Ladies and gentlemen, thank you for standing by; and welcome to the Benchmark Electronics Third Quarter 2010 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’d 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 third quarter of 2010. I am Don Adam, CFO of Benchmark Electronics. Today, Cary Fu, our CEO, will begin the call reviewing the current business environment in the third quarter and looking forward. Gayla Delly, our President, will then discuss our activities and performance for the third quarter and our outlook for the final quarter of 2010. I will then follow with a review of our financial metrics for the third 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 conference 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 expectations and that actual events or results may differ materially. We’d 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’s and S4 filings, quarterly filings and 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 will turn the call over to Cary.

Good morning. Thank you for joining our call today. Once again, the third quarter of 2010 presented many challenges to the Benchmark; and once again, our teams were able to step to the plate and execute for our customers. We’re very happy with our solid results. I’d also like to take this opportunity to thank our team for their excellent performance for the quarters. Revenue for the third quarter of 2010 was up 20% from prior years and up 4% sequentially. Quarter three EPS were up 41% from prior years and 15% sequentially. Compared to the year-to-year period, 2010 revenues were up 19% and EPS up 64% compared to 2009, excluding special items. Our team met and exceeded the key metrics we set – operational metrics we set for the quarters. Our team did this given the continued but improving supply chain challenge and the continued mix challenges from our customers, among other things. As reflected in our Q4 guidance, we are seeing a softness in the demand from our customers. Related to computing sectors, with the exception of one customer, we have seen a broad-based decline in demand, which is including the finalization of a production from a former major customer. To a lesser extent, we have also seen weakness in the demand from our telecom customers. Related to the supply chains, this seems to be getting better, although there continues to be a long lead-time part in place. We will anticipate its continuing improvement in supply chains throughout Q4. As noted in the press release, one of our key initiatives has been the expansion of precision technology service. This has been progressed well and provides further diversification of our customer base, strengthening our business model and enhancing our margin potential. We are very excited about the success of…

Thank you, Cary. We were pleased with our operating metrics for our third quarter. These included increased revenues, EPS exceeding our guidance, reduced inventory levels, consistent operating margins, and improved cash flows for the quarter. As Cary mentioned, the third quarter resulted in year-over-year and quarter-over-quarter increased revenues, along with increased EPS which exceeded our guidance. This is due to our consistent operating margins, plus favorable impact from FX and a favorable tax rate. We were able to reduce our inventory levels as planned and had a positive cash flow of $14 million for the quarter. During the third quarter, we booked 10 new programs with current estimated annual revenues of 100 to $117 million. These bookings were in the industrial sectors we serve with both new and existing customers. These bookings are of course subject to timing risk and the ultimate realization of estimated revenues. Our teams have been supporting the new programs we booked in prior quarters, and specifically related to two of the largest programs that we announced earlier in the year, we see these programs progressing. However, we do see a slower ramp than originally anticipated. One program has been slower to ramp with the overall market demand situation, and the other program has had incremental demand in the new production / introduction phase. This program is expected to be delayed by approximately six months. Even with these new program ramps, and some negative headwinds from FX variations during the quarter, we have maintained our operating margin at 4% for the quarter, excluding special items. As Cary noted, we continue to focus on driving efficiencies to expand our margin through incremental services and through our continued expansion in supporting our various industries. As noted earlier, we see some indication of weakness in demand levels for the fourth quarter. Based on this and somewhat slower progression of our new program bookings ramping to volume, which were booked at the beginning of 2010, we expect Q4 to be relatively flat in comparison to Q3. To give you further information, we see forecasted increases in our medical and test instrumentation sectors for Q4. In Computing and Telco, we see customers exercising greater cautiousness in their forecasts. Based on these factors, we expect estimated revenues for the fourth quarter of 2010 to be in the range of 590 to 630 million; and the corresponding earnings per share for the fourth quarter to be in the range of $0.33 to $0.37, excluding restructuring charges. Now, I’ll turn it over to Don to discuss our financial metrics for Q3.

Thank you, Gayla. As Cary noted, we completed the third quarter of 2010 with revenues of 614 million, which was a 20% increase over prior year and a 4% increase over the second quarter. These revenues were in the middle of our revenue guidance of 590 to 630 million provided during our last conference call. On a quarter-over-quarter basis, we saw stronger shipments for all the industry sectors that we serve. Sequentially, when comparing the third quarter of 2010 to the second quarter, revenues from test and instrumentation were up 10%, revenues from the medical sector were up 7%, revenues from industrial controls were up 6%, revenues from the computing sector were up 2%, and revenues from the telecom sector were up 1%. Note that for Q3, the revenues from the medical sector were up as anticipated and noted during our last call. We expect to see continued growth from this sector in the upcoming quarter. Our earnings per share for the quarter were $0.38 excluding special items and $0.37 on a GAAP basis. Note that we had minimal restructuring charges in the third quarter. To provide a more meaningful comparative analysis, we will present certain financial information excluding special items during this call. We also call your attention to the fact that these items are excluded when we do so. In today’s press release, we have included a reconciliation of our GAAP results or the results excluding these special items. Our gross margin excluding special items for the third quarter was 7.8%, which was slightly below the prior quarter. Our operating margin for the third quarter was 4% excluding special items, which is consistent with both the first and second quarter of this year. Net income was 23.4 million for the third quarter of 2010 compared to 17.4 million…

Great. Thank you. (Operator Instructions) And our first question today comes from the line of Amit Daryanani with RBC Capital Markets. Please go ahead.

Just a question on the guide. I mean it sounds like you guys are attributing the softness to the compute segment, when you look at most of the large OEMs in there, they’ve actually guided for normal seasonal uptick in the December quarter. So I’m wondering, are you just seeing some maybe inventory adjustments on the compute side? Or are you seeing some impact from some of the share losses over there?

Amit, after we discussed about it, if you look at the guidance we provided and look at the demand from our customers, we saw a really broad-based decline in the demand from our customers, except one customer, okay. And also included in our guidance is a finalization of a – based upon one of our former major customers. So, look at the total demand for the computer side of the business is really kind of broad based. And of course, we are not as involving in the server business as much in the past, and we tend to be involved in a different type of business mix. And that’s what the demand is showing from our customer base.

All right. And then the two compute customers that you guys talked about, sounds like one of them is getting pushed out by six months. But I’m curious, is the total deal – the ramp size still intact? I think the number was 250 to 275 million initially?

The ramp size is still in place, and it just got pushed out because of the challenging introduction. As we discussed in the past, this is a brand new product introduction, and they delayed it and I was not surprised with the delay and was a little bit surprised by the time of the delay. And we’re still seeing the deal’s impact, yes.

Thanks. And our next question comes from the line of Alex Blanton with Ingalls & Snyder. Please go ahead. Alexander Blanton - Ingalls & Snyder: Thank you. I’d like to delve into the weakness that you saw in fourth quarter demand. Would you be able to elaborate a little bit more on what markets those are and what the reasons might be, what your customers are saying?

Alex, as I mentioned in my notes portion, I believe, that we’ve seen – tagging on to what Cary said – in computing, we see that broad based across a number of customers, don’t have all of the specific data points to identify what the underlying causes are. Some of them are supporting governmental type programs, which is probably not unusual, to have a September quarter of strength and then not as much strength in the first quarter. Others potentially could be inventory. Others yet are programs being wrapped up. And then the timing of new ramps. So, I don’t think there’s one specific underlying fact that we can easily point to. It’s quite a few moving parts in the computing sector. Moving to Telco, that one sees a bit mixed indications from customers, probably specifically into the marketplace that they’re serving. So we see approximately actually a 50/50, where overall we see a slight demand drop in Telco, but with half of the customers showing strength for Q4 as compared to Q3, and about half the customers showing a decline. In medical, we see strength overall in the ramping of new programs. So expect that to be strong for Q4. As well, see strength in industrial controls and test and instrumentation. So the primary factor in terms of overall revenue because of its sheer size is probably the weakness in computing, specifically. In general, I would say we do see more customers hesitant. That probably is a result of two to three key factors. One, as we indicated, the supply chain is beginning to strengthen. With that, customers are not having to protect their place in essence with their forecast. So they feel a bit more comfortable adjusting their forecast upwards if they need to further into the quarter. Whereas when the supply chain was so tight, they would have to have indications much earlier in order to be able to secure and feel confident in being able to meet the demand of their end customers. And second of all, it’s probably the overall economic environment, that customers are not quite as comfortable. And if they don’t need to have that place in line, they’re not going to have that inventory in place. Overall, I think we see our customers are still very cognizant of their inventory levels; and we have not seen a buildup in inventory levels. So for that, I think we are seeing good, strong behavior in recognition of the opportunities in the marketplace. Kind of a long-winded – hopefully that provides a little bit more color, so that you can understand the variety of markets we’re participating in. Alexander Blanton - Ingalls & Snyder: Excellent. Well, thank you. What you’re saying basically is that the supply-chain disruptions and shortages of the components earlier in the year caused people to order somewhat earlier than usual, and now that’s easing up. That’s one of the reasons that it’s not really necessarily an end market phenomena?

Well, I think it’s probably somewhat of both. We probably will know better as we exit Q4. But we clearly see that customers had to expand their lead times and their systems, as did we, in reaction to the supply chain. And as the supply chain is able to have some components contract in lead time, the reversal is taking place, the ability to shorten that lead time window.

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

Cary, when we think about the computing market, do you think any of the weakness in the fourth quarter is due to lost market share?

As I said, we have one product with one major customer finalized. We have finalization of an engagement with one major customer. Other than that, no.

Okay. And when we think about the degree of decline in the fourth quarter, what are we talking about, ballpark? Are we talking mid single digit down in computing? Or are we talking double digit down in computing?

Mid single digits, yes.

Okay. And just finally, you talk about recent cautiousness with customers. How recent have you seen forecasts come down?

It’s really approaching end of Q3, early Q4. We usually get a new forecast from our customers toward the end of the quarter or the beginning of the quarter. And throughout Q3, we saw a pretty solid demand and we saw the – toward the end of Q3, we saw the adjustment coming in.

And when your customers think about 2011, maybe they’re not giving forecasts, but what are their general thoughts on 2011?

It’s still – it is very conservative and very cautious at this point in time. Of course, we have not given guidance for 2011 yet, and it’s really not a significant behavior change since the – for the last quarters, last couple of quarters. And I think everybody still has in mind all the economic conditions. And actually they’ll be cautious, is still the word we use, to describe the behavior of our customers at this point in time.

Thanks. And our next question comes from the line of Jim Suva with Citi. Please go ahead.

Thank you and congratulations, everyone. A question shifting away from the computing sector and more focused on the company wide. When you look at the new business wins as you just communicated, and compare that say year over year – because I know there’s seasonality from quarter over quarter, but year over year – it looks like the past two sequential consecutive quarters were both down year over year, the June quarter and the September quarter. Can – and one would think that the business environment should be improving now compared to a year ago. Can you help us understand about those new program wins and why year over year they’re slowing and how we should think about that for the company’s outlook?

I guess with the new program booking is really the timing. We talked about our last quarters and in the way we see a lot of the opportunity in the pipelines and the assembly program did not get closed. And a lot of visits on our sites and a lot of interesting – and the reviews, the quotations with the customers – a lot of activity, just that somehow we’re not able to close the businesses. So there’s not an indication that business has softened, it’s just the timing of the close of the project we’ve been working on.

I think the other point of interest here is as we get involved in greater levels of design and engineering support for our customers, we will often have those programs announced as a design win and probably need to identify a better way to highlight when we see those ramp to production, because as you might appreciate, in the design phase, the program is definitionally a smaller win for us with an unknown opportunity when it ramps to production. So we probably will need to begin trying to highlight some of those we will not see as new wins, because they’ll be follow-on as a segue from engineering into production, and as we ramp those into production. But we are seeing more opportunities where we are working with our customers on the design phase of programs. And so inherently, those are smaller wins.

Great, thank you. And a quick follow-up for either Gayla or Don. On the restructuring, can you lay out the timeline of when we think restructuring will be finished for the company? I think you mentioned some more restructuring in the December quarter.

That should be completed in the fourth quarter, is our projected timing right now.

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

Hi, thank you. On the last call, you noted that your guidance for the third quarter was baking in some conservatism, I think you said there you were giving the forecast something like a 5 to 10% haircut. And the quarter came in roughly in line with where people were expecting. I’m wondering, was there some weakness during this quarter and where was that weakness? And is that something that you started to see earlier, that is leading you to give more conservative guidance for the fourth quarter?

I think in terms of the – I don’t think we saw – in terms of the quarter, we didn’t see any weakness in terms of the impact on revenues for this quarter. I think as Cary and Gayla mentioned, in terms of the cautiousness we’ve seen from the customers, it really looks out to Q4, but really no impact to Q3.

I think the program – new program ramps, Sherri, is really where we would have expected more revenue contribution to have begun to filter into the model, whereas we’re seeing those ramps elongate. So that was really kind of what we were indicating in our guidance, because it is somewhat of an unknown. We anticipated those to come in, but took a conservative stance in guidance. And rightfully so, because as we see and as Cary indicated, there’s a bit of unknown on the timing of those.

So the new programs that you expected to see some of that in the third quarter got pushed out and it sounds like they’re also being pushed out from the fourth quarter a little bit further. Am I understanding that right?

Yes.

Okay. And then in terms of thinking about the fourth-quarter guidance, how much of that roughly is related to more conservative expectations from your OEM customers? And how much of that is related to the push-out of these new programs? Because I thought from the last call, it sounded like the fourth quarter you would see a pretty decent ramp of new programs, I thought it would be more than one program. So I’m trying to get a sense of what that balance is.

I don’t think I have the breakdown of that. I think it’s the combination of those. Generally, we would expect to see more strength in unit level demand increases from customers than we’ve seen, as well as the new programs. I don’t have a percentage to say how much the impact of those are. Don, if you have any insight into – typically you would see more strength – specifically in Computing and Telco is typically where you would see the strength, and in fact that’s where we’re seeing the hesitation. And then how does it actually work out? Again, when we are able to exit the quarter, we’ll see better whether that was through prudent hesitation on their part, or it is a reaction to the availability of components in the supply chain.

Okay. I guess I would’ve thought from the new programs you would have seen a little more uptick in the fourth quarter, but we’re not seeing that. So it sounds like it’s a balance of at least one new program being pushed out and then also weaker demand from the end customer?

Yes.

Yes.

Thanks. And our next question comes from the line of Brian Alexander with Raymond James. Please go ahead.

Yes, maybe a question on operating margins. It looks like over the last few quarters and implied in your Q4 guidance, we’ve kind of flattened out – plateaued, if you will, around 4%. Revenues climbed above 600 million a quarter from earlier in the year where it was around 570 million. And I think you previously talked about a goal of getting to 4.5% operating margins once you achieved 2.7 billion in revenue. So that implies about an 8% contribution margin relative to where you’re probably going to end up in 2010. And I guess my question is, do you still feel like that operating margin goal is achievable and those levels of contribution margins are also attainable?

I think what we’ve – Brian, this is Don. What we’ve said is, and I think it still holds true is, we feel comfortable with a 4.5% operating margin at roughly a $675 million revenue level per quarter. So in terms of this quarter, I think slightly impacted it. We had to do program ramps that didn’t shift that we had some costs associated with, so that was some headwinds to the model. But we still hold true in terms of operating margins of 4.5% at the $675 million range. And then margins were slightly impacted to a lesser extent by some FX as Gayla mentioned in the call. But again, 4.5% is a target we’re still looking at those revenue levels.

And just remind me, Don, what would be the – so let’s say we end this year at 4% roughly, I think that would be consistent with your Q4 guidance. So that 50 basis point improvement to get to 4.5%, how much of that would come from gross margin and how much would come from OpEx leverage?

Probably a combination. Gross margin, primarily.

Okay, primarily gross margins.

Yeah.

So getting north of 8%.

Correct.

Okay. And then just back to the revenue guidance, I know there’s been a lot of questions around this. But again, the magnitude of the weaker demand effect on your guidance – so if you’re guiding roughly flat sequentially top-line for Q4 versus most expectations that were mid-single digits to high single-digit growth, what’s the split between the demand effect on that and the program ramp effect on that?

Well I think as Gayla just mentioned, it’s somewhat difficult to – again, as you step back and you provide guidance, the new program ramps are always – it’s always a challenge to forecast those. But again, there is a – certainly the delay in one of the programs did impact revenues for the fourth quarter. But in terms of the demand slowing ramp, I don’t have that number in front of me. Is it 50/50? I don’t know.

What’s the size of the program? Sorry if you said this earlier. What’s the size of the program that got pushed out six months?

Those are the projects – the project we talked about should be – is the one computer project, it’s north of $200 million revenue. And that revenue is supposed to be scheduled coming in Q1, start in Q1. And now it will be in third quarter.

Okay. So roughly 50 million a quarter got pushed out?

Yes.

Great. Thank you. And our next question comes from the line of Sean Hannan with Needham & Company. Please go ahead. Sean Hannan - Needham & Company: Yes, good morning. Just a question – I realize that you’re not providing ‘11 guidance. But considering some of the flattish outlook and some of the topics we’ve talked about for December – and then, when we consider a lot of these programs that could ramp in 2011, including some of these meaningful programs around computing, can you help us to think about how you anticipate almost a ramp profile that may layer in for the different quarters in 2011, at least to the extent that should be logical for us to think about?

That’s a good question. Of course, as we indicated, 2011, we have not given the guidance yet. And we’re still working on the overall 2011 budget and the revenue projections. Looking from the trend standpoint of view, we’ll probably see a significant pickup in the second half. And based on the pace of the ramping, in the – at the particularly major computer customer – projects will be pushing into the second half. And from quarter to quarter, I’m looking at the detail yet. Did I address the question you had? Sean Hannan - Needham & Company: Sorry, I was on mute there. Is there any reason, Cary, why we shouldn’t anticipate at least continuation of some year-over-year growth in the first half then as well?

For the year-to-year, definitely, yes.

Great. Thank you. And we do have a follow-up from the line of Amit Daryanani with RBC Capital Markets. Please go ahead.

Thanks. A couple of questions. Do you guys have any customers of over 10% of revenues in the quarter?

Yes, we had one customer over 10.

And could you say who it was or what segment?

It was computing, and it was the...

IBM related....

IBM-related product.

Got it. And then the tax rate was down around 8.5%. Is that kind of the number we should think about going forward? Or how should the forward tax rate look like?

For fourth quarter, 12%. We had a one-time benefit this quarter.

Got it. And then just on the precision technology part of the business, could you just talk about kind of what the revenue run rate and the margin dynamics are today for that business? And as you’re ramping it up further, how do you see that business shake out over the next three, four quarters?

Well, we spent a lot of efforts to invest into this particular capability. And of course, the margin of this business is better than our traditional business. We anticipate in 2011 we’ll be reaching about 10% of our revenue for this business. And it’s – of course, it had to be incorporated into the new facility we’re going to build in Asia in Q4 this quarter, for this year. So it’s started slowly ramping, and it definitely makes a contribution. Of course a lot of expenses were involved with trying to ramp these projects up.

And Cary, this is the fiscal year ramping up in Malaysia I believe, right?

That’s correct. In Penang.

Great. Thanks. And we also have a follow-up from the line of Sean Hannan with Needham and Company. Please go ahead. Sean Hannan - Needham & Company: Great, thank you. Just quickly, what was utilization for you in the quarter? And can you highlight some of the areas of your business or facilities or geographies that may be above or below this level currently?

We’re in the probably highest 60% range overall. And I think it was pretty well balanced. I don’t see that we have huge laggers or huge overutilization rates. I think we’re pretty well balanced across most of our facilities. And no unusual patterns, I don’t think.

Thank you. And at this time, we have no further questions in queue. Please continue.

Thank you for joining us, and we’ll be in the office if you have any further questions or follow-ups. Thank you.