeing that weakness in your organic sales.

I think if you go back and you actually exclude the impact of LGC and Century Man you’d find that our organic growth rate would be mid single digits.

But, if I look at LGC and Century Man, I think one did $40 million and the other did $80 million last year so that’s about $120 to $125 million assuming that they have some growth this year, you exclude that from the $1.5 billion or so that you’re guiding for fiscal 08 then I get to about $1.37 billion or so, so that suggests very low organic sales growth.

Well, there are obviously some estimations in all those numbers. When we look at our own organic growth as we guided earlier this year, we expect to be in the low to mid single digits and I would say given our first quarter results we would reiterate that.

So perhaps I can ask the question in a different way. Among your organic segments which segments do you expect to be strong and which segments to you expect to be weak in 2008?

I think the other thing to consider in your estimates is, as Jim had mentioned, there’s late quarter and mid quarter closes on the acquisitions. So, we don’t necessarily get the full revenue impact. But, to comment briefly on growth, certainly our core fiber business we expect to see significant growth. Right now as we mentioned it’s in the double digit range so we would expect based on the trends that we’re seeing to see that growth continue. Our structure cabling business has been posting decent growth as well. Clearly, our wireless business although the comparisons are a little hard to calibrate given the inclusion of LGC to the ADC business but again, wireless is an area that we would be expecting double digit growth rates. And, our copper business remains strong and I think as you know we tend to model that down each year and I think it’s fair to say that at a minimum we don’t see it going down as much as we modeled and in the case of last year we actually had some growth. But those are the areas I would say that would stand out in terms of the highest growth rates.

Bob’s point was excellent on the timing. Century Man really will just be in our results for nine months this year, LGC for 11 months.

Got it. And, just one last question, now that you have made these acquisitions what should we assume is going to be your target for gross margin and operating margin as we look at the longer term model for ADC? How should we think about gross margins and operating margins?

I would say at the operating margin level we haven’t changed our goal.

Remember we gave you the goal of 14% so I think with gross margins improving assuming revenue continues to accelerate, that gets us closer to the OI and gets us there faster assuming we sustain the gross margins. I would say at the gross margin level I think our past guidance, and correct me if I’m wrong Jim, I think our past guidance was suggesting something in the 34% range. So, I guess I would say at this point we would stick with that with the caveat that assuming our CCT, our competitive transformation effort continue and assuming other initiatives that we have around improving gross margins continue we can probably look to the upside to that at some point in time. I’m not going to forecast that today but we clearly like the direction that our gross margins are going in.

Your next question comes from the line of Christian Schwab.

One quick question on the model first, share count that we should be assuming on the go forward basis similar to what we just saw here in the January quarter on a diluted basis?

Yeah, then you adjust for the if converted method calculation. So we’re giving that detail near the front end of the release as we usually do.

Perfect.

[Inaudible] interest add back and the additional shares for the converter.

Correct. Okay. As we look to 2008 with normalized spending patterns resuming at Bell South and Cingular implied, can you quantify how big that opportunity is? Just a return to normalized spending there?

I’m not going to put an absolute dollar amount on it, Jim might have a better fix on what that number might be because we’re almost looking at a year and a half of transition so it kind of depends on which year you’re comparing it to but let me say the following. At this point in our first quarter, if we look at Q1 08 versus Q4 07, Bell South is off about 7%. If I look at Q1 2008 versus Q1 2007 they’re off in double digit percentages. So, they haven’t turned the corner yet. Cingular was about just a modest decline in Q1 08 over Q4 07 but I think there’s significant upside if indeed the rates revert back to something that approximates normal.

So, should we assume that significant upside is not yet in your estimates but just a return of some type of up – I’m just trying to gage how much upside from Bell South and Cingular you’re assuming versus what could potentially be there.

We do not have a lot of upside built in. I think as we look out over the year we have factored in some improvement but I would say it’s clearly not at normal levels so there is opportunity there.

So, estimates could prove to be conservative should they actually return to true normalized spending?

Correct.

Then on your next comment regarding market share growth. If we look at your business growing in the mid single digits, let’s say the industry grows flat to maybe 1 to 2% and you grow 5 to 8%, how much of that growth are you getting from your penetration in to developing countries and market share gains? Just so we can gage that. Rob I would say right now developing countries probably will not in 08 represent the larger portion of that. I would see that coming quite frankly, based on current trends, some of that’s going to come out of EMEA, we’re off to a very good start in EMEA. Our fiber business is doing extremely well there. I think you’ll recall me saying from prior conference calls over the past year or so that we never did get the full benefit out of the [inaudible] cross selling in our fiber business and that that would be coming towards the end of 07 and 08 and I think we’re now seeing that. Also, we’ve been highly focused on our current core product line there where a year or so ago we got somewhat distracted focusing on the large DT cross connect opportunity quite frankly, maybe to the expense of the fiber products and other products. So, with renewed focus on that part of the business as well as a reflection of creators of attempted cross selling I think we’re making significant penetration in EMEA around fiber. At the high end we continue to do well in structure cabling in certain verticals particularly. So, we clearly see some market share gains there. So, that’s just maybe a snap shot of a couple of the areas.

Great. Then, just one last question then, on the share gains in the structure cabling and enterprise cabling do you think you’re gaining share versus the other players or the number one player?

I’d say it varies with the project and clearly the share we take is from the larger market leaders.

Okay. And you would expect double digit growth year-over-year in that business?

In the structured cable business?

Yeah.

Probably right now I’d put it at the mid to upper single digit. It could convert into double but I would say for now mid to upper single.

Your next question comes from the line of [Amid Bob Passey]. [Amid Bob Passey]: My first question was just on your gross margin guidance, I think you said you expect gross margins to be north of 75% on a quarterly basis for the rest of the year. I’m just wondering why that would be the case given the fact that you did 36% in the first quarter and I suspect the sales in the subsequent three quarters would be higher than the first quarter. So, maybe you can just help us understand why not north of 36% rather than 35?

Well, there were some mix – we had some relatively favorable mix issues in the first quarter. Some of our higher margin projects came in and I’d acknowledge that there’s some conservatism in those numbers where we’re a bit cautious as we look out. But clearly, our first quarter numbers were very robust and we’re reluctant to forecast an absolute repeat of those but that’s why our guidance at 35% or above is sort of open ended.

The other thing is even within our competitive transformation program this particular quarter we experienced pretty high volume in fiber and a lot of our competitive transformation early efforts have been focused around the fiber product line. So, that also contributed to very healthy margins in the first quarter. If the mix continues along those lines then we should see those benefits continue. But, at this stage of the game I think we’d like to have another quarter under our belt to get a better feel of where we think margins are going on a more permanent basis. [Amid Bob Passey]: Okay. Then, I just wanted to confirm the guidance you provided for the full year 2008, on an adjusted basis if I exclude a lot of the one-time events and exclude stock option expense, have you basically raised guidance by about $0.03 so it’s about $1.15 to $1.25 from $1.12 to $1.22 previously?

Yeah. [Amid Bob Passey]: Okay. Then, just as far as thinking about the business model for the rest of the year, is it fair to assume once we include the impact of Century Man that R&D should roughly be in the 5.5 to 6% and SG&A in the 20 to 21%, is that sort of the right levels to be thinking about these two items?

That’s about right. [Inaudible] with LGC in the mix because LGC is a high margin business but is also a big consumer of R&D. So, even though proportionally it’s not that large, its disproportional in terms of its R&D expense so you might see that rise to the high fives or something like that. [Amid Bob Passey]: Then just my last question was interest income in this quarter was actually higher than we had anticipated, is that because the convert effect didn’t kick in until late in the quarter? I’m just wondering how to think about interest income going forward and what explains what we’ve always a relatively large number for the quarter.

Well, the convert was in there for half the quarter. Realize to that we had a bit of benefit from a reduction in rates on the floating rate convertible, the 2013 maturity coming down so much so just some of the offset there benefitted us. Also, I would say that in general the interest rates in the markets tend to lag a bit so you’re seeing a lot of rates come down but as various funds mature and roll over that’s when we’re starting to realize that. But, the vast majority of that was just from having the additional $440 million from the convert on the balance sheet. [Amid Bob Passey]: Okay. I apologize I had one other one, just very quickly, once you pay off the convert later this year are you still pretty comfortable with your overall liquidity position?

Yes. I mean we’ve looked at available cash and think even with all working capital needs on a very conservative basis and paying off the $200 million that we have fully adequate cash on our balance sheet.

Your next question comes from the line of Simon Leopold.

I’d like to start with a housekeeping question, I apologize if I missed it but I was wondering if you mentioned your 10% customers in the quarter?

No, we didn’t. I have two 10% customers Verizon and AT&T.

And approximately where they came in for the previous quarter?

Collectively in this quarter they’re about 32% of revenue and that’s similar to where they have been.

Okay. I’d like to come back to the gross margin question if I may. You did 36% this quarter, you’re calling for 35% or better in subsequent quarters and I think you said your long term target is still 34%? Is that correct? And if so, why wouldn’t you be guiding it up given your confidence about this fiscal year?

That was a historical target that we had put out periodically so I may have lost track and timing of when we may have revised that with you but I’m told we actually did offer some guidance of up to 35% I guess a quarter ago. So we’re at that high end by a point in this quarter.

Okay. Fair enough.

We have 34, we put in 35 in 2007 so we raised the goal to 35 and then having just raised it to 35 and coming in at 36 we want to just stay with that goal a little bit longer but certainly we’re out performing it already.

In terms of your new pro forma guidance, you beat this quarter by a good $0.08 and you’ve raised the fiscal year by $0.03 so I’m wondering if maybe we should be looking at some higher operating expenses than perhaps we have before?

Well, I think there are a couple of things here, first of all the couple of projects that we were anticipating we would complete in the second quarter came in the first so there were probably $0.03 or $0.04 from that. The other thing is a question was asked earlier about interest income, clearly we are seeing interest income come down and even though that’s a non-operating item it’s hitting the EPS so you would see a disproportion amount of impact on the bottom line from that.

So there really is no plan to consciously raise operating expenses?

So when you talk about interest income coming down we’re probably looking at a good $1 million or more step down in the April quarter?

I haven’t put that exact pen to paper but let’s see, you can think interest rates last year, midyear were running in the mid fives, we kind of came into the year in the mid fours and probably today reinvested cash is more at the 3.5% level.

Your next question comes from the line of Paul Silverstein.

A couple of clarifications if I may, a lot of discussion on the gross margins and I just want to make sure that I understood you all correctly. I thought I heard Jim say each quarter 35 or better and then later on I thought I heard a comment to the effect that some quarters would be 34ish and some better. I just want to clarify are you in fact telling us that you think it will at least be 35 per quarter and the question is how good?

That’s the current thinking.

Yes.

Or better.

Then, on the op ex comment that you just made, I forgot what was the number Bob, but when you say no plan to raise op ex, I think it was you Bob, is that in dollars or is that in percentage terms?

That was in percentage terms or to address the last questioner about the guidance given that we didn’t reflect the full benefit he was asking if that represented the fact that you might be increasing your operating expense in the latter part of the year and the answer is no more than we normally would. So, clearly on a quarter-to-quarter basis there will be some absolute dollar of increase in op ex but the percentages Jim gave in terms of percent of revenue will hold.

Got you. So, higher in Q2 and Q3 and then it comes down in Q4.

On an absolute basis.

Got you. Okay. The AT&T announcement this morning, I don’t know if you saw it but it was [inaudible] I assume when a carrier whether AT&T or whoever deploys more systems, more infrastructure in general that there’s a certain amount of basic connectivity in terms of the patch panels and distribution frames and other related equipment that go along with that? Would that be a fair assumption?

Yeah. I mean, there’s was quite a broad statement making, or at least what I saw of it, addressing their business solutions side of the business so depending on what it is that they’re going to spend for I would expect some part of that we would see a benefit in professional services both fiber and copper termination product and possibly some structured tabling. But, that’s just a guess right now Paul. It’s just great to see their increasing their budget.

Okay. Then the last one if I might, Bob in terms of your commentary about strong European fiber based businesses this past quarter, it sounds like you’re not attributing that and perhaps not surprisingly to the FTTX initiatives. I know there’s been a regulatory law jam not just in Europe but also in Asia Pac but there have been a number of country announcements over the last month or two albeit that the European regulatory agency is still trying to hold it in check but it look likes at least at a country level the regulatory agency has been green light and [inaudible]. In terms of your guidance have you factored in anything? Or if you have, what have you factored in from these FTTX projects going forward? I’m assuming your one project doesn’t move the needle but collectively either the European initiatives and/or the Asia Pac initiatives could influence your growth rate.

In our 2008 outlook there’s not very much factored in to our current estimate. I’ve been fairly candid last year going into this year that I expected the international benefits probably to start to occur at the end of calendar 08 going into 09. I think that’s probably still the same but if it isn’t then it would be business, if we win it, that would not be in the current outlook.

Bob, have you seen anything post the regulatory announcements have you seen any movement? Have you gotten any calls saying, “We want you to deliver.” Or, is it still too early for that?

No, I wouldn’t say it’s at that stage but clearly there is a lot of activity going on. Europe has moved slower than things in the US but clearly that has certainly been a very positive sign to those carriers. We are seeing increased levels of activity but I can’t say that anybody picked up the phone and placed an order because of it. But, certainly it’s sending the right message to the carriers.

Your next question comes from Kenneth Muth.

Can you just talk about a little bit about the commodities and the impact on the margin profiles? Are there any benefits there? Any pastures that we’ll be hitting in this fiscal year?

I’m sorry will you repeat the question? I missed the very first part.

Just about how the commodities and if you’re pass through costs there and how that might be impacting gross margins? Or, are you actually having some price erosion due to your not being able to pass through.

We have been and will continue to pass through commodities prices. But, it’s not at large a part of our business as it might be some others. So, it’s a factor but it’s not going to move the needle dramatically such as people that are actually out there selling a lot of copper cabling for instances.

Okay. But, even on the enterprise side? Could you just maybe talk about –

We are passing along commodity price increases in that part of our business.

Okay. Then just on the carrier side with all the announcements of flat rate pricing, can you talk about any impact that you might and maybe not in the near term but in any longer term impact that flat rate pricing plans would impact on your business?

I can’t say – I can’t translate from that marketing effort and pricing effort on their part with their customers, how that might or might not come back to us. I would day probably not as a direct result but quite frankly, we’re always working with our customers to make them more efficient and help them with their economics and so forth. So, I would see us continuing to do that but I don’t see any direct one-for-one on our business as a result from that?

Okay. Then can you just maybe talk about any market share shifts with yourselves and [inaudible] at Verizon or AT&T and has bit been fairly consistent or have there been any movements one way or the other?

So far this year, as I mentioned we’re early in the year. I have not seen any market share shifts from where we were last year. So, I think both of us are going into 08 with our market shares intact from where they were when we exited.

Your next question comes from the line of Tim Savageaux.

A couple of question for you, first on the fiber business where you mentioned it was pretty strong growth performance, actually nearly 20% and I wondered if you could is first and a couple of follow ups here, described what’s driving that fiber connectivity? It may be that Verizon showed up a little bit earlier this year, I’m not sure if that’s what you’re saying? You’ve mentioned sort of the core fiber optic which I take to be more central office versus outside plant oriented. Or, if you can talk about that growth and whether you think 15 to 20% growth is sustainable for fiber?

Yeah, you’re correct it’s in the core. It’s not just Verizon, it’s global. We’re seeing increased demand across the board for our core fiber products. As you recall last year, I’m just going to pull the growth rates off the top of my head but core fiber has been in high double digits for a couple of years now and I think what we’re seeing is a couple of things one, you know there is a need for more capacity and more bandwidth and it does reflect the evolution of the networks to fiber based. So, we do see continued growth in the core fiber business for the foreseeable future.

Great. That sure brings me to the overall organic growth question again which is to say should your fiber connectivity business continue to grow 15, 20% and it sounds like you’re saying copper looks flattish, it was in the quarter, maybe down a shade, but that’s 60% of your business at a 10% rate right there, enterprise we know is growing, services we know is growing, also in the quarter both I think in double digits or maybe a little less than enterprise. So I understand HDSL is declining but if I do the back of the envelope math and add all that up unless something funky is planned for the second half this sounds like a high single digit grower, not a low single digit grower, or maybe a double digit grower. I’d love to get your thoughts on that as I kind of –

Are you saying the overall business?

Uh huh, if you could add up the component parts.

The service business is one that’s a little tricky because it fluctuates up and down with customer volatility and that’s a couple hundred million dollar chunk of our business so that one’s a little tough to plan around. Also the copper business as we mentioned has proven to be a little difficult to forecast in book and ship business with a transitioning technology and if it were to move down on us and not continue to perform the way it has then clearly that’s a healthy chunk of business that can ding us in margins and our access net business that’s the AMIA cabinets that we had a benefit from in prior years. That business is not growing, it sacked us about a 7% decline. So I think the guidance we’ve got out there in terms of growth is probably reasonably accurate, maybe a little conservative. Under the right set of circumstances could we see double digit? Well sure that’s possible.

Yeah, it does sound a little conservative and on that front let’s talk about gross margins for a moment. In each of the last couple, three years you’ve had anywhere from 250 to 300 basis point sequential increases in gross margins in the second quarter and I understand you’re expecting less revenue growth because some of it came in a little bit earlier and so I wouldn’t expect to see that degree of improvement, but I would still expect to see a sequential up and you kind of hint at that in the text of the release, so as we look at 36 moving up from there, probably staying up there and heading back down for the year it seems like 36 + should be a good expectation and as you look forward into 09 and continue to grow as you continue to cut costs where is the negative pressure on gross margins? What are the factors that may drive it down in 09 versus the way –

Well, certainly certain materials that we can’t pass along could have an impact. I would say pricing clearly will have an impact. Over the time period there are pieces of business that –

All those factors are in play right now, though, I don’t know is something really changing there?

No, I mean they’re not in play in this quarter, okay? But over a future time period very clearly product pricing could have an impact on the business. Mix as well even from a standpoint of within our CT program the things that we’ve cost reduced the most at the front end those need to continue to be the high runners. So there’s a number of factors in there plus, to be perfectly honest, to get down to the decimals that you’re referring to it’s a little challenging to be that precise around gross margins.

Well, understood, but directionally you have increased margins pretty substantially in the second quarter for several years now. Are you saying it’s not fair directionally to expect them to go up in Q2?

Tim, I would say if you look at the fiber business was so strong in the first quarter and as Bob said that’s where we’ve seen an awful lot of the competitive transformation benefit so obviously it’s tough to predict that continuing in that proportion. We have just added, although again it’s not a huge piece of the business, Century Man which is clearly a pretty basic type of product business in the China market and that’s going to be certainly well below our historical average margin. So we do have some pressures running against us. Is the guidance conservative? Probably somewhat but I think we just really want to see how some of these trends develop looking ahead before we feel comfortable that those are going to be sustainable.

I hate to beat this so I’ll leave it alone after this last question, but in the release when you talk about first and fourth quarter margins generally being lower than the middle two quarters is that theoretical? Is that in a different year or – when you say that what do you mean I guess?

Tim, I think first quarter was particularly strong and it may in fact break the rule a little bit this year in terms of being lower than second and third quarters. Do I think we’ve got a shot at sustaining a 36% gross margin for the year? Yeah, sure do and maybe we exceed that. But at this point again I would hesitate to view first quarter as one of the lower gross margin quarters of this year. Certainly not all the stars align but some things went well. We obviously are going to try to continue those trends. As Bob mentioned we will expect to have cost pressures and other factors come into play, so I think I’d probably leave it there.

Your next question comes from the line of Steven O’Brien. Steven O’Brien: I was wondering if you could about the linearity of Q1 in terms of the various months and what you saw in January in comparison to some of your peers in the fiber to the homes base who, while not direct competitors, saw some slowing orders and saw some price downs. Did that impact your January results in the quarter?

Our quarter was reasonably linear, there was no real surge beyond the norm in January. In fact January came in on the historical average so to that extent we had a reasonably balanced quarter. As a point of fact each quarter had something over 30% in each quarter. I’m not sure I can speak to all the problems of the peers that you referenced but we didn’t see anything highly unusual in our first quarter. Steven O’Brien: So if we look at 10 to 15% sequential growth could you characterize that based on where you think that would have been had there not been a couple pull throughs in Q1 and where it would be relative to the sort of historical sequential growth that tends to be a bit higher in Q2? And then is there something fundamental going on, maybe it’s acquisitions although I would think in this case acquisitions would lead to higher sequential growth but changes in your business that may make Q2 less of a huge sequential up tick next quarter?

I’ll answer part of it and I’ll ask Jim to chime in as well. I think going from first to second quarter I think, as best I can tell from order pattern as Verizon continues to streamline and become efficient in their procurement logistics as they did last year and so I think this year we’ll probably see even more of a balance over the course of the year than we did last year so that would account for a little bit of the change in the sequential pick up from Q1 to 2. In terms of the acquisitions it’s a little early to tell because each of them have patterns that have to be accounted for as part of the ADC pattern. So I’m not sure that they yet if they really are going to take away or add but clearly I think at this juncture we’re still learning about their quarterly, monthly patterns. So I don’t see anything unusual in the business other than what Jim articulated. There was some business, I wouldn’t use the word pull through, I would use the word got closed in Q1 when we’re planning for quite frankly certain projects to hit in the second quarter. So with those reflected in the first quarter, we’ve adjusted for that. Now could they be backfill? That’s possible. But clearly in our plan we were accounting for them in the second quarter and then again the Verizon improved linearity also would account for some of that. You care to add anything to that, Jim?

Just probably that the 20% year-over-year growth in fiber which is now really our largest single product line, certainly we expect very robust growth but to predict that [inaudible] that is probably beyond expectation. Steven O’Brien: If you characterize the fiber strength between Europe and North America in that 20% would you say that either geography was higher or lower than that 20% growth this quarter?

Just keep in mind that our business in the US is substantially larger so it’s disproportionate in terms of the impact but it was actually on a percentage basis much higher in AMEA than it was in the US. It was actually in the mid 30s in AMEA, fiber growth.

Your next question comes from the line of Jack [Monty].

I’m just trying to think about the operating margin target of 14% and kind of the drivers that get us there. How should we think about it in terms of volume, maybe also in terms of mix or operating expense reductions and how we get from the immediate base line of 10% to a 14% longer term?

We have reiterated recently on a number of occasions actually that probably to get to the 14% target which we still believe is achievable that we’re going to have to grow and likely that growth will be up into high one point million range. That is near the $2 million range to be able to get the top line leverage to do so. Obviously we took some steps in that direction with our recent acquisitions, we’ll probably go through even with the synergies that we expect we’ll go through some periods of time obviously with integration costs and that sort of thing. But as we build these and gain efficiencies and start to utilize go to market channels and various other things across ADC legacy and the acquisition lines we think we’ll see a lot more of that benefit come through in terms of overall efficiency and reduction in op ex. I think sort of one point of comparison is if you look at our first quarter op ex on an adjusted basis, that is as we have measured that 14% and you just look at that historically we were in the 8’s in the first quarter. That’s really strong for ADC. On a year-over-basis for example that was up 3.5 margin points versus the first quarter of just last year. So clearly we feel like we’re heading toward pretty solid double digits or soon to be double digits and again with some top line growth and some additional efficiencies through our competitive transformation we believe that that 14% target is still reasonable. How quickly we get there probably depends on how quickly we grow to the revenue levels I’ve described.

So from like a modeling perspective, if I just model sales growth, keep the gross margins at 35% and then basically grow the revenues to get to the 14% that’s kind of how you’re thinking? And I would want to keep this R&D and SG&A at 5% of sales and 20% of sales respectively? Is that what you’re thinking?

I think that’s generally directionally right. I mean it’s hard to say – if some of this growth occurs through acquisition it’s difficult to characterize exactly what the structure of those businesses might be. LGC for example is a high margin but it’s a high R&D business as well so it’s sort of difficult to be too specific but I think generally the direction that you’re taking it in is right. Having said that I would probably think we are going to expect to see margins continue to come up somewhat and to get to the 14% OI we would probably expect to see gross margins above the 35% that you’ve referenced.

Your next question comes from the line of Brian Coyne.

Most of my questions have been asked so I’ll just do sort of a quick one. I don’t know if you’ve touched on it but on cost transformation outlook, I know you’ve talked about $30 million this year and perhaps still more in 2009, 2010, do you have any updates on kind of where you think directionally that might go and sort of those out years and what might be the factors that could drive that?

When we initially defined this as what we used to call competitive cost trends [inaudible] we recognized pretty quickly that this becomes an ingrained part of business culture here and think as we’ve now turned that into sort of a three year rolling program in looking at 09 and 10 I think it’s obvious that it becomes more and more difficult to get incremental benefit. If you sort of look back at what we’ve done in the first couple of years the first two years total to around $60 million in annual benefit. We think this year as you just said we’ll add another $30 to that. I think we could probably do that for another couple of years, incrementally, but clearly it gets somewhat more difficult as we move forward and then again on an absolute dollar basis you’ve got to relate it to the size of the business. But I would expect to say that based on things we have a line of sight on that the opportunity in 2009 and 2010 are probably somewhat along the same lines that we’ve got this year.

Your next question comes from the line of George Notter.

Any chance you guys could give us the exact breakdowns between Verizon and AT&T as a percentage of sales?

Verizon is about 16.5 and AT&T is close to 16.

Then as another question I wanted to ask also about your forward-looking expectations for the year, what have you baked in, in terms of your thoughts on the economy in terms of the overall expectations?

We’re being somewhat cautious at this point in time although in discussions with many of my customers and others there is not a sense that our industry is going to be impacted in any major way because of a recession in 08. That could prove to be wrong but that’s the general thinking right now. I think we’ve taken an appropriate level of caution and we’re monitoring it closely but we haven’t done anything drastic in terms of our numbers.

So it fair to say that if the economy doesn’t worsen that it would –

George, are you still there?

That line has been withdrawn.

I think that’ll conclude the call for today. Is anybody else in the queue?

No, sir there are no further questions.

Okay, we’ll conclude the call then for today. Thank you all for joining us. Good night.

This does conclude today’s conference call. You may now disconnect.