Good afternoon, and welcome to the Flextronics International Third Quarter Fiscal Year 2014 Earnings Conference Call. Today's call is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Kevin Kessel, Flextronics Vice President Investor Relations. Sir, you may begin.

Thank you, and welcome to Flextronics' conference call to discuss the results of our fiscal 2014 third quarter ended December 31, 2013. We have published slides for today's call that can be found on the Investor Relations section of our website. With me today on our call is our Chief Executive Officer, Mike McNamara; and our Chief Financial Officer, Chris Collier. Today's call is being webcast live and recorded and contains forward-looking statements, which are based on current expectations and assumptions that are subject to risks and uncertainties, and actual results could materially differ. Such information is subject to change and we undertake no obligation to update these forward-looking statements. For a discussion of the risks and uncertainties see our most recent filings with the Securities and Exchange Commission, including our current annual and quarterly reports. If this call references non-GAAP financial measures these measures are located on the Investor Relations section of our website, along with the required reconciliation to the most comparable GAAP financial measures. I will now pass the call over to our Chief Financial Officer, Chris Collier. Chris?

Thank you, Kevin and for those joining us we appreciate your time and interest in Flextronics. Let us start by turning to slide three for our third quarter income statement highlights. We generated $7.2 billion in revenue which was well above the high end of our guidance range of $6.5 billion to $6.9 billion, with every business group exceeding our expectations. Our revenue increased over $770 million or 12% sequentially driven mostly by a robust 35% sequential growth in our High Velocity Solutions or HVS business and further supported by 5% sequential growth in our High Reliability Solutions or HRS business group. Looking at our revenue on a year-over-year basis it rose over $1 billion or 17%, which was mostly driven by strong double digit growth of 57% in HVS and 15% in HRS, offset by a single-digit decline in our Integrated Network Solutions or INS business. We continue to expand our adjusted operating income, increasing it $28 million or 18% sequentially to $187 million. This was at the high end of our guidance range of $160 million to $190 million. After accounting for $13 million of stock-based compensation our GAAP operating income totaled $174 million. Our adjusted net income for the third quarter was $164 million which was up $30 million or 22% sequentially. This adjusted net income translated into adjusted EPS of $0.26, which reflects a sequential increase of 18% and it exceeded the high end of our guidance range or $0.21 to $0.25. Lastly GAAP EPS was $0.23, up 21% sequentially. Now turning to slide four you will find our trended quarterly income statement highlights. Our adjusted gross profit dollars rose $30 million or 8% sequentially to $400 million. There are a few levers behind our gross profit dollar improvement worth highlighting. First we saw improved utilization…

Thanks, Chris. The December quarter marked the third consecutive quarter of expansion for the key metrics of our business. We delivered strong sequential growth in revenue, operating profit dollars, net income and earnings per share. We also expanded our adjusted operating margin percentage even with HVS programs responsible for most of our revenue growth this quarter. Free cash flow was very strong at $614 million and we are now comfortably going to exceed our fiscal 2014 free cash flow target of approximately $400 million by over 50%. The overall macro environment remains stable but we still see a fair amount of uncertainty and cautiousness across our customer base and we expect this challenging environment to persist in calendar 2014. We have grown our quarterly revenue over 35% from our March quarter and this growth has created efficiency challenges for us and in some cases incremental cost as we ramp our system. As we exit our March quarter we are largely through these ramps and we anticipate a stable year ahead. Our focus as a company in this stable environment will be to drive productivity, cash flow and earnings per share growth. We are taking targeted actions to realign our corporate overhead. We will invest $30 million to $35 million to optimize our cost structure with most of the targeted actions focused on reducing SG&A expenses. We expect this will allow us to reap significant productivity in the administrative portion of our cost structure without degrading our operational capabilities. Much of this productivity is on the back of significant investments in our India shared-services center which added over 1,500 people in the last 12 months. The underlying payback on these actions is very quick and we expect to be realizing a quarterly SG&A savings of $50 million effective the June quarter.…

Thank you. (Operator Instructions). Matt Sheerin with Stifel your line is now open. Matthew Sheerin - Stifel, Nicolaus & Co.: Yes, thanks and good afternoon. Mike I am wondering, I am hoping that you can comment on reports that just hit the wires on Lenovo acquiring Google’s handset and the Motorola handset operations, how that might impact your relationship with Google in terms of manufacturing and your relationships with Lenovo?

Yeah, so first of all we don't want to speculate what may happen or may not happen and because obviously this is some news that you have probably just seen recently. What I can tell you is our original intent with the whole Motorola deal, which I think we have repeated quite frequently was to build a broader relationship within the Google ecosystem where we believed over time we would find a lot of different disruptive hardware products coming out that we would be able to participate in. We think that’s intact. Our relationship with Google is very good. We’ve been ramping programs and we think that remains intact independent of any future direction of Motorola. So we believe that we’ve been quite successful making the transition to build a broader relationship. As it relates to Lenovo we have a very good relation with Lenovo. We received this Supplier Quality of the Year award last year. We do work with them today in Europe, China and the U.S. and the relationship at executive levels is also very, very strong. So as relates to Lenovo we look forward to working with Lenovo, to the extent that is where the business ends up and we’ll look to build on that relationship which is already pretty strong and pretty broad. And I almost have same comment as it relates to the IBM announcements that came our earlier. We’ll look to have this be an opportunity for us to grow. So I think the question is a good one and in both these companies, both Google and Lenovo we have very good relationships. Matthew Sheerin - Stifel, Nicolaus & Co.: Okay, great. And just as a follow-up, in terms of the restructuring it looks like it’s focused all on SG&A and not any operational reductions and headcount reductions. Are you happy with the footprint that you have in terms of the people in place and in terms of the leverage going forward where the cost cutting is really just focused on expenses at this point?

Yeah, we actually are very happy with it. We’ve made some adjustments just over a year ago with our footprint. We think it’s the right footprint. You can see some of the benefits as it rolls off into Multek where we made some very specific comments around their improved profitability and operating performance, largely on the heels of that restructuring. As we look forward we had a very, very complicated year this last year. We did have a lot of ramps that we talked about. We closed some factories. All those things carry with it double expenses from an administrative standpoint. So we are kind of beyond those expenses now and it’s the time for us, as we look forward we see a much more stable business, stability is, we are looking forward to and it’s a good thing because it allows us to drive productivity. So we are in the mode of driving that productivity very hard particularly as it relates to the administrative place because we don't believe we need to take down our operating footprint and we don't want to degrade any of our operating capabilities and we are going to drive hard on administrative efficiencies. So you are going to see that. And the other thing I'd like to add is, is as you can see the return on investment and how fast that flows through will be very, very rapid. Matthew Sheerin - Stifel, Nicolaus & Co.: Okay. Thanks a lot, Mike.

You are welcome.

Thank you. Our next question comes from Shawn Harrison with Longbow Research.

Hi. I wanted to follow-up on the cash balances for excess inventory. If you could maybe talk about what market verticals, kind of affecting those cash balances and just any more detail on that, because I guess that's the first time I've heard of that large a number from you guys in a while?

Hi, Shawn this is Chris.

Hey, Chris.

So let me frame it up in a certain way here, probably not going to get around the specifics around this segment or customers that contribute to that. But so inventories primarily are our customers’ responsibility and we generally procure based on their demand. So what we saw is a handful of customers that needed to provide us with an appropriate level of compensation because we are carrying elevated levels of that inventory for them. And so those levels are beyond contractual levels that we had established. So in response we secured around $700 million of economic relief. And we're really pleased with the ability to achieve that and secure that. We view these events as creating more of an economic consignment of these goods where we still have title but we've been fully reimbursed economically. So I think it’s important to understand that we don't have any incremental risk with these higher levels of inventory but rather think of it as still having us bearing custodial risk associated with this. But as you think about how it impacts cash flows, essentially we supercharged this current quarter with advances. And so we played a little bit with some of the timing, tapping some of our future cash flows a little bit in advance here. So the impact to cash flows going forward is going to be relatively neutral as the release of the liability aligns with the sale of inventory. I'd probably expand and just say that we would have expected a greater cash flow in our Q4 and but now we are only going to see a modest generation as we've already received some of that cash flow in this period. And so I think just going back we are seeing modest free cash flow in Q4 well in excess of where we had anticipated free cash flow of the year at $400 million. So we are pleased with the ability to engage with the customers and manage net working capital this way.

Chris, I mean is it one sector, is it multiple sectors if you are not willing to elaborate on just kind of…?

So it’s not just one sector, it is multiple sectors and it’s a handful of customers. So it was unusual, that's we've called it out and I think that's the color I can give you.

Okay. And just a brief of follow-up on kind of the Motorola-Google relationship, being at a 10% customer I mean how much did Google represent of that. Just trying to get an idea of how much you have been able to kind of integrate yourself with Google so far, if you can comment.

Yeah. So as we stated in the prepared remarks the Motorola was 10% customer for the quarter, 10% plus. How I would characterize the Google relationship is that it’s continuously emerging, as we continuously expand with them. And it’s now -- it’s entering into a top ten customer for us.

Okay, on its own.

On its own, yes.

Got you, very helpful. Thanks so much guys.

Thank you.

Thank you. Our next question comes from Sean Hannan with Needham & Company Sean Hannan - Needham & Company: Yes, can you hear me?

Yes. Sean Hannan - Needham & Company: Okay, great, thanks. So just see if I could follow-up a little bit around the PCB and the power business. Just trying to see if I can get a sense of little bit more on the trajectory that you see this calendar year and what's specifically driving that, if you could elaborate on that a little bit, Mike that would be helpful? Thanks.

Yeah. So we closed two factories, one if Brazil and one in Germany. Our remaining factories are in Minnesota and in China with about 80% of that revenue being in China and the revenue in Minnesota being highly specialized Flex Circuit business that's predominantly for aerospace, defense, automotive and kind of the high reliability group customers. So this efficiency allowed us to reduce our G&A pretty substantially and the focus to just only have two operations with 80% in one location allowed us to really focus on efficiency and productivity. We've changed -- you asked for power or Multek? Sean Hannan - Needham & Company: You just spoke both.

Yeah, both. So we changed some of the management team and we beefed the management team simultaneously and at the same time our revenue growth has actually been quite impressive. So we are outperforming the average revenue growth in the industry and the pace of the industry we're actually outperforming that. Part of that outperformance is on the back of our increased revenue that you are seeing in the EMS biz, a lot of that has pulled through. So we do a lot of work with local business, we do lot of other customers that have been ramping. So it's allowed us to get much higher utilization in the factory. So it's just a little bit of everything but everything put together has put it into a trajectory that we are very happy with it. And it's very close to achieving even our target profitability at this point. Sean Hannan - Needham & Company: Okay. And I think a lot of that move is pointing through to profitability and that's helpful. I think you folks have been really directing us toward that improvement for a bit. I was more pointed towards the business activity. It sounds like you answered part of that in terms of you got flow-through coming through from the EMS side and didn't know if there are any other contributors?

Not really, it's -- I’d not call it, pretty broad based in terms of what's going in there. One of the other things I mentioned a couple of EMS programs that are flowing through like Google and Motorola but the other thing that we're getting a lot of traction on is growing pretty rapidly in the variables business. We probably have some of the -- and part of the upside to our $7.2 billion, a lot of that was built on the variable strength. We have very, very strong position in multiple industry leading customers. Those products make heavy use of Flex Circuits and we did Flex which is exactly what the Multek operations do. So we additionally as we've added to our product innovation centers here in Silicon Valley we've also added a whole technology group that's focused on providing solutions using Flex and rigid Flex which is somewhat unique to Flextronics. Very few companies have both the rigid and the flexible in one location and it allows us some additional capabilities and some additional differentiation. And by engineering that into some of these industry leading variable companies has provided a lot of revenue upside as well. So there is just a lot of dimensions. I would call the growth very broad-based and even across different kind of product categories, even within Multek. So that's why I think we're pretty pleased, we kind of view the operational restructuring done, we view the management changes that we made done, there is a broad base of revenue coming into it. We would expect to outperform the industry again this year in terms of revenue growth based on the forecast we have and so we're pretty pleased with it. You also asked about power and power does not -- any real new news. We continue to do very, very well, we have satisfied with the performance for well over a year. We've doubled down on that business by engaging in the Powermat, not doubled down, but we've increased our penetration into that business. We have the highest technology in the mobile charging business today. We have by adding the Powermat relationship we want to make sure that we maintain our technology leadership within mobility as it relates to charging mobility, we think mobile charging is an important feature of what the future will -- that we will need for the future. And we think Powermat’s a great power to -- a great partner to take us to the next level. So kind of a lot of dimensions on both those different businesses and so we're actually bullish on both. Sean Hannan - Needham & Company: Great, thanks for all the color Mike.

You're welcome.

Thank you. Our next question comes from Brian Alexander with Raymond James. Brian Alexander - Raymond James & Associates, Inc.: Yes, thanks. I don't know if you said this specifically before but I guess I'll just ask the question. Were you actually profitable in the December quarter with your large mobility customer and do you still think that you can sustain profitability with that customer, even accounting for seasonality going forward if we were to see a big drop off in March do you think you will still make money there? And I have a follow up.

So look I think we’ll have normal seasonality as it relates to profitability of mobile customers with this customer. One of the comments that I made is we’re kind of done with all of our ramps and -- but I actually don't want to get into specific profitability on the customer. So I actually think it will perform normally. I think it goes down in the March quarter, it goes way up in the December quarter and I think we’ll see that over the course of next year. So I think it will perform normally and because we don't have any start-up charges or excess charges that we have to absorb like we did last year. So but it’s actually become uncomfortable talking about their revenue and their profit and we’re actually trying to not talk about their revenue and profit, both for them and for us.

But [Sean] one of the highlights though in the prepared remarks we did highlight that we were in line with our expectations, both in terms of revenue and in terms of the profitability for that customer this quarter. Brian Alexander - Raymond James & Associates, Inc.: Got it. That makes sense. Just a follow up on gross margins, if I back into the gross margin for the March quarter from your overall revenue and operating income guidance, Chris it seems like you should be back above 6% which you haven’t been above in several quarters and you are doing it with a higher mix of HVS, which we all know is lower margin. So the question is do you think you’ve hit a new watermark on gross margin based on all the actions you have taken and do you think that you should see gross margins stay above 6% each quarter going forward with the exception of December, when you have the HVS mix back up?

You highlighted couple of good things here. So yeah the implied guidance does represent having a fixed handle on the gross margin. It really is going to be a function of the mix. You see the mix shift in our March quarter shifting back to heavier concentration of the low volume, high mix businesses that we operate. I think we’ve taken distinct actions over the last 12 months to drive a different operating cost model and structure. I think you are seeing benefits of that as we progress this next year. We also highlighted we are tacking on the SG&A line. But going back to gross margin I would anticipate seeing us continue as long as that mix stays in that same balance, the handle over the fixed going forward. Brian Alexander - Raymond James & Associates, Inc.: Great, thanks a lot.

Thank you. Our next question comes from Amit Daryanani with RBC Capital Markets. Your line is now open.

Thanks a lot. Good afternoon guys. Couple of questions from me, one, your OpEx line, it’s been fairly resilient at least on a sequential basis over here. Maybe just help us think how do we think about OpEx beyond the March quarter when some of these cost cutting benefits come in? Do you think they will get back to sub $200 million, like $195 million run rate in June and beyond or are there any offsets that we should be aware of as you get through the back half of this calendar year?

Hi, Amit it’s Chris. So in the framework that we have laid out we are going to spend around $30 million to $35 million on these targeted SG&A activities and we will be upon completion of those actions we will be achieving a quarterly savings of around $15 million. So you naturally will see that line item coming back down to the $200 million and below once we get through completing those activities.

Got it. And I guess if I just look at your operating margin performance, especially if I stack it up against the May Analyst Day data that you guys provided and I think at that point the hope was $6.9 billion sales, 3% op margins you seem to be well ahead of that, at least on the December quarter run rate that you had. Op margin is still about 30-40 basis below what you guys were hoping for back in May. Maybe step back and talk to us about what is the gap for that 30 to 40 basis points operating margin versus what you guys were expecting back in May, when you didn't know about the Motorola ramps I think?

Good question. You know, that roadmap we laid out and we have continued to message throughout the year, when you see the quarter performance we just executed upon, I think there is a couple of drivers that came into play. One was that one customer that we are really not going to be talking a lot about going forward. We identified early on a higher level of profitability. While we were profitable this past quarter we’re not achieving that level of profitability. So that is contributor to the profit erosion there. Additionally from a margin perspective you need to consider the mix of business that we sit today at the end of this quarter, nearing more 60:40 than what it was implied when you did that model before. And then again we highlighted that even in this current quarter we still were succumbing to some operational inefficiencies and ramp challenges of some of the complex programs that we continue to ramp. So I think if you play those three elements out you see us naturally extend from the 187 out past the 200 we had said but going back from that trough of 105 to the 187 that’s 7% to 8% of an increase in a short period of time. So while it's -- we like the trajectory it can be greater and we're still working on that.

Fair enough, thanks a lot and congrats on a nice quarter.

Thank you.

Thank you. Our next question comes from Sherri Scribner with Deutsche Bank.

I just had two questions one I just wanted to ask about the components business. I know you talked about that being above the corporate average. Was it above the corporate average this quarter and when do you expect this to be above the corporate average?

Yes, so it was above the corporate average this quarter and we anticipate it stays at that level and based on a lot of the color that Mike had given you, I can understand the feel behind that confidence.

Okay. And then just looking at the INS segment I appreciate the detail on that, and was a little surprised you did well in server storage as a company, I've not seen a lot of upside there. I was hoping to get little more detail on what you are seeing specifically in the networking segment and also INS has been declining on a year-over-year basis for the past eight quarters, guidance suggest the declines again what turns that business around? Thanks.

Yeah, I think that if I think about the macro environment for INS I think it's going to be challenged for the next -- for the foreseeable future. So it's been soft for, I think for a couple of years. I think on average the growth in the industry if you take that Huawei is even flat to down perhaps in terms of hardware growth and I think that will continue to remain a challenged segment. Our upside in server storage is probably more from new programs that we brought in as opposed to industry dynamics and the industry sell-through going up. So it's more a Flextronics unique thing, it's not that server storage got better. But I think if I look at the overall INS revenue going forward we do expect it to be relatively flat growth for the foreseeable future, except for this quarter. The March quarter it always goes down. If you look at the March quarter 10% of our businesses, a year ago it down 10% in the March quarter. So that's actually pretty normal seasonality. But if I think about it structurally that business is really pretty flat and I think even keeping that zero is positive. So what we're focused on is as you know we focus a lot on some of these new disruptive technologies and we go after these new companies. We're doing work with companies like -- with [inaudible] and Power Optic Networks and [inaudible] and Cyan and if you look at the amount of the hardware disruptors or maybe hardware/software disruptors in this market we have a very, very strong market position with them. So what we're trying to do is to be able to augment some of that weakness that you see in the core businesses with some of those new disruptors and hopefully we'll be able to keep this at -- and I think the result of that end up being a reasonably flat market for us.

Thank you.

You're welcome.

Thank you. Our next question comes from Jim Suva with Citi.

Thank you and congratulations to you and your team, I mean absolutely great results and outlook very strong too. First, just a housekeeping question and then kind of a more strategy question. A housekeeping question for your EPS guidance, does it include stock buyback because or is that just kind of more of the run rate of the stock buyback that you have done? Then on the strategy question, you've got some very big parts of your business where the customers are potentially changing specifically the Motorola, Google as well as IBM assets but then Lenovo is also a current customer of yours. Are you able to, for lack of a better word secure or negotiate or come upon agreement upon that business staying with Flex before the transactions happen or is it all after the transactions happened because I guess the fear is in a year from now are we looking at, I am just going to pick at a number here 18% of your company's business could potentially be in-sourced?

So 18% would be Motorola plus IBM or how do you describe it 18%.

Yeah.

Okay, so listen we don't know what the world looks like going forward. What we do know is we have a fabulous relationship with Lenovo. We know that we provide some very strategic services for Motorola and for IBM. We would work to try to build and use this as an opportunity to leverage that relationship that we have with Lenovo to do more work from. Maybe they are going to in-source it someday. I mean I don't mean to say that they won't ever do that but probably would take a long time and they don’t even in-source everything that they have today. So I would look at this as an opportunity to build on that relationship. I think we talked about being Supplier of the Year last year, I think at Analyst Day two, two Analyst Day's ago we actually showed you guys a video of Lenovo and what we view is to be the most advanced supply chain in the world which is in Europe and it’s inlet on the products and it goes all the way through the manufacturing and distributions in to end customers that we do for Lenovo. So I'd like to think of that, we -- it’s an opportunity for us to build on that relationship. So I think if someone was going to buy the assets, I think Lenovo would be a great choice for Flextronics. And we would look to just build on it. So but I mean where it goes a year from now, who knows right. I mean it’s going to take a lot of time. It would probably take them six months to get anti-trust approval, I mean it’s going to take time to work its way out. And we just have a lot of time to work a lot of different things between now and then. But we are super happy that we are in a position with the buying customer that we have a very, very good relationship and they think we are a very high quality manufacturer.

And Jim back to your first question, the weighted average share count that we provide in the guidance of $650 million reflects the benefits from last quarter’s purchases. Our guidance will never reflect any forecasted or anticipated share repurchase activity.

Okay. Great. Thank you very much and then again congratulations on the great margins and profitability and sales.

Thanks.

Thank you. Our next question comes from Osten Bernardez with Cross Research. Osten Bernardez – Cross Research: Hi, good afternoon, thanks for taking my questions. I guess just to begin, with respect to Google, Motorola and Lenovo, I guess hypothetically if we were to assume that given your relationships with all three companies, that if you are able to continue manufacturing those devices, would you foresee any changes in pricing as it relates to the deal?

Well it’s actually hard to say but what I can tell you is that the pricing that we already do for this kind of HVS business is very aggressive, it’s always competitively bid. So I think it’s at market and as a result of being in that market I think we can be pretty comfortable that there is not going to be a significant change in pricing. Osten Bernardez – Cross Research: Thank you for that. And then with respects to your comments on the ramp costs that you experienced during the quarter. Would you be able to point to any specific served markets where those expenses were higher than you expected, or consisted of the large portion of those expected, excuse me?

Hi, Osten. So we actually had several ramps that we've talked about previously that span multiple segments. Primarily what I am alluding to here is more in the INS and IEI businesses this past quarter that had a more meaningful impact on our performance. Osten Bernardez – Cross Research: Got it, thank you very much.

Thank you.

Thank you. Our next question comes from Mark Delaney with Goldman Sachs.

Thanks very much for taking the question. I was hoping first if you could elaborate a little bit more on the impact of Motorola on your business and potentially any impact that Lenovo was having. So maybe if you could help us understand, if you think any of the current strength in your revenue in this current quarter of Motorola products was potentially related to Google, prebuilding inventory ahead of a potential sale. And then specifically I wanted to make sure I understand if your guidance for the March quarter is assuming any negative impact on the Motorola products related to the proposed sale?

Yeah. So I don't know if there is that much to add. We are just not ready to speculate on what may or may not happen overtime. Like I said it’s going to six months to probably get to the regulatory approvals and all those other things. And then who knows what their operating strategy is going to be on a go-forward basis. We just know we are positioned well with them. We've got a capability that they need and I think we will just go build the relationship up with Lenovo and continue building it and see how it works. But I don't expect anything to change in the near term. So regarding your last question about is there a negative impact, is anything contemplated as a result of this news in our forecast the answer is no. So we’re just assuming it’s a steady stage go-forward kind of basis. So we don't anticipate -- we don't foresee a negative impact in the near term.

Okay that’s helpful. And then in terms of that restructuring actions that you guys talked about is any of that related to the Motorola products right now?

No really that is not you know factory specific. That’s really focused on lot of our kind of what I call corporate overhead and administrative overhead that we use to run the company and like I said a lot of that overhead is almost, we had a double banging a bit just last year just because of the amount of work we’re doing and the new ramps and it just takes a lot more effort and cost. And as I mentioned by the time we get through the March quarter we believe we’re done with those. And so we still have a little bit of residual ramp up cost coming in the March quarter but then it flows out. So we’re getting ahead of the game and we’re rapidly as possible going to take out some of that redundancy. We see a very stable year next year and we have the right physical asset set-up for our facilities. So we’re pretty pleased with that and it’s a great opportunity for us to drive productivity and cash flow. That’s what we’re going to do and we’re going to get out ahead of it. And we’re going to be aggressive about it.

Thank you very much.

Welcome.

Thank you. Our next question comes from Amitabh Passi with UBS.

Hey Mike sorry to beat a dead horse. I just wanted to try this one other way. Can you give -- can you remind us what the scope of your relationship is today with Lenovo? Are you predominantly on the computing side with them, are you also doing mobile devices for them? I just want to get a reminder and a refresher on kind of the scope of your relationship today.

Yeah we do quite a variety of different things. We do not do any mobile phones with them today. We do, do quite a different computing products and repair and logistic operations around the world in a variety of different locations but we do not do any mobile manufacturing of any kind.

Okay, thanks. And then Chris just I apologize. Just a clarification of the $60 million annualized savings in SG&A did you say by the June quarter you will actually realize or get to $15 million per quarter run rate or will that take longer?

Upon completion so maybe this lags a little bit, we’re going to be at that $15 million a quarter. You should see us roughly in that range around that June period but really as soon as that is fully complete and we’re making our best efforts to tackle those measures quickly.

Okay. All right, thanks. That’s all I had. I appreciate it.

Operator, we have time for one more question.

Thank you. Our last question comes from Wamsi Mohan with Bank of America Merrill Lynch.

Yes, thank you. And Mike could you tell us how large your business with Lenovo is currently and also could you size the variables business. How large it was this past quarter and how large you think it could be in annual revenues? And I have a follow-up.

Yeah Lenovo is, it’s probably I would say roughly around $500 million business for us today. I don't know exactly that number and obviously it moves around little bit by quarter but it’s about $500 million. And as far as the variables go that’s ramping rapidly. So on the variables business the question is what is it this quarter and what is it next quarter, we’re close to $500 million run rate with variables and we actually think that can accelerate going out in 2014.

Okay, thanks. And as a follow up, there was some talk about Foxconn talking with various states here in the U.S. to set up some manufacturing operations. How worried should investors be about the risk of Foxconn starting to target some of the higher margin markets?

As it relates to Flextronics, zero.

And that’s because…?

I think to set up -- so first of all part of what they talk about us is LCD displays and set up an LCD manufacturing operation and they talk about automation, building robots, that’s kind of stuff. I mean first of all we don't do LCD displays. We don't build robots and there is no market that I know of in the United States that we participated where putting up a fully automated factory with robots is going to service any of our customers. So if that’s a direction and activity that they are going to launch I actually don't think it conflicts with any business that we see in the United States. Second of all we’ve already got like a huge position in the United States and we are in like 10 sites, we’ve got five million square feet, we’ve 10,000 employees, we’ve got know-how experience, we’ve got already set up operations, we don’t have greenfields, we have production introduction centers, we have Lab IX, we’ve got innovation centers, we’ve got, the amount of things we’ve is pretty overwhelming. You know come in Silicon Valley we have a million square feet if they want to, in Texas we’ve probably a 1.5 square feet, almost 2 million square feet, we’ve probably 2 million square feet in Texas. If you go into the Carolinas we -- I have like 800,000 square feet and doing distribution we’ve had operations for 15 years in the United States and we have the customer base. So to do a low-volume high mix work takes patience and time. And it’s just hard, I think to have that patience and time when you are $130 billion company. So I think that the impact is for all those reasons, is actually pretty low. And it doesn’t mean they won’t come in and do some things but it probably won’t be within our core business.

Okay, thanks appreciate the color. And lastly Chris, what caused the lower tax rate this past quarter and when do you see that reverting back to 8% to 10%? Thanks.

I am sorry, didn’t hear that. Can you repeat that please?

Yeah, sure. I was asking about the lower tax rate this past quarter, what caused it and when do you see the rate reverting back to 8% to 10%.

We are guiding to stay in that same range of 8% to 10%. This past quarter, you saw us slightly below that. It’s really a mixed bag driven by a whole host of different items from the amount of earnings in different jurisdictions to changes in the valuational allowances, to even changes in certain tax positions. So it’s all around the place, but a lot of moving parts. I just should say going forward, it’s anticipated to stay within that 8% to 10% range.

Okay, thank you.

Okay, thank you everybody for joining us on our call today. This concludes the call.

Thank you. That concludes today’s call. You may disconnect at this time.