Ladies and gentlemen, thank you for standing by, and welcome to the Benchmark Electronics first quarter conference call. At this time, all lines are in a listen-only mode. Later, there will be a question-and-answer session. (Operator Instructions) 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 first quarter of 2010. I'm Don Adam, CFO of Benchmark Electronics. Today, Cary Fu, our CEO, will begin the call discussing the business environment during the first quarter and further into the year. Gayla Delly, our President, will then discuss our activities and performance in Q1 as well as an outlook for the second quarter of 2010. I will then follow-up with a review of our financial metrics for the first quarter. After our prepared remarks, Gayla, Cary, 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 will make projections – we may make projects or the forward-looking statements regarding future benefits or the future financial performance of the company. We would like to caution you that those statements reflect our current expectations and that 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 other forward-looking statements. We undertake no obligation to update those projections or forward-looking statements in the future. Now, I will turn the call over to Cary.

Along with our results, we are happy – we are also happy to report, we had a (inaudible) booking in the quarter. The improvement in the – probably in all of our business environment, our results, and then we expect excellent booking for the first quarter provided wage starts through the year. Notably, our results for the quarter show a quarter-over-quarter improvement in our operating margins that will continue to benefit from improved revenue mix as well as our efficiency improving initiatives. (inaudible), however, that our Q1 revenue was impacted by two primary factors. First, we had a forecast without competing – with the customers’ greatest trends in the Q1 depends on the computing sector, which is typical of backend data. They are backend loaded. The demand pool at the end of the quarter was much weaker than anticipated. This evidence also shows – our revenue by industry results showing that the computing sector was down 24% from Q4. Second, the product mix from our customers in a non-computer industry experience greater variability than with plenty in our forecast model. Furthermore, the component constraints that began towards – at the end of 2009 carrying into 2010 as a supplier continued to be challenged by the increased demand level with the improving economy. Long lead times for the sector components impact our ability to meet forecast mix changes and the – support driving order from our customers. Our supply chain changed in support of our customers, but very diligently to working with an extended supply chain to meet the demand challenge. However, this extended lead time impacted our shipment by approximately $20 million for the quarter. As you recall, our Q4 revenue exceeded our guidance (inaudible) in a strong demand resulting in the low inventory balance to begin our first quarter 2010. The current lead time, as extended, have been incorporated into our planning cycle. Because of this, we believe that our inventory level now is where to Q1 – or somehow we're somehow higher than Q4 is appropriate size given the extended lead time in the marketplace today to support the sequential revenue growth projected in Q2. For Q2, we'll continue to see steady demand from our customers across the industry sectors. We see the continued processes from our customers with a revenue booking as the new program ramps. During the first quarter of 2010, we’ll complete our restructuring charges activity. We did announce in the second half of 2009, as anticipated, it was – it incurred $1.7 million in restructuring charges, primarily related to the closures of one of our US facilities. At the same time, we are currently expanding our position in machinery capability into Asia to provide our customers with another solution in a low cost region. Now, I turn the call over to Gayla to talk about the operation details of Q1.

Thank you, Cary. As Cary noted, we’re very excited to report the record new bookings we had during the first quarter. To give you more color on that, we booked 11 new programs with current estimated annual revenues of $300 million to $375 million at full ramp production. These bookings include two sizable programs in the computing sector. One is a design to production opportunity. And the other is a transfer of current and upcoming productions. Several of our new programs wins are an expansion and addition to new customers at our customer base. For example, in the medical sector, we now support new sectors, including energy with designs production services for these customers. In addition to the wins in the computing and medical sectors that we mentioned, we also have new bookings in the industrial control, telecommunication sectors for the quarter. These bookings, of course, are subject to the risk of timing and to the ultimate realization of the estimated revenues. As Cary mentioned, the first quarter of 2010 was very dynamic. Normal seasonality in the first quarter of each year typically includes some level of process in the computing sector. However, this year, the computing sector was more significantly impacted, and this was offset by strength in our other sectors. These sectors, however, represent a greater mix of business and experience greater mix changes. These changes resulted in some shortages and inefficiencies in our operations, which are reflected in stable levels of finished goods, but higher levels of raw materials and WIP [ph] where our components were delivered too late for us to produce and ship products to our end customers. Even with these challenges, we’re very happy that we drove results, meeting our earnings per share guidance and driving efficiencies, and ultimately, our operating margins. We achieved…

Thank you, Gayla. As Cary noted, we completed the first quarter of 2010 with revenues of $572 million. These revenues were both subtly below our revenue forecast of $580 million to $620 million provided during our last conference call due to the reasons noted earlier. During the quarter, we saw stronger shipments for all industry sectors we serve, except for computing where we saw significant decrease. Sequentially, when comparing Q1 2010 to the fourth quarter of 2009, revenues from the test and instrumentation sector were up 26%, revenues from the industrial control sector were up 7%, revenues from telecom sectors were up 4%, revenues from medical sector were up 2%, and revenues for the computing sector were down 24%, again, with the demand weaker than we anticipated. Our earnings per share for the quarter were $0.30, excluding restructuring charges of $1.7 million or $847 million net of tax. The rate restructuring charges incurred during the quarter were primarily related to the closure of one of our US facilities. To provide a more meaningful comparative analysis, we will present certain financial information, excluding restructuring charges, during this call. We will call your attention to the fact that this item is excluded when we do so. In today’s press release, we have included a reconciliation of our GAAP results to our results, excluding these charges. Our gross margin for the first quarter was 7.9%, excluding restructuring charges, which is substantially improved from the fourth quarter of 7.3%. Our operating margin for the first quarter was 4%, excluding restructuring charges, compared to 3.5% for the fourth quarter of 2009. Consistent with our last call, Q1 benefits – benefited from a better revenue mix in addition to improved operating efficiencies. Excluding restructuring charges, net income was $19.1 million, compared to $10.3 million in the…

Thank you. (Operator Instructions) And our first question today comes from the line of Amit Daryanani with RBC Capital Markets. Please go ahead. Amit Daryanani – RBC Capital Markets: Thanks. Good morning, guys.

Good morning.

Good morning. Amit Daryanani – RBC Capital Markets: Hey, just a question on new wins, so $300 million to $375 million, that actually seems like three times the normal amount you guys typically announced. I think you mentioned two large wins. Can you just talk about how much were those two wins alone accounting for that $350 million part? And it sounded like one of them was a transfer from a competitor. Could you confirm that? And are both the wins from existing customers, I guess?

So thank you, Amit. The new wins were quite sizeable this quarter. We’re very happy with the progress we made on that front. And the two new bookings that are sizeable offer – one is a transfer from the competition and is existing in new generations of products that we are bringing up. And the other is a new customer also where we are doing design to production work with a new customer for a new product. So we are very excited about those, on the design to production. And just as a note and comment, you note that those are always longer to bring out into the revenue stream. And then on the ramp up, the transfer from the competition that will come into the revenue stream over the next couple of quarters. The two projects represent about $200 million would be the size – the portion of the new bookings that that pertain to. Amit Daryanani – RBC Capital Markets: Perfect. Thanks. And just on the follow-up, looking at the June quarter guide, it looks fairly aggressive, up 8%. But I'm just trying to think about the $20 million that you guys – $20 million that you left on the table in December. Do you expect to shift that in the June quarter? Have you already done that because if I X that out, then the guide looks like it it's up 4%? That seems a lot more in line with seasonal trends.

Yes, Amit. As I indicated in the notes, the inventory was late to be delivered so you saw some it in WIP, and of course some in raw material. So we do expect that to ship. And we have also considered, in our forecast, the constraints in the supply chain that we would expect to continue to experience. And maybe one of the notes that we did not make is that we still see some challenges in the extended supply chain, and do not expect that the added capacity or the decline in demand would take place in the third quarter. So we expect to see the continued challenges throughout the third quarter, and wouldn’t see easing until fourth quarter potentially. Amit Daryanani – RBC Capital Markets: Got it. Thanks. I’ll see the floor. Thanks a lot.

Great. Thank you. And our next question comes from the line of William Stein with Credit Suisse. Please go ahead. William Stein – Credit Suisse: Thanks. Just wondering, in the shortages, what product categories are we talking about? And are they jumping around from, pardon me, category or commodity to commodity, or skew to skew, or are they more consistent. And what are you doing to try to chase that material down?

Yes, the component shows that the component lead time is pretty – pretty steady. I guess from the type of component we deal with that we do see some shortage, the lead time extended in the semiconductor, semi-component, and the memory and disc plate. And they're called to some dial and some capacitors in the – we had identified those components and the – in the – through our whole planning cycle. And we incorporate the lead time – extend the lead time of the component into our planning cycle, which should give us better visibility with the impact on the lead time extension on revenue. As Gayla said, we'll not anticipate those lead times improve until probably late Q3 or maybe early Q4. Our closest to this is the – further pushed the lead improvement until – from Q2 – in the last call, we'd have about – the lead time should be improved in Q2, Q3 conference, not a quarter out. Our teams are working very hard on the – to deal with the situation, very defined escalation path within our organization. And unfortunately, some of the lead time extended is exceeding – dropping all the lead time. So we just not have enough room to ship the products, but as we have a high inventory level in the first quarter, which gives more flexibility to accommodate the Q2 revenue requirements. William Stein – Credit Suisse: And then a follow-up on the computing end market, if I can, the overall margin was certainly higher than expected with the shortfall in the computing end market. A natural question might be that is this end market perhaps somewhat of a drag relative to corporate average margins? In other words, when we see this come back, should we expect it to drag the margin? And then also related to that, are materials shortages affecting you in an outsized win in the market or is it more demand that hurt the computing segment?

Specific to computing, in fact, the sequencing is typically not as elongated and does not have as many unique components. So the supply chain is typically not an issue in the computing sector. The computing sector in general does not necessarily have lesser margins. It’s typically as a combination of volume and new products, and the complexity of the products. So I wouldn’t generically say that computing has a significantly different margin. However, I would say that we find it, as you’ve seen over last few quarters, a number of new wins that we have were supporting a lot more production in the front-end and design. And so we have, along with driving operational improvements and executionary change, the efficiency we’re gaining is providing results to the operating margins. I would expect that with the increase in the computing programs that we’re ramping, we would see the volume increase and the capacity utilization, along with our operational execution continue to allow us to drive the margins that we have expected and drive towards the 4.5% range as we ramp those over the next few quarters. William Stein – Credit Suisse: Great. Thank you.

Thank you. And our next question then comes on the line of Alex Blanton with Ingalls & Snyder. Please go ahead. Alex Blanton – Ingalls & Snyder: Excuse me, that's Alex Blanton. The win from competitors that you described, could you share with us what the reasons were that you were able to win that business away?

Alex, I think that's always an interesting question to go through. But what you typically find in our business is – clearly being a service business, it's really all about the service the customer gets. So at any point in time, there are parties and players in the industry, maybe from plant to plant or from team to team, that experienced challenges in serving the needs of the customer. And sometimes maybe even become, I hesitate to use the word, so harsh, it's callous, but become a little too comfortable and don’t continue to perform and go over the top for customers. And that’s just typical in the service industry. I think that in this situation, we’re really excited to take on a new customer and to support their needs. Alex Blanton – Ingalls & Snyder: So it wouldn’t matter with price, but just dissatisfaction with the performance they were getting.

Absolutely. I think the industry is very competitive. Actually I don’t think you’re seeing pricing become as much of a differentiator and – because today – simply because the competitive nature of the business is already baked into all of the "business processes". Alex Blanton – Ingalls & Snyder: Right. And did you tell us, I’ve forgotten, what industry that win was, the one from the competitor?

On computing. Alex Blanton – Ingalls & Snyder: In the computing sector, okay. The drop in the computing business, what’s your best guess as to the reason that happened? And what kinds of products are we talking about?

Well, as I looked across what was happening in the industry, I think it's common with the subsets of products that we have, such as server's depot, the nature customers or providers in that sector as well as some of our competitors see that the same nature. And then, the level of decline is more specific to the subsets of products that you're supporting. So just based on the industry results for Q1, combined with the types of products we were serving, I think that was the real driver there. Alex Blanton – Ingalls & Snyder: Well, okay. I better ask you more about that offline. And finally, the component shortages, everyone has talked about that to one degree or another. What is your best guess as to when we might see an easing in that?

At this time, in talking to those in the supply chain that we are seeing a struggle, in essence, we expect to see them bring on the additional capacity in the late Q3 in the Q4 timeframe. There's a delay as compared to what was expected. We had expected the improvements to be seen, in fact, in Q2 – late Q2, Q3 timeframe, which is another factor that we’ve played into our forecast. But with the continued increase in demand, that improvement in capacity did not occur. Alex Blanton – Ingalls & Snyder: So another capacity that you expected three months ago won’t be sufficient. That’s why–

Yes. And again, not our supply – not our capacity, but our supplier’s capacity. Alex Blanton – Ingalls & Snyder: Yes, that’s what I mean.

Right. And so, they have continued to (inaudible) headcount and facilities, and expect – I’d say remedied, maybe that's too strong, but significant improvement to be seen towards the latter portion of 2010. Alex Blanton – Ingalls & Snyder: All right. So the implication here, finally, is that the demand level that the people in the industry are expecting now for the second half of the calendar year is higher than it was three months ago. The demand is accelerating, is that what we’re looking?

Yes. Alex Blanton – Ingalls & Snyder: Okay. Thank you.

Thank you. And we have question now from the line of Sean Hannan with Needham & Company. Please go ahead. Sean Hannan – Needham & Company: Yes, good morning. Thank you.

Good morning.

Good morning, Sean.

Hey, Sean. Sean Hannan – Needham & Company: Just to clarify something around the guidance and I think there were some questions around this a little bit earlier. I'm trying to look at some of the organic progression. And Gayla, I think you had some comments earlier as well on you guys incorporating the component shortage situation. So if we’re looking at your numbers, are you effectively – your numbers for June, are you effectively assuming a similar limitation due to the shortages, so if we didn’t have this issue with the organic guide actually be a little bit higher than what we’re talking about?

I guess the other way to say that is, do I have backlog that I could ship if I could get all that the components I want? And the answer to that is yes. Sean Hannan – Needham & Company: Okay. That’s great. And then if I could circle back on the two wins you clarified, one, the transfer is within the computing space and that is from an existing customer?

No, neither of the new programs is from existing customers. They're both new customers. Sean Hannan – Needham & Company: Okay. That’s helpful. Then the second, what is the segment for that new customer? And sorry, I was dropped off the call a few times. So you may have stated this.

It is computing also. Sean Hannan – Needham & Company: Both computing, okay. And then lastly, is there a way – if you could provide a little bit of commentary around your general level of utilization at this point.

Generally, our utilization rate is in the high 50% range. So you will have I’d say about 58%. So we still have room to grow, and as Cary and I have indicated in our comments that we don’t see a lot of need for additional brick-and-mortar. Although, we are expanding to – our precision technology capabilities further in Asia. But beyond that, don’t see a lot of significant investment required to be able to achieve our growth, goals, and target. Sean Hannan – Needham & Company: That’s great. Thank you so much.

Thank you.

Okay, thanks. And our next question then comes from the line of Brian Alexander with Raymond James. Please go ahead. Brian Alexander – Raymond James: Yes. Can you just talk about if computing isn’t really a drag on overall operating margins and do we expect a rebound there in the June quarter? Why are we not expecting to see any operating margin expansion sequentially per your revenue and earnings guidance? I think you’re expecting it to stay at around 4%.

I think actually, at the midpoint, it's probably at, say, 4.1%, so we are expecting some improvement. But again, when we are fighting the inefficiencies associated with the supply chains, we baked that in. And that has pretty significant impact when you’re not getting the components. And I think as others have likely referred to, you’re getting de-commenced [ph]. So it’s not only the planning parameters that have changed on the extended lead time, we have expected deliveries that don’t show up. So the inefficiencies associated with that, once again, we've tried to bake those in to our planning and forecasting. Brian Alexander – Raymond James: Okay. That’s helpful. And then just on the computing wins, is there any way to be a little bit more specific given that computing is such a broad category that includes servers and storage? And I’m just wondering–

We don’t break down our computing any further than that. And as we get further into the ramp of the production, likely at that time, we'll be able to share a little bit more about this programs with you. Brian Alexander – Raymond James: And then I know one of your large customers is going through a product transition in the computing segment, which affected your March quarter. And I’m just trying to get a sense for what your expectations are about that product transition for your June guidance. Are you basically expecting the computing business to rebound seasonally or are you expecting it to still be weak?

On the customer with – going through transition, it's probably important to note that that's down to low single digits, and is not a significant factor and impacting our guidance or what-not going forward. Brian Alexander – Raymond James: I was thinking of a different server customer that is also going through a transition. But it doesn’t like that's having an effect either.

No. Brian Alexander – Raymond James: Okay. Thanks.

Thank you. And we have a question now from the line of Brian White with Ticonderoga. Please go ahead.

Hey, Brian?

Sir, your line's open. If you have it muted on your end, we’re unable to hear you. Brian White – Ticonderoga: Okay, Cary?

Hey, Brian. Brian White – Ticonderoga: Just on the markets as we look into the June quarter, what areas do you think are showing relative strength?

(inaudible), Brian, we see a – we anticipated all sectors will be slightly up in the second half – in the second quarter. And a lot of strengths definitely come from the telecom side, industrial control, and the tests and instrumentations. And of course, computing will rebound a little bit. Brian White – Ticonderoga: Okay. And the new wins that you announced today, what percentage of those you think will have an impact on this year’s revenue?

I will say probably only 20% at most will be the impact this year, particularly the largest program, the computing program, which will be from design to production. We saw that one will be – start to ship a key production order in Q4 and start to the full production order in Q1 and next year. Brian White – Ticonderoga: Okay. And just finally, on tests and instrumentations, what are you seeing there that cause such a big uptick in the March quarter? Is that a new program or is that just the end market demand?

What we're seeing there is a combination of both, new program wins that are kicking in as well as biometric increases based on end market demand. Brian White – Ticonderoga: Okay, great. Thank you.

Thanks. And we have a question then from the line of Sherri Scribner with Deutsche Bank. Please go ahead. Sherri Scribner – Deutsche Bank: Hi. Thanks. I just wanted to go back to the guidance question again. Sorry to belabor it. But I guess I’m a little confused on the Q2 guidance. It sounds like – so you said $20 million will ship in Q2 that should have shipped in 1Q. And then you said that you expect the component constraints to continue at about the same level. So it almost seems like the guidance that you’re giving with the 1Q revenue that's shipping in 2Q and the component constraints, that sort of washes each other out. And it seems that the guidance is generally for – the guidance should be pretty much what you expect to see with those two canceling each other out. Is that the right way to think about it?

Yes, I think that's correct to say it's a net from gain for the constraints on the back end and the opportunities from the front end as a result of constraints from the beginning. Sherri Scribner – Deutsche Bank: Okay. So then, I mean the guidance seems a little bit better than typical seasonality, which I know that Amit commented on. So that strength is coming from the segments that you mentioned testing, telecom, and industrial controls and some recovery in the computing segment. Is that–?

Yes, so Sherri, I think that following on Brian’s question. I should have jumped in there. But while some of the programs that we’ve recently announced today will not ramp, what we are seeing is the impact of some of the previous wins beginning to ramp. And we saw several of those that will begin to ramp into the next two to three quarters. Sherri Scribner – Deutsche Bank: Okay. That’s helpful. Did you have any greater than 10% customers in the quarter?

I believe we had one computing customer right around the 10%, 11% range. Sherri Scribner – Deutsche Bank: Okay. And then in terms of the inventory levels, Cary, I know you had mentioned that you feel like inventories are about – or basically okay where they are now. You guys have had a pretty big inventory build over the past couple of quarters. You’re up about 8% sequentially in the fourth quarter, and then up 15% in the first quarter. Is the implication that inventories would stay relatively flat now that you’re comfortable with the levels? Or do you think they'll grow in line with the revenue growth?

Sherri, this is Don. I think you – certainly, the constraints that we talked about, we look at the inventories from terms, and then we ended up at 5.8%, which is surely below our target. I would anticipate next quarter to try to get back over 6%, 6.5%. So we're that (inaudible) in terms of real dollars we'll see as still a pretty bad range. But with the supply chain constraints up there, it's still a little difficult to predict. Sherri Scribner – Deutsche Bank: Okay. And then in terms of 4.5% operating margin guidance, have you guys given a new – given a revenue target of where you think you can reach that? Clearly, you’re ahead off your original plan, so just trying–

That's a difficult program. If you can recall, in the last call, we talked about the $600 million would be 4% and 5% – 4% operation margin. And that’s how – our new term goal in the last quarter. Now, our new term goal for operating margin is 4.5%. It really depends on mix as well as the utilization of the factory. I think in the note, the $675 million, we should be there. And of course, it be – steady going up from this point to there. But $675 million, we should be in the 4.5%. Sherri Scribner – Deutsche Bank: Okay, great. Thank you.

Thank you. And we have a question then from the line of Jim Suva with Citi. Please go ahead. Jim Suva – Citi: Thanks. Looking at your program ramps, which look extremely strong, and I think if I heard you correctly from the commentary from Gayla and Cary that it sounds like some of that entering into this year, maybe 20% of it. But it sounds like most that's going to ramp into next year. Is it fair to say that next year, for you guys – and I know you don’t guide really far out. It looks to be an extremely healthy year with these very large programs. And given the size of them, can you just get them running with the same type of operating efficiency and margins? Or since they're so big, should we expect a little bit of some yields or learning curves given just the magnitude of how impressively big they are?

Jim, we clearly are planning to hit the ground running and drive efficiencies there. I think as with all – and in fact senior organizations, you're driving continues improvement and lane initiatives for efficiency. So we are seeing a large number of new programs that we’re excited about a lot of ramps. But there's always some fall off, some cannibalization, some unexpected leakage, whether it's customer forecast, a competitive nature of their industry. So I guess, what we don’t see, we don’t know. And as we get closer into the – to next year, we’ll see the downside. I think the upside we see that it's on what we’re booking. What we don’t see is markets, what industries will suffer from (inaudible) consequences of the market environment. Jim Suva – Citi: Just a housekeeping question, it’s 15% tax rate what we should look at going forward?

Yes, that's the guess. I think we should be looking forward, yes.

Unfortunately, that's a problem we have with having such a high level of new product ramps and a strong performance in our non-Asian site specifically. We are seeing good opportunity growth, but the tax rate is very high. Jim Suva – Citi: Thank you very much, everyone.

Thanks. And we have a question then from the line from Eric Ranadi [ph] with Banc of America/Merrill Lynch. Please go ahead. Eric Ranadi – Banc of America/Merrill Lynch: Hi. Thanks for taking my question. Gayla, I just wanted to circle back on the comment you made when you talked about with respect to your computing business down 24%, 25% sequentially. If you could just clarify what drove that. Thank you.

Again, I think it’s the underlying marketplace primarily. And it was unexpected in comparison to what our customer forecast was. So it wasn’t – our forecast independent of our customers that was based on customer forecast that our demand shortfall was there. So with any more (inaudible), we grow after specifically as the customers because they really don’t understand the dynamics of the computing spend in Q1. I believe that there was some consumer spend that took place. But I think on the higher end, the spend did not accelerate in Q1 as much as we've anticipated. But beyond that I don’t have details. Eric Ranadi – Banc of America/Merrill Lynch: Okay. Thank you very much.

Great. Thank you. And that does conclude our question-and-answer portion of today’s call. I do like to turn the call back over to the company's management for any closing comments.

Well, thank you for joining us today. We'd be in the office to answer any questions you have. And thanks again. Thank you for your support.

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.