Good morning and welcome to the Zebra Technologies 2012 Third Quarter Earnings Release Conference Call. Joining us from Zebra Technologies are Anders Gustafsson, CEO; Mike Smiley, CFO; Mike Terzich, Senior Vice President, Global Sales and Marketing; and Doug Fox, Vice President, Investor Relations. All lines will be in a listen-only mode until after today’s presentation. Instructions will be given at that time in order to ask a question. At the request of Zebra Technologies, this conference call is being recorded. Should anyone have any objections, please disconnect at this time. At this time, I would like to introduce Mr. Doug Fox of Zebra Technologies. Sir, you may begin.

Thank you. Good morning. Thank you for joining us today. Certain statements made on this call will relate to future events or circumstances and therefore will be forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Words such as expect, believe and anticipate are a few examples of words identifying a forward-looking statements. 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 also described in Zebra’s 10-K for the year ended December 31, 2011, 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. Disciplined execution in a challenged business environment led to solid third quarter performance for Zebra. Earnings from continuing operations were up 9% reaching a record $0.69 per share excluding a non-cash charges, sales which declined a slight half a percentage points to $252 million or up 1% on a constant currency basis. Steady strength in North America where we achieved record sales including increased demand for high performance and other tabletop printers offset softness in Europe. An improved mix with a boost in tabletop printer sales contributed through a sequential increase in average unit prices. Even with economic headwinds, customers maintain their investments in solutions that help them drive operational efficiencies and generate incremental sales. Zebra products are vital in helping our customers realize the improved business performance by allowing them to make smarter decisions by gaining greater visibility into their extended value chains. Either by our take share and expansion strategies, more companies are turning to Zebra for the hard ROI benefits those solutions deliver. We also achieved a solid performance by generating operating leverage in the business. Gross margin exceeded 50%. Operating expenses declined from the prior quarter, including the incremental expenses related to the acquisition of LaserBand in July. Earnings also benefited from a lower effective tax rate on operations. Our cash generating capabilities continued the pace. For the quarter we generated $58 million in free cash flow and returned $15 million to shareholders with the repurchase of another 400,000 shares. So far this year we have returned $40 million to shareholders with the purchase of $1 million shares as Zebra continues to demonstrate great capacity for increasing shareholder value. Zebra’s third quarter performance highlights the value of our diversity across geographies, products and industries. It also demonstrates the success…

Thank you, Anders. Let me highlight some of the key components of Zebra’s results for the third quarter. My comments will principally focus on year-over-year changes and the performance of Zebra’s operations. First, continued strong sales growth in North America and Latin America offset weakness primarily in Europe and currency headwinds. Second, gross margin was well above guidance and up from a year ago principally because of lower freight charges, overhead cost and reserve expenses. Third, operating expenses were up 18% from a year ago, including 12 percentage points from the non-cash charge with recurring expenses down from the second quarter. And fourth, the results include a $9.1 million non-cash asset impairment charge, which is related to the location solutions product line. The charge is not deductible for tax purposes. Let’s review sales. For the quarter sales declined 1.5% from $253.3 million last year to $252 million this year. The impact of foreign exchange, net of hedges reduced sales by $3.8 million or $0.04 per share. On a constant currency basis sales were up 1% year-over-year. Sales for North America were up 7%, increased $5 million on a sequential basis. Broad-based sales to customers in several industries complemented ongoing strength in our run rate business. In EMEA sales declined 11%. Sales growth in the UK, Russia and Turkey partially offset weakness in other sub regions. On a constant currency basis, EMEA sales declined 5%. In Asia-Pacific sales were down 5% from a year. Improving trends in Japan and Greater China supported third sequential improvement in sales and offset softness in Korea and India. Latin American sales, up 9% to a new record, including healthy sales in all sub-regions. Looking at our product categories a 5% decline in hardware sales is partially offset by an 18% increase in supply sales in…

Thank you, Mike. Zebra’s third quarter results demonstrate the success of our strategies to drive performance. Our investments in product innovation, channel development and geographic expansion are making Zebra more strategic to more customers in new ways. They positioned the company for improving levels of growth and profitability as business conditions improve. But economic headwinds have restricted near-term performance in some regions, our diversity and sustainable competitive advantages have enabled us to extend our industry leadership. We are pursuing our growth goals, while diligently managing the business and maintaining effective control over operating expenses. We also continue to deploy our resources in those areas that deliver the highest risk-adjusted returns, including continued opportunistic stock buybacks and strategic acquisitions. All of these factors give us great confidence and optimism in Zebra’s future. While we look with some caution to the fourth quarter of 2012 and into 2013, we will continue to invest in programs and strategies that will serve Zebra and its shareholders over the long-term. In new product development, we will maintain a high cadence of product introductions with an increasing focus on innovation around connectivity and mobility. We are on track in 2012, to exceed the 13 products released last year. And we are excited about the product roadmap as we look ahead for 2013. We will incorporate our Link OS ecosystem in to our next generation of desktop, tabletop and mobile printers to deliver even greater value to our customers. New features and functionality will expand the range of potential applications we serve as well. We will continue to build on our use of platforms to gain greater efficiency in the product development process. The major technology trends of mobility, cloud computing and Internet of Things are opening new opportunities for Zebra. The increasing use of RFID and…

Thank you, Anders. Before we open the call to your questions let me ask that you limit yourself to one question and one follow-up. In addition Mike and I will be available after the call for any further discussions.

(Operator Instructions) Okay. And our first question is from Steven Stone. Steven, go ahead please.

Hi, thanks for taking my call. I guess my first question, this gross margin expansion you saw there I guess you are seeing it I guess sequentially contract a little bit on what was the real reason for the increase here and why is it I guess is that sustainable or why do you think its going to kind of pull back a bit?

Yeah, this is Mike. I think there is a – Mike Smiley, there is one more Mike here. There is a couple of things that are affecting us we had a number one we had an attractive product mix in part Anders mentioned the ZT200, which is our mid-range tabletop printers which was stronger than we had anticipated. We expect that to moderate a little bit next quarter, but we also had some benefits in some adjustments to reserves like excess and obsolete and warranty and such. Our experience has been positive. We don't expect that to continue every quarter and then some overhead stuff. So effectively we probably wanted to make sure people were aware of this, the margin that we got this quarter had some more unusual type things is part of it, we just don't expect that that will continue every quarter.

Okay, and then just kind of as far as Asia, usually the Asia-Pac region it’s a little weaker in December just talking sequentially here, but there has been all these talks of green shoots. So are you hearing anything different from customers or that should we kind of expect the normal seasonality, kind of going forward kind of a weaker December and March sequentially.

Right, Asia-Pac has been a great market for us over the last several years. And it met our expectations in the quarter, although the results were kind of mixed within the region. Greater China was up slightly and Japan was also strong but India and Korea were quite weak for different reasons. And I think here we see China and Korea being very big exporters to Europe. So I think the headwinds from Europe is certainly have an impact on those countries, but in India, I think it's a more issue of the local rupiya having depreciated quite substantially against the dollar over the last year or so. Our local customers are looking very carefully. The exchange rates as they look to make purchases, but over the longer-term though we are quite bullish on Asia, we think that the region will have higher than average GDP growth for quite a few years to come. And I think as the middle class benefits on this growth, we will see kind of the diversification of our business in Asia as we’ve seen in North America and Europe before.

Okay. Thank you.

Thank you. Our next question is from Paul Coster with JPMorgan. Please go ahead.

Hi, Paul. Paul Coster – JPMorgan Securities LLC: Okay, thanks for taking my question. Yeah, good morning.

Good morning, Paul. Paul Coster – JPMorgan Securities LLC: Good morning. Can you talk to us a little bit about how LaserBand contributed in this quarter, what revenues could be attributed to that and what it does to your overall margins as well as the accretive?

A couple of things, first of all – yeah this is Mike Smiley again. We are not sort of breaking out LaserBand, but I think a couple of things I will tell you, is that it’s here planned very nicely, it’s being integrated, being managed. We are really pleased to have these guys on because not only strategic, but from a CFO standpoint it’s also the financial results are very attractive, the cash margins on this business are very comparable to the rest of our business and so forth being strategic and the type of businesses we are in, we are very pleased with this business. Paul Coster – JPMorgan Securities LLC: Well, let me put it in a different way. But you are seeing organic growth in North America without the LaserBand acquisition.

Yeah, oh definitely we would have. Okay, definitely. Paul Coster – JPMorgan Securities LLC: Okay great, fine.

North America had a record quarter without the contribution of LaserBand. Paul Coster – JPMorgan Securities LLC: Okay, go it, thanks very much. And then the strength that you saw in North America in particular was that across all of your service lines?

Yeah, North America has been a very strong region for us for awhile now. We’ve had five consecutively strong strengthening quarters. Our run rate in Q3 was quite strong and stable throughout the quarter. But we had less large deals than what we would consider to be normal. I think here we are really seeing the benefit from our focus on product innovation and channel development. North America is our most diverse region. So we participate in many vertical markets and with most of our product segments too. We saw particular strength in manufacturing and also in the expanded retail base. We see retail customers are more keen to adopt new technology now. And healthcare, I would also highlight. This is a strong vertical for us and I think the underlying trend here for why we are doing so well or why the industry is doing well here I think is that our products are really helping companies drive productivity. So if you look at the S&P 500 over the last few years revenue growth for that has been modest, but the productivity of those companies have been great and I think that comes from companies investing in tools like ours to drive greater efficiencies. And as we look ahead I would say we feel quite good about the growth opportunities we have in North America and we feel we have a very robust strategy that will continue to benefit us. Paul Coster – JPMorgan Securities LLC: Just sign off with one last question and that is, I mean, linearity, sounds from what you’re saying that it’s essentially improving slightly, I mean, most recent months for instance would be an improvement over the prior month?

Well, you mean Q3 over Q2 or…? Paul Coster – JPMorgan Securities LLC: No, no. I’m trying to get a sense of the most recent data points that you are seeing from your sales. Does the North American linearity point slightly upwards or is it slowing? I mean just gives us if you can give us some color there.

It’s I would say our quarters are somewhat more back-end loaded now than they were probably a year or two ago, but the North America business is projecting to grow as we kind of outlined in the guidance here. Paul Coster – JPMorgan Securities LLC: Okay. Thank you.

Paul, this is Mike Terzich. One another point I want to add. One of the points to Q4 for us in North America that we always content with, which we’ve mentioned in the past calls is we do see a little bit of that softening in the retail businesses as major retailers kind of [hunker] down for the holiday season as they’re less willing to deploy technology during the Christmas buying season so to speak. Paul Coster – JPMorgan Securities LLC: Got it. Thank you very much.

Thank you. The next question is from Keith Housum with Northcoast Research. Please go ahead. Keith M. Housum – Northcoast Research Partners LLC: Good morning, gentlemen. Thanks for taking my call. A little more detail you maybe providing on the two large orders that you announced that you expect to ship more in fourth quarter and I guess and how that impacted your guidance as you provided for the fourth quarter?

So the two orders we announced, I think, was the Ministry of Health in Brazil and that was the retail order in Brazil also to your (inaudible). Keith M. Housum – Northcoast Research Partners LLC: Yes.

So those are both in our guidance. They are both multi-quarter orders. So they are not going to be fulfilled all in Q4, but it will provide a nice incremental stronger foundation for the business in Brazil and I think it goes to show how the investments we made in Brazil in both products and channels is starting to pay off for us. Keith M. Housum – Northcoast Research Partners LLC: Okay, great. And then just one follow-up question for you. We’ve been seeing quite a bit lately, for example the J. C. Penney and their RFID announcement going forward by 2014 to be more RFID enabled. As I’m going to ask that question to you guys, what you’re seeing in the market in terms of our RFID and is that turning into more of a driver [worth] than in the past?

Keith, this is Mike Terzich. I will take that. Yes, we are definitely seeing a higher level of retail interest in passive RFID technology and most of that is occurring, as you point out with major retailers that are looking to get a better handle on more broadly managing their inventory level at the store. So, certainly JC Penney has a vision and a view that is very broad from an adoption perspective though we can tell you that the interest level is across multiple retailers who are finally seeing where they can deploy across a set of skews items if you will, where they’re going to drive greater inventory, accuracy, and more customer satisfaction. So yes interest levels are increasing.

I would just add one thing to that particularly in our location solutions business, we’ve been working hard there to also incorporate passive RFID solutions there. So that gives us a good position in manufacturing to bridge kind of the three technologies of barcode passive and active RFID to provide inventory tracking and other product ID solutions. Keith M. Housum – Northcoast Research Partners LLC : Okay. And do you see the RFID has been incremental to your existing business going forward, will it be substantial enough, we’ll see it in the guidance as a year or two down the road?

We’ve always had RFID as part of our guidance. So it’s not a new thing from that perspective and I expect that as we go forward, we will continue to include RFID as parts of our overall guidance. I do not expect that we will break it out this as a separate product line. Keith M. Housum – Northcoast Research Partners LLC : All right. Okay, thank you guys.

Thank you. (Operator Instructions) Our next question is from Greg Halter with the Great Lakes Review. Please go ahead. Greg W. Halter – Great Lakes Review: Hello, good morning guys.

Hey, good morning Greg. Greg W. Halter – Great Lakes Review: I’ve been reading a little bit about one of your competitors I think it’s a Sato making in more I think potential consorted effort into the competitive space. And just wanted to get your view on that?

Well, I think we have a competitive market overall, so Sato is clearly a well recognized and a reputable competitor for us, but I think that we look at the overall competitive landscape, we feel pretty good about that competitive positioning. And we’ve made meaningful investments in innovation to refresh and drive more innovation new things into our product line. And also make sure that we continue to develop our channels, which are equally strong barriers for entry or driver for growth for us. So I feel that we have to compete against all of our competitors on a daily basis. And I feel we are in a pretty good place to continue to do that well and extend our leadership position in the industry. Greg W. Halter – Great Lakes Review: All right. Thank you and as a follow-up a good lead in there on the channels. Can you speak to the percentage of your sales that came from your largest and second largest customer in the quarter? Hello, are you mute?

This is Mike Smiley. We had three customers that were over 10%. The largest was 20.8%, the second was a 11.2% and the third was 10.5%. These are all three distributors. Greg W. Halter – Great Lakes Review: All right. Thank you.

Yeah.

Thank you. Our next question is from Tony Kure with KeyBanc. Please go ahead. Anthony C. Kure – KeyBanc Capital Markets: Hi, good morning guys. Thanks for taking my questions.

Good morning, Tony.

Good morning, Tony. Anthony C. Kure – KeyBanc Capital Markets: I just wanted to, I think you said this on the last call, I want to confirm not sure how played out as the quarter progress, as far as the LaserBand acquisition price. I think you said $58 million on the last call that it net out to be that way?

There is working capital adjustments and stuff like that at the end. So I think it netted out to be $59 million, but it’s in the ballpark same thing. Anthony C. Kure – KeyBanc Capital Markets: Okay, okay. And then on the gross margin improvement Mike, you mentioned three things a lower freight charges, the voluntary reserve, I just didn’t catch the third thing that you had on that that you listed there?

The other would be excess and obsolete type things. So when we look at the amount of inventory for which we need a reserve for that we’ve determined we didn’t need quite as much based on our history and stuff like that. And then I think you mentioned freight was another big benefit for us. Anthony C. Kure – KeyBanc Capital Markets: Okay, yeah. Okay, and then as you talked about the normalized gross margins which is pretty helpful the $48.5 million to $50 million. Given you’re at about $50.4 million this quarter. Is it fair to say that those positive impacts of gross margin were about a 100 basis points of gross margins?

Roughly. Anthony C. Kure – KeyBanc Capital Markets: Okay, great. And great, thank you so much.

Yeah.

Thank you. Our next question is from Brian Drab with William Blair. Please go ahead. Brian Drab – William Blair & Co. LLC: Good morning.

Good morning, Brian.

Good morning, Brian. Brian Drab – William Blair & Co. LLC: Just want to make sure that I have the revenue total revenue growth and acquisitions and organic straight. So FX was a negative 1.5 point headwind and then I think is it safe to assume LaserBand contributed maybe two points to growth and organic for that company overall was down about 1%?

You know, Brian that I think we want to communicate that the LaserBand is performing nicely. It’s not a huge piece of our business. We are not really breaking that out. So as a result, I’m not going to tell you exactly how much that is, but it was a nice piece of – it’s an attractive business, but it’s not material to your overall numbers. Brian Drab – William Blair & Co. LLC: And it wasn’t the full quarter?

Yeah, in Anders point, only 11 weeks we had it, so. Brian Drab – William Blair & Co. LLC: Right, I understand, but is there any reason that I should think that their revenue run rate is far off the annual sales of $24 million in 2011 and is there any significant seasonality to this business?

I think in my script, I've mentioned that LaserBand met our expectations. So, yeah we were pleased with the revenues they delivered and the profit. Brian Drab – William Blair & Co. LLC: Okay and then just one more follow-up on this. Is LaserBand, is it safe to assume that LaserBand revenue is recorded in the supplies line. I can't remember if you told us that before?

Yes, it’s in supply. That’s right Brian. Brian Drab – William Blair & Co. LLC: Entirely in supplies?

Yes. Brian Drab – William Blair & Co. LLC: Okay, okay thanks guys. I will talk to you later.

Yeah.

Thank you. Our next question is from Greg Halter with Great Lakes Review. Please go ahead. Greg W. Halter – Great Lakes Review: Yes, thank you for allowing me back on again here. Given the LaserBand acquisition that’s been completed obviously and seems to be doing meeting your expectations so far. Just wondered if you could comment on what you're seeing out there relative to additional acquisition opportunities certainly in light of the very solid cash position?

Yeah, all right. Our acquisition strategy hasn't really changed from prior quarters. We look at allocating our capital to the highest risk-adjusted return activities that said the first thing that we use for this and then of course, we look very carefully to make sure that any company we look at acquiring also fits our strategy. We want to make sure things that we consider to acquire really do fit to the strategy, enables us to accelerate the implementation of our strategy or make the overall more strong and there are certainly assets out there that we continue to look at, but I will say that we want to be disciplined buyers and we have a strong cash position, but we see that as a good thing, not something that we need to find a home in a hurry. So we got to be disciplined as we have been before. Greg W. Halter – Great Lakes Review: All right. We certainly appreciate the disciplined nature. Just wonder if I could ask what the yield was on your investments in the third quarter?

Yields on our investment, it’s very low.

We are primarily invested in, and it’s Mike Smiley, investing governments and corporates and stuff. So it’s de minimus. Greg W. Halter – Great Lakes Review: And the reason I ask is with that minimal rate, and I presume most of that is in the U.S., just wondering whether or not the company would look at a special cash dividend or be even more aggressive on its share repurchase program?

Going back to Anders’ question on the acquisitions, our approach towards deploying capital has not changed. They will argue we deployed $75 million in the last quarter between share buybacks and acquisitions. We feel that we’re probably seeing more attractive assets than we did probably a year, a year and a half ago. So I wouldn’t be surprised to see us do some attractive more acquisitions and we have been buying back stock. We’ll do more. I don’t think we have plans to all of a sudden ramp up deployment of capital from a share buyback at this point unless there is a big change in evaluation from where we are. Greg W. Halter – Great Lakes Review: All right, it sounds good. Again to point out that sequentially your cash was only down $18 million despite the buyback and the LaserBand. So you guys are doing well on the free cash flow side?

Yes, and wanted to be real strengths of the business. Greg W. Halter – Great Lakes Review: Thank you.

Thank you.

Thank you and that was our last question in queue. I will now turn the call back to Doug Fox for closing remarks.

Just to thank everybody for joining us today and to let you know that our next regularly scheduled conference call for the fourth quarter will be on Tuesday February 12, 2013. Everybody have a good day. Thank you for joining us today.

Ladies and gentlemen, thank you for your time and attention. That concludes this conference.