Good morning. And welcome to the Zebra Technologies 2010 first quarter earnings release conference call. Joining us from Zebra Technologies are Anders Gustafsson, CEO; Mike Smiley, CFO; and Doug Fox, Vice President Investor Relations. All lines will be in 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, and 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, 2009, 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. Here in the room with me are Mike Smiley, our CFO; and Mike Terzich, our SVP of Global Sales and Marketing with Specialty Printer Group. Today, Zebra record year-over-year improved gross margin, earnings that were really ahead of expectation and our third consecutive quarter of sequential sales growth. Strong demand in international territories, improved sales of high-performance and mid-range tabletop printers and lower than expected operating expenses helped drive the 18% year-over-year improvement in sales to $226 million and $0.42 in GAAP EPS. Momentum continued to build during the quarter as manufactures, retailers and others responded to improving business conditions. Our initiatives over the past 18 months to improve operational efficiency and extend our leadership enable Zebra to capitalize on growing economic confidence. Our financial strength provided us the capability to respond to increase demand by expediting product delivery in the constrained supply chain environment to meet customer needs. Our actions in this regard led to more orders with more customers and stronger channel relationships that would deliver ongoing benefits well into the future. During the quarter, we made solid progress on several key initiatives that support growth, profitability and shareholder value creation. Our geographic expansion activities extended Zebra's global reach into underserved, high growth regions. We are also pleased with the growing pipeline of new products under development to meet more regional and vertical specific needs. We have now met our target of achieving at least 250 basis points of gross margin improvement from printer outsourcing. Further, we used our cash reserves and $24 million in free cash flow for the quarter to buyback additional shares of Zebra stock, demonstrating our continued discipline in deploying our resources in those activities with the highest risk adjusted returns. The results for the first quarter,…

Thank you, Anders. Let me highlight some of the key drivers for Zebra's first quarter financial performance compared with a year ago. First, all four geographic regions experienced sales growth from a year ago, with three international territories posting sequential sales gains as well. Second, gross margin was up nearly 3, 4 percentage points. Third, operating expenses were below our guidance range and fourth, overall earnings were ahead of guidance in part because of favorable adjustment income taxes. Sales are up 18% from the first quarter of 2009. Foreign exchange had a favorable impact of $4.3 million on the year-over-year change. Sales were up 2% from the fourth quarter of last year, including a $4.6 million unfavorable impact from foreign exchange. Zebra Enterprise Solutions sales of $18.5 million were down about $3 million or 15% from a year ago. While pipeline activity and the outlook remain on track the issues in the first quarter were the timing of bookings and revenue recognition, an adjusted EBITDA loss of $2.9 million was a bit more than expected largely because of the revenue level. Operating expenses and our investments in the business remained on track to support the operation and our targeted investments in product and channel development. Sales in Specialty Printing Group were up 22% from a year ago and had its third consecutive quarter of growth. On a consolidated basis all regions maintained strong sales momentum with international regions experiencing strong steady business throughout the quarter. Sales growth was strongest in Latin America up 61% with notable sales of card and mobile printing solutions. In Asia Pacific, up 31%, broad economic improvement, including manufacturing centers in China and South Korea drove demand for high-performance, mid-range, card and desktop printers for manufacturing, government and aviation applications. EMEA sales were up 12% on…

Thank you, Mike. Zebra's strong beginning to 2010 was due in large measure to the diversity of our business across several dimensions, product, geographies, customers and technologies. Our leadership in product innovation, channel partnership and international coverage enabled us to respond to the increased global demand for Zebra product as companies accelerated investments in solutions to help them identify track and manage assets more effectively. As we look to the second quarter, business trends remain favorable. Within this environment, our guidance takes into account a stronger dollar against the euro and somewhat less favorable product mix. In addition, distributors, which have been building inventories of Zebra products over the past two quarters, are now at levels appropriate for current sales volumes. On the cost side, we're expecting higher freight charges to continue as we work through the global supply chain constraints on electronic components. Second quarter operating expenses also include annual company-wide merit increases, as well as expenditures supporting ongoing geographic expansion and other initiative. Our ability and willingness to maintain investments in our business will have a long-lasting cost effect on building shareholder value. While we are cautiously optimistic that business conditions will continue to improve, we are confident that making these key investments in our future in three major areas are the right thing to do. First, geographic expansion to extend our reach in under-penetrated high growth region, second, new product innovation to ensure we stay ahead of the competition in meeting customer needs and third, building stronger partner relationships to reach a broader customer base. We are already seeing early benefits from our stepped up pace of geographic expansion activities. We are now more than half way to our goal of adding 40 sales and marketing professionals to our emerging regions. Customers are responding positively to our…

Thank you. (Operator Instructions) Our first question comes from the line of Brian Drab with William Blair. Please proceed with your question. Brian Drab – William Blair: My first question is related to your primary supplier or your number one, sorry, your number one distributor who in the recent report said that their sales were down about 10% in the barcode business sequentially from the fourth quarter and attributed that in large part to part shortages far up the supply chain. So my question is did Zebra suffer from some part shortages in the quarter and resulting in, any failure to deliver product?

Brian, it’s Mike Terzich, I'll take that question. You know, the quarter – in the quarter we did, like others, have some supply chain constraints, but as we mentioned in the prepared remarks, we worked pretty tirelessly to overcome that. And so for us, we were able to leverage our financial strength, we air freighted quite a bit of product in and I can tell you that our distributors in particular in North America, we received some positive comments throughout the quarter that we worked very hard at keeping them in product and we did that by making the air freight investments, we needed to make to get the product to them in time for them to conduct commerce. So, I don't think, we were a material – we had a material impact on the distributors' financial performance in the quarter.

Yeah. Maybe expand on that a little bit, I think our supply chain responded better than we had anticipated to the constraints that we saw in the components supply. We were able to expedite products from China to our customers in the U.S. and the rest of the world, and I think largely mitigated the impact of the tighter supply chain. And I think, we believe that we extended our lead in the industry by doing this, there are probably some deals that we lost but we, net-net, we believe we won more deals than we lost because of our ability to expedite and supply products in a timely basis and we believe that the distributors now have appropriate level of inventory for the business volume you’ll see. Brian Drab – William Blair: Okay. Great. Thank you. And just one more question on the ZES group. You mentioned, there are some ongoing project delays and but sounds like there's some very interesting products and systems in development. I'm wondering, do you have a pretty good view towards the pipeline of projects that you're developing those product for? And is there some pent-up demand here for these products and systems in the latter half of this year?

The project delays were largely in the maritime side, where we have, implementing a new system takes anywhere between 12 to 18 months and it includes a lot of on-site development and customization, sometimes that takes a bit longer than expected. We believe that we have a very healthy pipeline of new applications and products that we can develop that will support primarily our new strategy of really leveraging our channel partners to penetrate new markets to give us a greater reach than we would otherwise have. And I think we see a general strengthening of the activities in RFID, where I think, if you go back six months, 12 months, we probably would see, say that, most of the trials and pilots were more to test the technology, and today we probably see more trials and pilots which are testing the ROI of the application. So I think that's a step forward for us. So we continue to be optimistic about the opportunities we have in front of us for ZES. The ROI, the customer ROI for our solutions is very healthy and but early in the product life cycle, so it is takes longer to develop that the market. Brian Drab – William Blair: Okay. Congratulations on a very solid quarter. Thank you.

Yeah. Thank you.

Thank you. Our next question is from the line of Reik Read with Robert W. Baird. Please proceed with your question. Reik Read – Robert W. Baird: Hi. Thanks. Good morning. Just a follow-up on your comments there, Anders, is the delay, really result of customers not being able to provide the CapEx and so it's slowing down these projects or is there any development issue that is slowing them down?

Yeah. It's not really based on any delay or difficult of our customers to get funding for these projects. These are projects that are underway. It is more than, you decide that you want to automate another process or you want to do some other customizations that weren't part of the original scope, that tends to add a little bit of work to the project, that makes it more suitable for the customer in the end. So that tends to be the biggest driver for some of these delays. Reik Read – Robert W. Baird: Okay. And given that those get rectified and that you said, you basically doubled your pipeline. Does that suggest that business will continue to get better throughout each quarter of the year or are there other constraints?

Yeah. So the pipeline comment was really focused on our location solutions, so the hybrid active RFID solutions not necessarily on the maritime applications, which are the ones where we have some delays. But we do believe that the location solutions will see continued growth as we go through the year. Reik Read – Robert W. Baird: Okay. Great. And then just a question on the specialty printing side of things, you guys had mentioned as part of your comments that the enterprise business was looking pretty good. Can you give us a sense for what that means in terms of project sizes? Are these mostly smaller enterprise projects that are getting going or are you starting to see some of these larger projects that you’re seeing historically and are there any verticals that are bucking the trend one way or the other?

Right, Reik. It’s Mike Terzich. On the enterprise side what has been particularly good has been the return of some larger projects, these are multi-million dollar projects in scale relative to the retail marketplace Tier 1, Tier 2 retail in North America and in Europe. And then secondarily, the space of direct the mobility market has also seen a nice set of opportunities relative to serving mobility solutions for those end users that are delivering, that have a high volume of routes delivering Cola and snack foods into restaurants and retail location. So those are the two that principally right has been ramping up. Reik Read – Robert W. Baird: And anything on transportation logistics those end markets seem to be getting healthier they releasing capital?

What the – when you look at the results of the quarter, there was two pieces. One was the resurgence of what I would call manufacturing supply chain, which was the manufacturing piece and inherent in that is some of the warehousing and some of the transportation space that goes along with that. So that was a steady state business and tends to be smaller projects, more opportunities to leverage our large installed base and then when you overlay on top of it some of the enterprise business we saw, that’s pretty much constitutes the fabric of the quarter that we just experienced. Reik Read – Robert W. Baird: Okay. And then just one question for Mike Smiley, on the operating expenses lower than you expected in the first quarter seems like sequentially they're bumping up quite a bit is there – you mentioned the merit increases – just merit increases account for all that pump up or is there some timing issues in there as well?

Yeah. Good question. A piece there is merit but another pieces just investment and some of these initiatives that Anders, talked about was a geographic growth a build, extending our resources in channel development. So a lot of it is sales and marketing related and a little bit of engineering, but a piece of it is merit. Reik Read – Robert W. Baird: So we should think about those progressing throughout the year and you don't have a drove back down?

I think they will be – might be – you can probably think of them as steady but a slight pullback possibly. There is a number of project related expenses in the second quarter relates a new products also. But I don't think it will be a major difference.

No. No. Reik Read – Robert W. Baird: Okay. Great. Thank you very much, guys.

Yep.

Thank you. Our next question is from the line of Charles Murphy with Sidoti & Company. Please proceed with your question. Charles Murphy – Sidoti & Company: Good morning, guys.

Hi, Charles. Charles Murphy – Sidoti & Company: Just a couple questions regarding guidance as well. Usually the June quarter is little bit better sequentially and midpoint of your guidance is going to flattish, I just wondering if there was a specific reason scenario, if you are just going to playing it on the safe side for right now?

First, I think our business remains very healthy. We've had two very solid quarters here with Q4 and Q1. We were sequentially up in Q1, which is quarter that normally is down based on seasonality. So when we look at in the Q2 we continue to expect business to be from remain healthy to be remain strong. But couple of things that are – we somewhat going against us a little bit, one is that the FX is moving against the pretty settling during the last quarter. And that has a big impact on us. We also see some constraint in the supply chain, make us little cautious about how effect to we can turn around things that they don’t get accepted it – they would have had and we expect and that also has an impact on the supply and the freight charges. But generally, we think that our Q2 is very strong, very good is just we had a really, really strong Q1. Charles Murphy – Sidoti & Company: Got you. Okay. And then for the gross margin guidance a little bit down sequentially is that just a matter of product mix?

It's a combination of things, product mix is one of the big items. FX is an another item. We also had a couple of small unforecasted benefits in some of our accruals that you don't expect to continues we look at (inaudible) on those types of things. That’s it benefit of the quarter, so you've got some give and takes but the product mix in FX are big players there. Charles Murphy – Sidoti & Company: Got you. Okay. And then lastly, for the OpEx guidance of $77 to $80 million is that including amortization in restructuring excluding?

That's including. Charles Murphy – Sidoti & Company: Okay. All right. Thanks.

Yeah. Thank you.

Thank you. Our next question comes from the line of Paul Coster with J.P. Morgan Securities. Please proceed with your question. Paul Coster – J.P. Morgan Securities: Thank you. Most of my questions have an answered. However, on the OpEx side as we project four, the growth should be due to slightly toward sales and marketing, is that correct given the headcount increases is there?

Yeah. Slightly towards sales and marketing a little less towards engineering. Those would be the two areas, we really are in product development and increasing our relationships with the channel partners is important for us. That's where we're making some investments. Paul Coster – J.P. Morgan Securities: As you at the 40,000 marketing products to the mix presumably less than that going forward. Are you recruiting sort of immediate both carrying people and are they coming from competitors?

We are recruiting them, is there background varies on people. They usually have sales experience or technical experience. They're generally not from our competitors. We tend not to recruit from competitors. We find other people who have good solid experience in related spaces. We think that works out best for us. And as you know, they – by and large should be on board by later this quarter. Paul Coster – J.P. Morgan Securities: Okay. Mike, just one technical question on the ZS funds, sounds like there was a revenue recognition issue or not issue but the revenue was delayed the recognition was delayed, was it delayed into the second quarter or is it indeterminate delay?

Well, I mean, yeah. You're absolutely right. Let's make sure it's clear that, it was delayed because of customer implementation, it's not a revenue recognition problem per se. Paul Coster – J.P. Morgan Securities: Okay.

And that is delay now whether that's Q2 or Q2 our forecast reflected what we think is appropriate given when we think this thinks will come to pass. Paul Coster – J.P. Morgan Securities: Okay. Great. Thanks very much.

Yeah. Thank you.

Thank you. Our next question comes from the line of Chris Quilty with Raymond James. Please proceed with your question. Chris Quilty – Raymond James: Mike, just a further follow-up there on Paul's question. I mean once those projects come back into the flow. Where do you think you'll be in sort of a revenue range within ZES in the back half of the year?

Obviously, we go out a quarter. I would say and we're not getting back at estimates, I would just refer you back to Anders' comments about how he felt about the business is perhaps the best tone to sort of consider going forward. Chris Quilty – Raymond James: Okay. And how about just say, a qualification here if you're looking for cash flow breakeven by the fourth quarter of 2010, what does that mean in terms of the actual operating loss or I should say, I've lost track what the DNA is running giving the various write downs in the business?

Yeah. We have about the amortization is running about $1.7 million dollars a quarter. It's sort of where we're at right now. Chris Quilty – Raymond James: Within ZES?

Yes. Chris Quilty – Raymond James: Okay. And I assume that depreciation is not a significant number?

It's not huge. I can give you the details later on that, but it's not a – it's not a big number. It's running roughly $2 million in the year, something like that. Chris Quilty – Raymond James: Okay. And tax rate on a go forward basis?

32%. Chris Quilty – Raymond James: For the second quarter, but are there any other one-time items that may pop-up by the back half of the year or is that a good run rate on a go forward?

No. It's a good rate to use going forward. Chris Quilty – Raymond James: And that’s of course reflects the benefits of the off-shore manufacturing are there further tax savings that you are yet to capture there?

That definitely reflects what we think is sort of the – our tax position and situation is for the year, so. Chris Quilty – Raymond James: Okay. And inventory levels, likewise they've come down real nicely again sort of a permanent reflection of the off-shoring?

Yeah. They've come down quite substantially over the last year plus. I think we would like to see they will come up a little bit in the Q2 and Q3, partly to enable us to be better prepared for any other supply chain constraints that we might encounter. So that we can always be in a position to satisfy the demand we see from our customers.

That will also help with our freight, if you go through gross margin, right now is that we're sort of dealing with a low inventory offset by freight volumes. Chris Quilty – Raymond James: Okay. And final question I think you kind of alluded to an improved retail vertical on the demand side, but it's still we're a year removed from what should have been a pretty big up cycle in that particular vertical obviously delayed by the recession. Are you seeing any indications larger deals building in the pipeline and might this year be the year where they finally play catch-up?

But I think we can comment on what we've seen so far, I think we and retail has come back as a strong vertical for us both in the U.S. and Europe. And we've seen more larger deals out of retail. So our outlook for the year is quite good for retail.

Hey, Chris. This is Mike. One thing that's fueling some of the retail optimism is while the sales, retail sales are improving slightly. They've done a much better job of managing their own inventory. So they had – they did not have to go through such dramatic price reduction with their inventory, so their profitability on relatively flat to slightly positive a revenue result is what's fueling a lot of the project pipeline. Chris Quilty – Raymond James: Got you. Great. Thank you, gentlemen.

All right, Chris.

Thank you.

Thank you. Our next question is from the line of Ajit Pai with Thomas Weisel Partners. Please proceed with your question. Ajit Pai – Thomas Weisel Partners: Yeah. Good morning.

Good morning, Ajit. Ajit Pai – Thomas Weisel Partners: A couple of quick questions. I think the first one is just looking at the color that you provided on retail and looking at some of the large enterprise spending of their improving, what is the spending on?

Well, they're spending on a variety of applications. A couple that we could name here, one is a high level of interest in self service in the store. So that would be associated with some of our kiosk product line. And obviously with the labor constraints that they have in their driving influence of improving the customer experience we're finding particularly in North America and in Europe a high interest in kiosk applications. And then the other is in the area of mobility, in-store mobility. So a variety of applications where they can continue to do on-demand labeling, price markdowns relative to their story environment. Ajit Pai – Thomas Weisel Partners: Got it. And then just shifting over to the enterprise solutions group, I mean some overall revenue perspective with the still quite freak to talk about some encouraging trend in various markets over there. But and strengthening through the end of the year, but you said that the maritime application was still not showing any kind of strength. So could you give us some color as to over the past two years, how much that's fallen, what's the drivers of reinvestment in that particular category would be. And when do you expect is it a 2010 event? Is it a 2011 event? When do you expect that business to come back and whether has been share losses or share gains over there or whether you are still to best position company in that space?

If for the maritime side, I think we may not be communicated very clearly. But I said was that the high transportation for allocation services solutions have improved and strengthen. I didn’t mentioned really any think about the pipeline position for our maritime business, that is still very healthy. We don’t breakout the individual segments within that, but the maritime business has been more stable than the rest. It has longer sales cycles – longer implementation cycle. So it's more of a moderated curve. And we believe that we've continued to gain some share in that market, as we've been in a strong financial position and we've come up with now a new product this past quarter to Argo, which is really targeted a new market segment that we haven't otherwise been able to participate in, the really smaller terminals with less than 120,000 CUs. Ajit Pai – Thomas Weisel Partners: Got it. So when you're looking at the revenue itself as the lowest revenue in that segment in about nine quarters was most of that driven by sort of reducing the past two three quarters, the backlog has just gone down and we are just depleting backlog or was some of that weakness related bit capital constraints across orders that you already had but just people pushing out delivery?

It was not really people who had orders that pushed out deliveries. I don’t think, can’t think of any examples of that. It was more that some of the larger projects that were going on had some delays as they asked for additional work to be done in order to complete it. So automating some new processes or procedures that really optimizes the use or the softer packages one third inflected. So the business environment is getting better. It's not back to what it was before the recession but it's certainly getting better across all of those verticals but I think particularly so on the hardware side. Ajit Pai – Thomas Weisel Partners: Got it. And overall the operating model of that business hasn't changed which is based on your new cost structure of $25 million quarterly run rate, you will be break-even in operating income, is that fair?

Yeah.

Yeah. That should be fine. Ajit Pai – Thomas Weisel Partners: Okay. And then you also mentioned in the opening remarks that you know towards the end of your commentary that the M&A environment, you are looking at that as a potential deployment of cash. Could you give us some color as to what kind of opportunities they're looking at for which businesses, just broadly and whether you're seeing that pipeline increase or potential acquisitions or you're watching the valuations have gone up, recently, that’s regarding more difficult to fine potential acquisition.

You know, as we – we talked about acquisition strategy, we will start by talking about our capital allocation strategy and we are still committed to making sure that our investments generate the – are in areas that generate the highest risk adjusted returns and we've always continued to look at potential acquisition targets. Over the last year, year and a half or so, we have prioritized returns capital shareholders to buy backs. We've done that pretty much exclusively and very aggressively. But we also said that as on a normalized basis, over a longer period of time that we would have expect to have more equal balance between investing in the business and acquisitions and buybacks. At this point, I think you know, the first priority, the top priority for acquisitions are that they have to have a good strategic fit, then they also have to meet all our financial hurdles and again nothing has changed from our earlier quarter calls, so we said that, we are at this point not considering making acquisitions into (inaudible). So there's really nothing different than what we talked about on earlier calls. Ajit Pai – Thomas Weisel Partners: Got it. Is the pipeline richer or the same as previously or is it much less?

I'm not sure if I can comment on that, Ajit. We continue to look at things, before until we find the right thing, we are not going to do anything.

Very binary.

Yes, you got to be very binary. Ajit Pai – Thomas Weisel Partners: Got it. Okay. Thank you so much.

Thank you. Our next question comes from the line of Jay Meier with Feltl & Company. Jay Meier – Feltl & Company: Hi. Yes. Thank you. Just a couple follow-ups. You talked about your ability to deliver product into the channel and it sounded like especially in North America through some expedited shipping and I read that to mean that you gain share inside the channel. And as your competitors had capacity constraints, you also mentioned that you believe your inventory level in the channel is proper for current business conditions, but does that outlook imply that you anticipate maintaining this share and how should we think about that as those capacity constraints lighten up?

Well, I guess first we – our objective is to continue to gain share. That's why we are – why we are in business. But we do believe that we have a good inventory position with our channel partners today. The overall, you know, the longer supply chain is going to continue to be constrained, I think for at least the next three months. So we expect to see some higher freight charges or expedite charges but we believe that we are well-placed to be able to capitalize on the overall constraint in the supply chain as we have – we believe the very competitive and dynamic supply chain and we are willing and able to expedite orders for customers. Jay Meier – Feltl & Company: I understand. Okay. That's fine. And as far as the markets are getting beat up a little bit today because of some skittishness around Europe and the potential for that economic region to degrade. Are you starting to sense any skittishness out there? I mean, how are you viewing Europe and maybe Asia? There's been some comments about China as well.

Yeah. Starting with Europe, I think, Europe was steady in Q4, steady in Q1. We haven't seen any indication of the Greece credit situation to have impact on our pipeline. We do pay attention to it from the perspective of what the Euro is going to do as compared to the dollar and that’s always been weakening which is not helpful. In Asia, we have seen particularly China and Asia as a whole to come back quite strong in the last two quarters and we have seen no sign of any disturbance or anything like that there. It looks pretty healthy. Jay Meier – Feltl & Company: Okay. That's fine. And last question, what is your view of the DOD and their spending trends and in particularly with AIT 4. Did you receive any task orders during the quarter or are you under the impression that's been slowing?

Jay, this is Mike. The – you know, we're a sub supplier on that AIT contract. So for us, the contribution we get from that business has never been significant but we have seen that there has been a slowing pattern with the Department of Defense and some of their requirements through purchase orders, but nothing that we can specifically point to on our end. Jay Meier – Feltl & Company: Okay. So AIT 4 hasn't been a big contributor but I have been under the impression that the DoD has been a pretty big consumer of Zebra products over the years, is that so?

You know on a relative basis, we have a nice business with the DoD, but it's – but it has not been significant.

On the Zebra enterprise price solutions side, we also have a government business and that was steady. It was strong in the first quarter or so from everything but that's not an AIT 4 project. Jay Meier – Feltl & Company: I understand. Okay. Thank you very much.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Andrew Abrams with Avian Securities. Please proceed with your question. Andrew Abrams – Avian Securities: Just a quick question on the location solutions, can you talk about any changes in customer type over the last six months or so or are you beginning to see automotive come back, is there some kind of customer mix that's returning or maybe has changed permanently and now you're focused in a different area?

Over the last you know, 18 months or so, we've expanded our customer base in location solutions, automotive was – automotive and maritime were the two largest virtual markets for that – those solutions earlier and automotive is still a – the main contributor. It was up in the first quarter, but certainly not up to the levels we had seen earlier. But we've also been able to penetrate some new markets, the DoD and the government is one of those and we – as we are leveraging more channel partners, we have a chance to really get a need to more other types of verticals that we didn't have access to with our own sales force, particularly around industrial manufacturing generally. So expanding the automotive into other discrete manufacturing processes. But also looking at some other ones that we're not quite ready to announce any (inaudible) yet but that looks like they have some good applications for location technologies. Andrew Abrams – Avian Securities: Thanks. And also I missed part of your comment on the supply chain and I think you filled it in a little bit, but I was – I was curious about why the continued air spending if you're looking for the supply chain or your inventory levels at your, I guess, at the distributorship side to be more normal. Is this in order to take share, kind of beat out the competition or is there still a necessity to fill demand that has light inventory from your perspective.

It's more based on, you know, making sure we have the right products for the right opportunities. So peak – yes we see larger enterprise deals come in, they may not be fully forecasted or fully inventoried at our distribution partners. So or if we get more orders for some low volume models that we don't sell as much of normally, it's more to make sure we have the flexibility to meet the ordered pattern that comes in. Andrew Abrams – Avian Securities: Also in that same regard, has there – because of the shortages that have popped up there, have you seen any changes in pricing at all at the distribution level? I mean, has there been any price competition in order to win back business that might have been lost because of – because of a shortage?

No, I think as most surrenders are somewhat supply constrained, I don't think that the price competition certainly has not been any higher, any more severe than it normally is. So we think our – as Mike Smiley mentioned in his opening comments. Our AEPs were up in the quarter and that would indicate that we didn't have to compete really on price. There was some supply constraints.

Price wasn't a big player. Andrew, what you have seen with the distributors is then competition among the distributors for a valuable product, right So if one has it, the other does not, they're seeing some movements between their customers relative to where they source that product from. Andrew Abrams – Avian Securities: Got you. Thank you very much. Appreciate it.

Thank you. Our next question comes from the line of Dick Davis [ph] with Richard W Davis & Company. Please proceed with your question. Dick Davis – Richard W Davis & Company: Congratulations on a fine quarter. The question I have is, can you give us a breakdown of the various geographical areas as to what their contribution to what revenue was?

Yeah. I think if you are looking at the – the earnings release, you can see that basically. We have for the quarter – about $97 million was in North America, $84 million was in EMEA, $25 million was in APAC and $21 million was in Latin America, out of the 226. Those are dollars or you can calculate the percentages. Dick Davis – Richard W Davis & Company: Yeah. I can.

Or I can give you the percentages, 43% for North America, 37% for EMEA, 11% for APAC and 9% for Latin America. Dick Davis – Richard W Davis & Company: Okay. Can give us a little color on EMEA, because of the currency problems there with the Euro, I mean that's a very good report you guys did. No doubt at all. Does some of that strength come from Eastern Europe or is it some from the U.K. and kind of the Europe.

Well, Dick, this is Mike Terzich. The strength that we saw in Europe was in several areas and principally around a lot of our manufacturing centric sub-regions, so Germany, France and the region that we call Central and Eastern Europe which has a lot of manufacturing opportunity, contract manufacturers. So Eastern Europe, Poland, we saw some really nice growth in those regions which was good to see, because that's where a lot of our core manufacturing centric products and some of our higher end product are sold. Retail was improved as well, but a little more isolated. It wasn't pan European and its – constructive was a little more centered around the U.K. So we saw some rebound in the U.K. weaker market as well.

The growth included the Euro zone. It was not from outside the Euro zone particularly. Dick Davis – Richard W Davis & Company: Very good.

Is there any more?

Thank you. Our next question comes from the line of Anthony Kure with KeyBanc Capital Markets. Please proceed with your question. Anthony Kure – KeyBanc Capital Markets: Hi, guys. Thanks for taking my question. Just a little bit more – talk about pricing competition, I understand average unit price went up sequentially but just more in general, at least historically. Could you kind of breakdown the pricing profile of each region and how it might be more or less competitive?

Our pricing profile by region is pretty stable. We sell through very robust reseller programs. So we have a lot of discipline in how we price and how we offer pricing and our products are also, otherwise – they have a tendency to become great market product. It's very important for us that we keep a very steady price profile. Normally, you would expect maybe Asia to be the most price aggressive, but since we have a substantial part of our business there from the multinational companies, we see Asia is seeing very much in line with the rest of the world. Anthony Kure – KeyBanc Capital Markets: Okay. Great. Thank you. And then just a clarification on that depreciation comment I think, Mike, when you were talking about 1.7 of amortization per quarter. And I think you said, depreciation wasn't huge and then said something like $2 million, was that together with $2 million or?

Depreciation is $2 million for the full year. Anthony Kure – KeyBanc Capital Markets: Okay. Great. Thank you.

Yeah.

Thank you. Our next question comes from the line of Greg Halter with Great Lakes Review. Please proceed with your question. Greg Halter – Great Lakes Review: Hello, guys.

Hello. Greg Halter – Great Lakes Review: Relative to the freight costs, I think they were $ 6 million in the fourth quarter, $4 million in this and you're indicating that it should be continue to be higher. You gradually expect that to work its way down to flat figure at some point here in 2010?

Yes. The short answer is yes. We were up almost $2 million or down about $2 million from the first quarter. And we expect that to go down a tad more in the second quarter, but it's really a function in part about how the end suppliers, you're able to provide components. So all of a sudden, they're not able to sort of pick up capacity, we could be having more freight. We're only giving you a view out of quarter but we would expect that these end suppliers, they'll start delivering and we'll be able to sort of build up our inventory and reduce the freight. Greg Halter – Great Lakes Review: Okay. And I believe you are targeting a CapEx number around $20 million now? With your business improving here, so far this year, do you expect that to change at all for any needs you have?

No. It's pretty. We have at lot of leverage in CapEx as far as business growth goes, so that's not going to change. Greg Halter – Great Lakes Review: Okay. And what were your new products to revenues, that metric you often cite?

Some new products. It's a very important part of our business. It's really the life blood over time to make sure we have a healthy pipeline and new products, but what we have seen over the last – last nine months, we come up with a number of new attractive products like the Xi4, high end printers, we have a retransfer card printer and the new KR 403 Kiosk Printer, that I talked about on the scripts. We have had a number of new attractive products come out and we have a good pipeline for the future. We are shifting our investments slightly to really focus on printers that open up new markets taking for us. So you can see the – really the retransfer card printer was one of those. The HP100 Printer was another one of those. And it takes me longer for those printers to really come into their own. 18 months is not enough to really get them up to full capacity, so we think this is an important metric but not necessarily the way it's structured today. So I think we're working on how we can come up with a metric that really captures the new innovative aspects of our new product portfolio objective. So we really are not tracking that to same extent anymore. Greg Halter – Great Lakes Review: Okay. Would that necessitate an increase in your R&D expense or do you expect it around the same level it's been running at, what, 10?

We expect that to run the same. This is just more of a – prioritizing the projects we do. Greg Halter – Great Lakes Review: Okay. And one last one on the Scansource, I think they're still your biggest customer, any biggest indication on what size they were of your total sales in the quarter?

Yeah. I think that's around 17% for the quarter. It will be in the cue but around 17%. Greg Halter – Great Lakes Review: All right. Great. Thank you.

Thank you.

Comes from the line of Reik Read with Robert W. Baird. Please proceed with your question. Reik Read – Robert W Baird: Just two quick follow-ups, with respect to the outsourcing I think that you guys had said, last quarter that all of the transfers will be completed by June. Is that still the case or are those closing down ahead of schedule?

No. I think that by June that's still what we're planning. Reik Read – Robert W Baird: Okay. And again just on the RFID side, not necessarily the VES [ph], but the Gen 2 stuff. With all the apparel opportunities that are starting to click in, is that providing an opportunity for you guys with some of the printer encoder business, would that be material or is that still too small?

Well, as you know, our RFID business on the SAG side has seen an uptick in last couple of quarters. We had done a nice deal from the government for our RP 14 –RFID enabled mobile printer in the first quarter and we see the pipeline looking quite good for Q2. So we can't really call upon specific enterprise deals, but we do see renewed confidence, I guess around – also the and – payroll [ph]. That's when I talk about the upside. We've seen products and (inaudible) kind of moving from testing – really start to test the application. So I think that's a good indication that they ought to be some more contracts, more projects going forward. Reik Read – Robert W Baird: And would you agree that in general sense that it's really apparel and asset management that are driving it?

Itemized apparel tracking seems to be a very big application today. Reik Read – Robert W Baird: Okay. Great. Thank you.

Yeah.

Thank you. There are no further questions at this time. I would like to turn the floor back over to management for closing comments.

Thank you all for attending. I apologize, we ran a little late. Just for your information, our next conference call for earnings will be scheduled for August 5th. So thank you very much. Have a good day.

Bye-bye.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.