Also on this conference call, we will be discussing GAAP and non-GAAP results. We are providing the non-GAAP estimates to enable interested parties to evaluate our performance in the same manner in which we evaluate our own operations. These non-GAAP measures exclude certain charges and benefits, which we do not consider to be part of our ongoing activities or meaningful in evaluating our financial performance, including stock-based compensation expense and the amortization of acquisition-related intangible assets. To help you better understand those results, we have included a reconciliation of our GAAP and non-GAAP results in the earnings press release. All numbers that are discussed in today’s conference call are non-GAAP unless otherwise noted.This conference call will be available for audio replay in the Investor Relations section of the Calix website at www.calix.com. In addition, our earnings press release has been posted on our website along with supplemental data, which you may want to review in conjunction with our press release and conference call remarks. I would now like to turn the call over to Calix President and CEO, Carl Russo. Carl? Carl Russo Thank you, Dave. Good afternoon, everyone. Joining me on the call today is Michael Ashby, our Executive Vice President and Chief Financial Officer. Before I turn the call over to Michael, I would like to give a brief review. As we indicated in our pre-announcement on July 11, we saw weakness across nearly all parts of our customer base in Q2. As you are aware from reports by other companies in our industry, macroeconomic concerns have had the effect of slowing down capital projects in the Tier 1 service providers and we have experienced that same effect at some of the Tier 2 service providers as well. In the case of our Tier 3 customers, however, there were increasing concerns over the USF/ICC reform and the implementation of the Connect America Fund and those concerns led to an unexpected slowdown in ordering during the second quarter. I will provide additional commentary after Michael discusses our Q2 results in more detail.
With that, I would like to turn it over to Michael Ashby.Michael Ashby Thank you, Carl, and good afternoon, everyone. If you’ve not already done so, I would encourage you to go to the Investor portion of our website and download the financial slides that we posted concurrent with our press release earlier today. My prepared remarks will provide a financial overview and the related business trends and I’ll provide guidance for the third quarter of 2012. As a reminder, the guidance we provided in May for the second quarter included revenue of $93 million to $97 million, gross margin to be at around 45%, operating expenses to be just over $38 million and EPS of between $0.07 to $0.11 a share. We also expected to be cash flow positive. On July 11, we provided preliminary estimates for Q2 for revenue of $79 million and EPS of $0.04 per share. Our Q2 actual results are consistent with our July 11 estimates. Actual revenue for the quarter was $78.9 million, gross margin was 45.2%, operating expenses came in at $33.5 million and EPS was $0.04 per fully diluted share. We were cash flow positive the quarter and ended the quarter at $53.1 million of cash on hand. I will now provide some color on the shortfall in revenue experienced in Q2. While our major accounts, national accounts and regional accounts were all under our internal targets for the quarter, the biggest shortfall was in the smaller Tier 3, or regional accounts, who historically account for more than half of our business. The quarter actually started off as expected, but the middle of the quarter was weak. We anticipated being able to make up the middle of the quarter weakness in the last month, but while June was a strong month for us, it was not sufficiently strong to make up the shortfall in revenue for the entire quarter. Read the rest of this transcript for free on seekingalpha.com