Ladies and gentlemen, thank you for standing by, and welcome to the Benchmark Electronics Fourth Quarter 2009 earnings conference call. At this time, all lines are in a listen-only mode. Later there will be a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, today's call is being recorded. At this time then, I would like to turn the conference over to Mr. Don Adam. Please go ahead, sir.

Good morning. Welcome to the Benchmark Electronics conference call to discuss our financial results for the fourth quarter of 2009. I am Don Adam, CFO of Benchmark Electronics. Today, Cary Fu, our CEO, will begin the call discussing the business environment during the fourth quarter and into 2010. Gayla Delly, our President, will then discuss our activities and performance in Q4, as well as an outlook for the first quarter of 2010. I will then follow with a review of our financial metrics for the fourth quarter. After our prepared remarks, Cary, Gayla and I will take time for your questions in our Q&A session. We will hold this call to one hour. During this call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We would like to caution you that those statements reflect our current expectation and that the actual events or results may differ materially. We also like to refer you to Benchmark's periodic reports that are filed from time to time with the Securities and Exchange Commission including the company's 8-K and S4 filings, quarterly filings on Form 10-Q and our annual report on Form 10-K. These documents contain cautionary language and identify important risk factors which could cause actual results to differ materially from our projections or forward-looking statements. We undertake no obligation to update those projections or forward-looking statements in the future. Now I'll turn the call over to Cary.

Thank you, Don. Good morning. We are pleased that you are joining us for our call today. The Benchmark team delivered another quarter of solid performance, strong demand from our customers, as well as from the progress of our new program ramps enabled us to deliver an 18% sequential revenue growth over Q3 with improved margins as well as a year-over-year growth for Q4 of 3%. This is evidence of our work that we have done to diversify and rebalance our customer portfolios. We’re able to achieve this result even with the component lead-time constraint during the quarters and a drop in orders that accelerated in November, December, both of which was managed and supported very well by our teams. As evidenced by the increased revenue in Q4, we see that our customers are getting more comfortable with the current economic environment. In Q4 and looking into Q1, we continued to see some positive signs of improvement from our customers with a solid revenue booking in our new program ramps. Although we are seeing this process change from our customers, we will continue to be guarded about our outlook given the overall uncertainty that still exists in the marketplace. In 2009, we have taken many actions to realign and improve our global footprint, service offering and capacity. We expanded our capacity in Romania, moved to a new building in New Hampshire and acquired precision machining capabilities. As a part of realignment, we also had to adjust our footprint in high-cost areas. Through Q4, we incurred $2.4 million in restructuring charges. These charges are primarily due to realignment actions in two of our high-cost locations which we've discussed in the last conference call, a reduction in our capacity in one of our European facilities and closing of one of our U.S. operations. We expect to finish our realignment efforts in the first quarter of 2010 and incur additional restructuring charge of about $2.2 million. Overall, 2009 was a very challenging year for Benchmark, as we and our customers are working through the impact of the global recession. It is our goal to emerge from the recession as a stronger company. Again, we have kicked off the new year with a good trend in bookings and strong demand from our customers, but due to the mixed signals, we will continue to be cautious and watch the overall marketplace for a change in trend and the challenges. Now I will turn the call to Gayla to talk about more on the operation details.

Thank you, Cary. Our fourth quarter demonstrated our continued ability to execute to our plan, driving sales and bookings while maintaining tight spending controls. During the fourth quarter, we saw sequential revenue growth while managing the component lead-time constraints that were brought about by the numerous changes in the overall economic environment. During Q4, we had revenues of $600 million, which exceeded our guidance and were up 18% sequentially from Q3. Approximately, 50% of this revenue increase quarter-over-quarter is estimated to have come from end market demand improvements, while the remaining 50% was derived from our new program ramp. Our earnings per share excluding special items of $0.29 also exceeded our guidance. Our operating margin excluding special items was up from Q3, showing that our financial model of operating leverage is working. During the fourth quarter, our operating margin increased to 3.5% excluding restructuring charges, compared to 3% for the third quarter. We are gaining efficiencies and driving towards our operating margin target of 4%. While we drove improvements in Q4, we were not able to achieve the efficiencies that we would have expected at the $600 million revenue level. These inefficiencies were caused primarily by many supply chain and materials issues encountered during the quarter as our suppliers were challenged by the increased demand levels. In addition, we had numerous new programs in various stages of ramp during the period and a high level of intra quarter product mix changes which are normal in periods of secular growth rates, which we saw in Q4. We maintained the 4% operating margin as our target and we are gaining momentum towards that goal in the near term. Overall, our teams did a tremendous job of managing the challenges, supporting the increased level of demand from our customers. We will continue to…

Thank you, Gayla. As Cary noted, we completed the fourth quarter of 2009 with revenues of $600 million. These revenues exceeded our revenue guidance of $520 million to $560 million provided during our last conference call and were up 18% over the third quarter. The growth we experienced from the fourth quarter was the result of overall demand improvements from our customers as well as new business ramps. During the quarter, we saw stronger shipments in all of the industries sectors that we serve except for medical, where we saw a slight decrease. Sequentially when comparing Q4 to Q3, revenues from the test and instrumentation sector were up 74%; revenues from the computing sector were up 30%. Revenues from the industrial control sector were up 20%. Revenues from the telecommunications sector were up 3%. Primarily due to product transitions, revenues from the medical sector were down 10%. We have seen that the ramp of our customers new products have not been synchronized with a reduction in output from some of our mature programs. Our earnings per share for the quarter were $0.29 exclude restructuring charges of $2.4 million or $2 million net of tax. The restructuring charges incurred during the quarter were primarily related to the reduction of capacity in Europe, in costs incurred in anticipation of our closure of one of our U.S. facilities. To provide a more meaningful comparative analysis, we will present certain financial information excluding restructuring charges during this conference call. We will call your attention to the fact that these restructuring charges are excluded when we do so. In today's press release, we have included a reconciliation of our GAAP results to our results including these restructuring charges. Our gross margin for the fourth quarter was 7.3, excluding these items which has slightly improved from…

Great. Thank you. (Operator Instructions) And our first question today comes from the line of William Stein with CSFB.

Thanks. You mentioned component shortages impacting the quarter. I'm wondering if you can help us get an idea for how that might be quantified either from a revenue -- from both revenue and margin perspective and whether you anticipate that a catch-up will happen in the March-quarter? Is that embedded in guidance that you will catch up on whatever you missed in the current quarter?

Will, I don't believe that the impact was significant on the revenue as we were able to manage and support customer demand for the most part. It did have an impact on the efficiencies because of the nonlinearity of delivery of components into the production line and the requisite cost inherent with the output of the products with the demand variabilities. But what we see is that our teams have worked very well at aligning the supply chain and gaining efficiencies and that's what we expect to have a positive impact on our ability to support customer needs in Q1.

Anyway you can help us quantify what the negative impact from I guess it is a loaded chase environment was in Q4, so we can get a baseline for thinking about margins going forward?

No. I'm sure my teams would like to say that we would have achieved 4% without it. I don't have the proof in that as a with and without because inevitably some things such as overtime and demand overlaps clearly would happen anyway even if you had all the production and the kits aligned. So, I don't have that ability to accurately depict that for you, but clearly I think we would have nudged closer to our 4% goal, given our revenue throughput that we had for the quarter.

Great. And then just one follow-up if I can, I think you said that there were going to be additional restructuring charges in the March quarter. Can you just help me with my notes on that, what the charge is going to be? And then help us understand if we are going to start seeing benefits on the margin from those charges in the March quarter or in future quarters and an idea as to the size of that?

Yeah. In terms of the charges for the first quarter, primarily relates to the closure of one of our facilities that we have already announced. In terms of the benefits, you are probably looking at a quarter or two past the quarter in which you take the charge.

And can you size it for us please?

The charge will be about $2 million for the quarter.

And the benefit?

That would be… well, the annual benefit, I don't have. In terms of that specific one, we've had a number of restructuring that occurred last year that are reflected in our guidance for Q1, probably $6 million to $8 million.

Great. Thank you very much.

Great. Thank you. And our next question comes from the line of Alex Blanton with Ingalls & Snyder. Please go ahead. Alex Blanton - Ingalls & Snyder: Hi. It's Alex Blanton. All of the EMS companies are reporting better-than-expected sales numbers and that the underlying demand they see is rising enough so that they are not going to see the normal seasonal decline in the first quarter. Do you have any idea how much of what you are seeing and you mentioned 50% came from end market improvement. How much of that end market improvement is due to a lesser inventory reduction than in the prior quarter in the supply chain toward the consumer, in other words, in front of you there?

So ultimately, Alex, we have tried to dig through and gain a greater understanding of that, as you can imagine, in discussions with our customers as well as looking at the demand profile. I don't think we have been able to discern exactly how much of inventory reduction in the trend has taken place, but we have been able to see that in fact our customers are not building inventory. So while the rate of reduction may have changed, it continues and it is not back to an inflection point where inventories are building. Alex Blanton - Ingalls & Snyder: Well, it really doesn't matter whether they are building inventory if they are reducing it less than the prior period. It has the same effect, exactly the same effect. It means that part of your production increase is not necessarily due to an end market demand pickup, simply to a lesser rate of inventory reduction. You don't have to rebuild inventories, just reduce them to a lower rate.

Correct. And so I am not arguing that point. I guess what we do continue to see, though, is that as you can see from our guidance, our customers have not -- if they are in a replenishment mode of a reduced level of inventory, they have not stopped that activity. And so if you look across the extended supply chain, I believe you will see and part of the reason we see lead time extensions is because the demand is continuing. If your question extends as to, well, at what point does it fall off. that is where forecasting becomes much more challenging. And what we see is the environment, there's many factors that go into our forecasting, as you know. So we -- why we pointed out that 50% of our growth was from new programs is because we believe that the new programs and the addition of new customers is what provides us a strong base to build from as well as our diversified base of revenue. Alex Blanton - Ingalls & Snyder: On these new programs, one question on those. Are those an expansion of the outsourcing those customers are doing versus in-house or are they programs you are taking from other providers?

Actually, it's very interesting that you point that out because they are actually coming from three different -- one is an expansion of our relationship to extend the services we provide to the customers. In other cases, we have taken production that was previously in-house and are supporting those transitions to our facilities. And the third of course is as supply base is being consolidated, we’re the beneficiary of taking market share. So when we look across geographies, across industries and across source of business, each of those, we see a green area such that our performance is moving in the direction we would like to see it move. Alex Blanton - Ingalls & Snyder: Okay. Thanks.

Great. Thanks. And our next question comes from the line of Amit Daryanani with RBC Capital Markets. Please go ahead.

Thanks. Good morning, guys.

Good morning.

I guess just a question on your inventory. Inventory is up a little, I think 7% to 8% sequentially. You are guiding sales to be flat. Is that a reflection of maybe customers asking you to hold a little bit more buffer inventory given the extended lead times of it going on? Could you just talk a little bit about that?

No. I think the inventory was up but our sales were up 18%. If you look at our turns, our fourth quarter, we had the best turns that we had during the quarter was over seven. So I think the inventory increases simply as a result of the increased throughput.

So I guess the other way to say it, Amit, is as we have visibility for the guidance this time that we didn't have last quarter, we have plans in place to be able to support this production and gain greater efficiency and bottom-line results, whereas last time the demand continued to build and we had not –positioned the inventory to support that.

Got it. I want to go back to Will's question in a different way, maybe. So you scale up, for you to get back to this 4% margin target, assuming the mix is steady and business is more or less linear, what sort of revenue run rate would you need to get there?

I think that is what we had indicated before, between 600 and 625, so that ties into your prior question. But if I get the inventory in place to support the throughput and I have a good mix of product, we should be able to achieve that in the near term and that's the goal we are driving toward.

Got it. Finally for me, your gross margins are sitting at kind of at the highest levels you've seen at least since the 2003 days. And as you guys start to build your revenue topline and the new products start to accelerate, historically there's been some inefficiencies with them as you climb up the learning curve. Can you just talk about how sustainable are these gross margins north of 7% or as sales come into the final, would we see that degrade a little bit?

Any time we bring in new programs depending on the size of the new programs, there are inherent inefficiencies as we build up our learning curve. And so those are always a part and even a factor in Q4. So I don't see those as something that we can segregate. It's a part of life in our business, but I do believe that if there's a level of goodness out of the storms that we endured in 2009, it is the focus that our teams have placed on improvements that are sustainable. And I believe those are what allow us to not just incorporate the efficiencies that we have into our model today but to continue to drive further efficiencies. That is what in essence will protect our margin. No doubt it will continue to be a very competitive marketplace and we will just have to continue to drive efficiency to achieve those margins.

Amit, probably one more comment here. Keep in mind that 4% is our near-term operational margin goal, okay? Once you get material flow more efficiently, we should be there fairly quickly, and our long-term goal is still, operations goal of 4.5%, 5% of the volume of the topline increase and we believe it is still achievable. But with that, your margin, gross margin kind of continues to improve, which we feel will position us to get there.

Got it. Thanks a lot, guys.

Thanks.

And our next question then comes from the line of Sherri Scribner with Deutsche Bank. Please go ahead.

Thank you. I just had a couple of questions. Did you mention any greater than 10% customers in the quarter and did you have any?

We didn't mention. We did have one related to IBM.

Okay. And then, Don, in terms of just thinking about the income statement in 2010, SG&A was up a bit in December. Are your expectations that SG&A would be flat or up on an absolute basis in March? And would you expect that to trend up through the year?

I would say Q1, it should be relatively flat. You may see some marginal trending up but I would say Q1 probably flat.

Then in terms of the tax rate, did you specify -- you mentioned that the tax rate would be higher. Is that still in the 9% to 10% range?

It's going to be, looking out to 2010 probably in the 14% to 15% rate.

So are we going to see 14% to 15% in the…

First quarter? Yes.

First quarter. Okay. That's helpful. Thank you.

Thank you. And our next question comes from the line of Brian White with Ticonderoga. Please go ahead.

Hi. Yeah. Good morning. You talked about a big new program win, I think on the third-quarter conference call. And I'm curious if that contributed to some of the revenue in the fourth quarter and will it contribute in the first quarter?

Talking about Q3?

Yeah. The new program that Cary discussed in Q3.

Yes. That contributed in Q4, right.

Okay. And do you have a general size of the impact on the fourth quarter?

No, I don't have -- I can't quantify this one.

It had not ramped to the significant volumes clearly in Q4.

Okay. So it ramps more in first quarter or does it also carry into the second quarter?

It will continue in Q1.

Okay. Cary, what industry is that new program in?

Test and instrumentation.

Test and instrumentation, okay. When we think about markets in the March quarter, you are guiding flat, which is excellent. Generally -- or if you look at the different markets, what market do you think will actually grow sequentially? You said computing would be down.

Yes, I think if you look at all of the -- we are anticipating all of the sectors with the exception of computing to grow probably with the most growth in industrial controls and telecom.

Okay. Thank you.

Thanks. And our next question comes from the line of Sean Hannan with Needham and Company. Please go ahead.

Good morning Don.

Yes. Good morning.

So, just a quick question. I realize you are not guiding beyond March but when we do look to June and beyond for the remainder of the year, obviously you have some thoughts in your mind based on your current portfolio of programs as new ramps and wins. How should we be thinking about the trajectory of that business whether we should figure for any sequential, if we're thinking more of a kind of a flat to perhaps sequentially up quarters as we move through the year based on what you're looking at? Are there any quarters that stand out in your mind, where there should be expectations for the potential of a sequential downtick? Any color around that would be helpful.

Sean, we can appreciate that. So, I'm going to stick to our guns here and we aren't going to imply guidance when we haven't given guidance. But, I will tell you kind of maybe add some color around why we believe that that is a prudent thing to do. We have been in discussions and worked closely with our customers aligning with them their forecasts and understanding how comfortable and how confident they feel about the year. And as well, we've looked to the external indicators such as jobs reports that came out this morning, unfortunately not bringing good news. And so, with all of the external factors appearing to be lacking solid ground and the programs and the internal factors that we pointed to earlier, ramping programs and winning programs, showing that we are gaining positive ground, those two counterbalancing impacts that it's just a matter of really which one wins out. And if we look at the external factors, it's really hard to put those pieces together at this point in time for either us or our customers. So those are the rhymes and reasons behind with all of the years of experience of us and our customers for forecasting, you think we would all get exponentially better. But it isn't, this type of environment is not one where it garners confidence for the customers to be able to make decisions out that far in advance because the significant increase in Q4, as Alex pointed out earlier, was seen kind of across the board. So those are the factors that we look at. We look at providing near-term guidance and then seeking more clarity further out. So we will be counting [ph] you if you have greater clarity.

Well. I guess, what I'm trying to drive out is where the level of confidence is within your recent program wins. So, if we were to pull out some of the kind of more macro factors and think of, hey, look, if we're in a generally stable environment today, knowing what you know around your current portfolio, what that mix is, what the mix is of your wins, are we arguably better positioned for, as we move through the year kind of that flat to sequentially up type of business level improvement?

Yes. I would believe that clearly with all of the comments we made earlier, whether it's our diversification of our revenue base, whether it is the new programs we've ramped, the efficiencies we are gaining. Clearly we are in a much better position. But we participate in the global economy, so we can't ignore that nor can our customers. So if we got to just pretend that there was no influence from the outside, yes, we feel much better. But that's not realistic.

Well, that's helpful in and of itself, Gayla. Thank you.

Great. Thank you. And our next question comes from the line of Jim Suva with Citi. Please go ahead. Jim Suva – Citigroup: Great, thanks. Gayla, a quick question. Restructuring, is it pretty much done after the March quarter or are there still some more things in the cards?

I believe we are pretty much done, Jim. We've got our footprint aligned. And as I just mentioned, unless there's a major recession coming on the heels of the last recession, we clearly are aligned for the footprint we need to have today. As you can see by the comments Don made on the capital expenditures, we are not needing to add significantly to our footprint but we do see some opportunities to invest in our capital once again to support our new program ramping. Jim Suva – Citigroup: And can you help us understand? And by the way, that's great to hear that the restructuring is pretty much done after this quarter. Now that we have come out of this restructuring, what type of sales level is your infrastructure and your capacity now aligned for before you would have to start adding a fair amount of more capital?

Clearly, I believe our footprint and if you look at our facility structure, we have got a good bit of runway before we would need to add incremental structures. As always, though, it depends on mix. It depends on geography. But suffice it to say, we still have great opportunities to book additional business and grow without having to add capacity. Jim Suva – Citigroup: Right. Can you help us understand when you say quite a bit of good runway, are we talking above $2.5 billion sales, above $3 billion? Any more details around, what you mean by a quite a bit of runway?

My belief would be it would be closer to $3 billion, before we would need to look at that. Jim Suva – Citigroup: Great, thank you. And last question, you've traditionally, historically have had a customer that was much more meaningful in size and now is significantly below 10%. Does that customer even really move your profitability or concentration much or now that a lot of the M&A around that customer has been clarified, is there an opportunity that they could actually come back stronger? Or is it just kind of at a level now where we should just expect it to kind of go forward?

I guess the end result will be seen based on the type of products that are selected as vehicle for growth in the future. But I would expect it to stay about where it is at this point in time. We are very pleased with the diversification we have achieved, both industry, customer base and the ability to expand with each of our customers. So again, we have lots of headroom to grow with our customers now because we do not, in fact, we may be the only one in this industry now that does not have a customer concentration in the 20% area. Jim Suva – Citigroup: Thank you for the details.

Thank you. And at this time then, I'm showing no further questions in queue and that does end our question-and-answer session. Would the company's management like to make any closing comments before I close the call?

Thank you for participating on the call and we will be around in office, if you have any further discussions, please give us a call in the office. Thank you very much.

Great. Thank you. And ladies and gentlemen, that does conclude our conference for today. Thanks for your participation and for using AT&T's Executive Teleconference. You may now disconnect.