Good day, ladies and gentlemen and welcome to JDSU’s fiscal 2009 fourth quarter and year end earnings conference call. My name is Amicia and I will be your operator for today. At this time all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) I’d now like to hand the call over to Ms. Michelle Levine, Director of Investor Relations. Please proceed Ms. Levine.

Thank you operator and welcome to JDSU’s fiscal 2009 fourth quarter and year end financial results conference call. Joining me on the call today are Tom Waechter, Chief Executive Officer; and Dave Vellequette, Chief Financial Officer. I would like to remind you that this call is likely to include forward-looking statements about the future financial performance of the company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from Management’s current expectations. We encourage you to look at the company’s most recent filings with the SEC, particularly the risk factors sections of our report on Form 10-Q filed May 5, 2009 and our most recent Annual Report. The forward-looking statements including guidance provided during this call are valid only as of today’s date and JDSU undertakes no obligation to update these statements as we move through the quarter. Please note that all members are non-GAAP unless otherwise stated. A detailed reconciliation of these non-GAAP results to our GAAP results as well as a discussion of their usefulness and limitations is included in today’s news release announcing our results available on our website at the www.jdsu.com. Finally, and as a reminder, this call is being recorded and will be available for replay from the investor portion of our website at www.jdsu.com\investors. I’d now like to turn the call over to Tom.

Thank you Michelle and good afternoon everyone. Let me begin by summarizing our fiscal fourth quarter results. Our revenue and operating income results were consistent with the guidance we provided, reporting revenues of $277 million and an operating loss of just over 1% as we continue to successfully execute against our stated priorities. Our book-to-bill for the quarter was one. Book-to-bill was greater than one in our AOT segment and our CommTest segment we saw improved demand from North America service providers. The CCOP book-to-bill was less than one as some optics customers continued to deplete excess inventories. Through the first seven weeks of Q1, we have seen a sequential increase in demand across all businesses. JDSU fourth quarter gross margins of 42.3% improved from last quarter due to favorable mix between the segments. Operating expenses of $121 million were down for the fourth quarter in a row, a reduction of $30 million from the fiscal 2008 fourth quarter. This quarter we also continued to improve our balance sheet. We grew net cash by nearly $17 million and generated nearly $10 million of free cash flow. We decreased our inventory an additional $15 million and DSOs were down by over two days. Fiscal 2009 was a challenging year, but we successfully navigated through the global economic turbulence during the year by executing against our stated priorities and initiatives which resulted in an improved financial model and a stronger product portfolio. Our improved financial model is evidenced by our improved operating model and our strong balance sheet. Our operating model reflects a $120 million reduction of our annual operating expenses, a $40 million reduction in our manufacturing overhead and a 20% reduction in our facilities footprint. In one year, we lowered our quarterly free cash flow breakeven by over $75 million…

Thank you, Tom. Before I start, please note that all numbers are non-GAAP unless I state otherwise. Fourth quarter revenue of $277 million was down 1.3% from the prior quarter and down 29.1% when compared to the fourth quarter of fiscal 2008. The sequential revenue decline was primarily in the CCOP segment. For fiscal Q4, test and measurement segment revenue represented 49% of total revenue as compared to 46% in the prior quarter. CCOP segment revenue represented 33% of total revenue compared to 36% in the prior quarter and AOT segment revenue represented 18% of total revenue, unchanged from the prior quarter. Fourth quarter gross margin of 42.3% was up from the previous quarter’s gross margin of 41.8% and up from fourth quarter fiscal 2008 gross margin of 48.9%. The fourth quarter gross margin reflects the positive impact from the segment mix as well as realizing benefits from our manufacturing cost reductions. Operating expenses for the fourth fiscal quarter of $121 million were down from the prior quarter’s $125.2 million and down over $30 million from the prior year’s $151.4 million. The lower operating expenses reflect reductions in discretionary spending, office consolidation, work week shutdowns and reductions in headcount. Due to our improved gross margins and lower operating expenses, our operating loss for the quarter of $3.8 million improved from the prior quarter’s operating loss of $7.8 million. We reported a net loss for the fourth quarter of $2.3 million or a loss of $0.01 per share. This compares to third quarter fiscal 2009 net loss of $6.9 million or a loss of $0.03 per share. For the full fiscal year, total revenue was $1.3 billion, down 15.4% from the prior year’s $1.53 billion. Gross margins for the full year were 42.8%, flat when compared to the prior fiscal year.…

Your first question comes from Mark Sue - RBC Capital Markets.

Tom, from your commentary it seems you may be more inclined to add to your testing product portfolio, should we assume more acquisitions particularly maybe in wireless? Does it mean any subsequent optical communications divestitures in the future and then separately, just your high level thoughts on what the incremental opportunity maybe for JDSU as it relates to the broadband stimulus bill. If you could kind of have frame that for us that would be great. Thank you.

As you know, we have been pretty active in the M&A market. We continue to evaluate the market and we look that across all of our business units because we think there are opportunities out there across the Board. So wireless is an interesting area for us as I mentioned during the call that we do benefit on the fixed backhaul and back into the core network. We’re looking to see if there are opportunities where we can get directly involved in the wireless transmission test as well, so that is of interest to us. I think as far as the broadband stimulus packages, I think are really just starting to rollout in the U.S. in August. There are some stimulus packages also in Australia that we believe we’ll participate in, so we have stayed close to that situation. We think we’ll be able to benefit from some of the stimulus rollout as it starts happening here in the near future.

Your next question comes from Subu Subrahmanyan - Sanders Morris Harris Group.

My question is related to optical comp. You’d mentioned inventory depletion by some of the customers. Does that seem to be complete at this point especially on the ROADM front and then if you look at your sequential growth guidance, obviously some of that is coming from the tools business addition, but it sounded like you were suggesting there’s probably more growth in test and measurement in the near term was Optical Comm. So I was just trying to understand that better.

I think as far as the Optical Comm and our customers with bleeding through their inventory. We do believe that has accelerated to some degree as we’ve looked at the last couple of months here and particularly in ROADMS, that was an area where a customer or two of ours, larger customers that we do high volume ROADM business with were definitely still working through some inventory on hand. We do see that starting to improve. I think it’s just a matter of watching that over the next couple of months. I think as far as sequential growth, as I think Dave mentioned we did have seen an up tick in orders in the first seven weeks of this fiscal Q1. We do see that across all businesses, but I would say that CommTest, especially North America for service providers is probably leading the charge as far as that improved order intake rate at this time.

Subu, I did say that in Q1, we have seen an increase in ROADM demand from several customers, again in support of Tom’s comment.

Your next question comes from Michael Genovese - Soleil Securities.

First question on Asia, this looks like if I have all my numbers right, it looks like the third quarter in a row with a double digit percentage wise sequential decrease in sales in Asia. So can you just dive into that a little bit more and give us more detail on what’s going on there?

Well, primarily for this quarter, the decline in Asia was network equipment manufacturers. So our customers obviously supplying CCOP end customers. So as you saw from the CCOP revenue decline, that’s what’s been really driving the Asian revenue down. It’s been primarily in that segment.

Just a bigger question, I don’t really expect specific guidance on this, but you’ve said get back to $390 million in revenues to do a double digit operating margin. So without giving us a timeframe on that, can you just tell us in broad terms, how do you think you’ll get there? I mean do you think all parts of the business are going to increase in unison or we’re going to be looking at greater growth in test and measurement and can you give us any indication of how far out you think this $390 million in revenues might be?

We haven’t talked about our timeline as you noted, but what I would note is as I went through my part, I talked about $175 million of revenue in the test and measurement and what that could contribute. I talked about $150 million of revenue and operating profit in the CCOP and then the AOT would make up the majority of the rest of the revenue and basically for that type of a weighting and that’s why we highlight the gross margin being 46%. Those combined are what will drive us to that 10%. That’s down like from last quarter. For the last previous quarters, we’ve been talking about a model at $400 million. So the point we’re trying to make there is we’ve brought down that level, granted only $10 million of top line, but that the structural model of the company now has reduced the revenue level required to get to 10% operating income.

Just the last follow-up on that though. I mean to get those kind of test and measurement numbers seem fairly easy if the overall market continues to recover, whereas on the optical side, you’re talking about revenues on a quarterly basis being 60% higher than they just were. I’m just wondering, do you think that the market will be that strong over the next several years or do you expect to gain share? How do you grow revenues 60% from where they are right now?

Well, when I first look back is that Q1 FY ‘09 the revenues for CCOP were $162 million. So they’re actually above that level and as we have noted before, the laser business has dropped by 50% from where it was and the optical accounts business has dropped substantially from where it was. So we’re not really giving guidance about the specific pieces of it. We noted that in the quarter we’re in that book-to-bill is improving and as we progress through the quarters, we’ll talk more about how we’re growing and how we’re getting there.

I think we noted that we have quite a few new products that we released in the December quarter. We expect some good ramp on tunable XFP, the Super Transport Blade. We’re just starting to get those out to market. So we do expect those to be, they have been well received so far and we do expect those to ramp, especially if the business environment improves.

Your next question comes from Paul Bonenfant - Morgan Keegan.

My first question is a housekeeping one. I’m wondering if you had any 10% customers in the quarter and if you could disclose for us who the 10% customer was, last quarter as mentioned in your 10-Q?

Actually, we don’t disclose the customers and we didn’t have any this quarter.

Now on to substantive questions, you’ve reiterated your operating income and free cash flow breakeven at $275 million to $285 million. This is unchanged, although you’ve reduced the top line for your operating model by $10 million. I’m wondering with the additional cost reductions in the quarter, why is this top line number not coming down or should we expect it to comedown in future quarters?

On the breakeven?

Yes.

As we get to future quarters, we’ll look at how the model is shaping up, how the new products as Tom had mentioned are contributing and those would be factors that we look at to see if we should be lowering that range.

Last question, optical was down fairly significantly this quarter. Yet it sounds like your pricing declines were inline with your expectations. Aside from the slow up tick on the ROADM in the quarter, are you seeing any share shifts either temporary or otherwise as a result of maybe your manufacturing transitions and on the CommTest side, the up tick in the revenue, do you have a sense for whether that’s pushed out orders that are starting to return versus new business?

Let me first start with the transition. We think the transition went really well with the Sanmina factory. The great part about that is brought in a very seasoned CM and we were able to keep our workforce and so these are folks that already knew our products, knew what to do. So that worked out very well. In the markets that we serve, we don’t believe we are losing share. That being said, in the ROADM market, where we are not in all designs at this time and we’re getting quelled in fact in the 50 gigahertz space. The total ROADM market you would expect, we were at 60%, 75% market share. We expected that to decline overtime and we’re now expanding our penetration in ROADMS into the 50 gigahertz.

I think, Paul to address your question on CommTest and the order intake. I think as you know especially the service provider in North America had really setup a budgeting process this year that was more quarter based then maybe in the past and more back end loaded. So we’re just actually, I think starting to see them release more of those quarterly budgets and we expect it to be spend to be higher in the second half of the year than the first half of the calendar year.

Your next question comes from Ajit Pai - Thomas Weisel Partners.

Couple of quick questions, I think the first one is to do with your business portfolio right now. When you look at the different segments that you have and you also sort of provided us that some indication of what the operating models for the segments look like at data 70 levels, could give us some indication as to how you prioritize acquisitions in the future across. I think you did mention you’re pretty active right now in M&A across those businesses, but is there a business that you want to scale much more than the others and what’s the target mix you’re looking at maybe a couple years out when you reach those metrics that you talked about in terms of operating margin and quarterly revenue run rate?

As I said earlier, we are looking across all segments really the prioritization or focus we place is to make sure it fits into our longer term strategy and into the business model that we set out in front of us and to make sure that the acquisitions are accretive and I think the most recent acquisition is a good example of that process and focus that we have.

Right, but when you’re looking at target model that you provided for optical communications I think another analyst asked about that as well it’s a 60% to the rise from where that revenue level is right now. Would that mean that you attain your target operating model purely organically or it also implies that you intend to make more acquisitions in that business?

I think the models that we put out in front of ourselves there are primarily organic growth models.

You talked about the ROADM business but then if you look outside of ROADM at the rest of the components, just the implication that you expected share losses on the ROADM side but the other businesses are holding up pretty okay. Is it fair to say that you don’t believe on the optical communications side that your non-ROADM business that you are losing share, is it fair to say you’re not losing share?

Yes, we don’t believe we are losing share on the other components that make up our portfolio there in addition to the ROADM.

So you believe that the inventory work down is what’s responsible for the sequential declines in revenue and as the depletion of inventory at your customers is over, you should see a fairly strong rebound at some point. Is that fair, that’s what you are assuming?

We believe that primarily the reduction we saw was from ROADMS, the major dollar reduction and we do believe as the inventory is worked off by that those customers that we will see some healthy growth from that reversing itself.

Your next question comes from Jeff Evenson - Sanford Bernstein.

Two questions related to growth. First, you mentioned in the script that you are introducing new laser products which will triple your addressable market. Wondering if you could give us a bit more color on those and perhaps talk about where they are in the transition from gas lasers to solid state lasers and what the competitive advantage of your products might be. Then second as you look out a bit further, the Verizon CTO has talked about replacing some router capabilities with optical and wondering if that is an opportunity for you on the ROADM or other fronts.

I think first on the lasers as we mentioned, a big part of our development focus is on the fiber lasers and we do see that some of the advantage that we believe we will have with these products is both on performance precision and accuracy of the laser and then also power consumption. We think those are all advantages for us as we go forward and we’re just starting to get some of those products through the development cycle and into the market. I think as far as the…

Are you making the specialty fiber for those yourself?

No, we’re not. We buy the fiber itself.

On the routers and optical?

I believe that there are opportunities for us on the optical routers. I wouldn’t comment specifically on anyone customer, but as they transition, I do believe there’s an opportunities there for us with the product offerings that we have.

Ladies and gentlemen, this concludes the question-and-answer session for today’s call. I’d now like to turn the call over to Mr. Tom Waechter for any closing remarks.

Think you operator. As our call concludes, I’d like to reiterate some key takeaways as we exit fiscal 2009 and begin a new chapter for JDSU in 2010. First, we are seeing early signs of market stabilization in our CommTest and laser businesses and we are optimistic for growth in fiscal 2010. There has been a tremendous amount of work at JDSU over the course of the year to reduce our operating costs and move to a variable manufacturing cost structure, so much, so that we were able to lower our quarterly free cash flow breakeven by over $75 million and improve our operating model and we introduced over 100 new products this year as our innovation engine accelerated. 2010 will be a new chapter for the company with our strong product portfolio, solid balance sheet, improved business model and our focused and dedicated employees. JDSU as well positioned for growth as the economy rebounds. Thanks again for joining us today. We appreciate your taking the time and for your interest in JDSU. Have a great evening.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect.