Welcome to the Littelfuse Incorporated Fourth Quarter 2007 Conference Call. (Operator Instructions) At this time, I will now turn the call over to Chairman, President and Chief Executive Officer, Mr. Gordon Hunter. Please go ahead, sir.

Welcome to the Littelfuse Fourth Quarter 2007 Conference Call. Joining me today is Phil Franklin, our Vice President and Operations Support and Chief Financial Officer. As you saw in the news release, our fourth quarter results were on track with our guidance for both sales and recurring earnings. Sales increased 6% over the fourth quarter of last year and adjusted diluted earnings per share of $0.38 increased 52% over the prior year adjusted earnings per share of $0.25. Full year of 2007 sales were just over $536 million up only slightly from 2006, but still a new record for Littelfuse. With our automotive and Power Guard business achieved record performance in 2007. Our electronics business had a challenging first half of the year, but improved in the second half as inventory levels in the distribution channel end-to-end customers returned to normal levels. At this point, I would like to turn the call over to Phil Franklin who will give the Safe Harbor Statement and a brief summary of our press release.

Before we proceed, let me remind everyone that comments made during this call include forward looking comments. These statements are subject to various risks and uncertainties and as a result, actual results may differ materially from those expressed in forward-looking statements. The discussion of these risk factors maybe found in the quarterly and annual reports filed with the SEC. As Gordon said, the fourth quarter played out largely as we expected. We experienced typical fourth quarter seasonality with sales down 4% sequentially which was in line with our guidance. Earnings excluding one time charges were $0.38 per share, which was above our guidance of $0.33 to $0.37 due to a lower tax rate. The tax rate for the quarter was 23% versus our guidance of 32% due to higher earnings and low tax jurisdictions and timing issues. Compared to the prior year quarter, sales increased 6% as the automotive and electrical businesses continued the recent growth trajectories and electronics, after several quarters of negative growth was up 3%. For the full year 2007, sales were essentially flat with 2006. Both automotive and electrical had record years posting growth of 9% and 14% respectively. This was offset by electronics where sales declined 5% for the year. I will now pass it back to Gordon who will provide more color on our performance for the year and review the current state of our markets.

Sales increased in all three of our businesses in the fourth quarter compared to the same quarter last year. We turned a corner on the electronic inventory correction with electronic sales of 3% in the fourth quarter. As indicated earlier, our other two businesses had record quarters. Fourth quarter automotive sales increased 9% over the same quarter last year and electrical or Power Guard as we refer to it, sales were up 14%. Geographically, fourth quarter sales increased in all regions. Sales increased 2% in the Americas, 7% in Asia and 10% in Europe. The gains reflected the improvement in the electronics business, the continued strength of our automotive and Power Guard businesses as well as the strength in the euro. Looking at the full year, automotive sales were up 9% over 2006 and electrical sales increased 14%, while electronic sales were down 5%. Geographically, 2007 sales were down 5% in the Americas, up 3% in Asia and up 6% in Europe. Next, I will provide some additional comments on each business unit and update you on our major cost reduction initiatives and other 2007 highlights, and then we will conclude our prepared remarks with guidance for the first quarter and the full year of 2008. I will begin with electronics, our largest business unit accounting for about two-thirds of total Littelfuse sales in 2007. Electronic sales were $88.2 million for the fourth quarter and $349 million for the year. Consistent with our guidance, it is evidenced by a 3% increase in the fourth quarter sales over the prior year. This business has stabilized with the inventory levels and the channels and the end-customers at normal levels. Several segments within electronics driving growth of our circuit protection products, our flat panel TVs and notebook PCs which both experienced strong end-unit…

As we said in the press release, our guidance for the first quarter and the full year 2008 is as follows. Sales for the first quarter are expected to be in the range of $134 million to $138 million which represents 2% to 5% growth over the prior year quarter. Earnings for the first quarter are expected to be in the range of $0.32 to $0.37 per share. Sales for the year of 2008 are expected to increase 5% to 7% compared to 2007. For the second half of the year, being stronger than the first half due primarily to increasing new product sales, diluted earnings per share for the year 2008 are expected to be in the range of $1.80 to $1.90. Earnings are expected to be stronger in the back half of the year due to higher sale and increased cost savings. We will not generate much free cash flow in 2008 as we will have severed payments of approximately $20 million and net capital expenditures of approximately $45 million both related largely to the manufacturing transfers. In summary, 2008 will be a transition year in which expenses and capital spending related to the manufacturing transfers throughout their peak and savings from these transfers are only beginning to ramp up. In 2009, the savings will increase substantially and the transfer cost will begin to decline, as a result, earnings are expected to increase to $2.50 per share in 2009. Cash flow should return to more normal levels. Upon completion of the manufacturing transfers, we remain confident that we will achieve a 15% operating margin. This concludes our prepared remarks, now we would like to open up for questions.

(Operator Instructions) We will go first to Ingrid Aja at Merrill Lynch.

I was just trying to get a better understanding, if your EPS comes in at the low end at the range this quarter at $0.32 maybe you can give me a little more understanding how you get to $1.80 for the year?

Well, as we said, Ingrid, we have a bit of a back end load of plan this year due to both the sales ramp up and the kind of the shape of the cost savings versus the transfer cost. What we see is typically, we would have sales kind of peaking out in the second and third quarter and that really is the case this year, but we have a steeper ramp up than our normal seasonal pattern in sales because of the new product introductions that we are doing both in the electronics and automotive. It tends to be a little bit more backend load as the normal and then in addition to that, the cost savings for some of the big transfer programs begin to show up in the back half of the year. Those would be for Ireland and then a couple of smaller programs that we have like to move out of the old Whitman Don Juan plant to the Philippines, those savings are both backend loaded, so it is a combination between a somewhat stronger back half for sales and better cost savings in the second half of the year. We should see pretty substantial margin improvements as we get into Q3 and even a better than normal Q4 from a margin perspective.

And then, I guess on your revenue assumptions, you brought them down slightly from 6 to 8 to 5 to 7, and I was just wondering what drove that change and maybe what is the biggest risks in the end market?

I mean, I think we are a little bit cautious in the kind of the overall outlook for the macro economy, number one and particularly as it relates to our electronics business. We are still confident of growth this year and we turn to a growth position in the fourth quarter, but we are still being a little cautious. I think the overall macroeconomic outlook is probably a little less positive than it was when we gave our earlier guidance so we really have not backed off significantly on that, but we have tweaked it down a little bit.

Next, we will to Alexander Paris at Barrington Research.

Could you break down for me the auto and electronics by region, was it up or down in America versus Europe versus Asia Pacific in each of those two areas?

You are talking about for the fourth quarter, Alex?

Yes, or the year or both.

Well, let us talk about for the year and I will just talk generally, for the automotive business, it was really up in all three regions for the year. We have some growth initiatives in Asia, so we had pretty strong growth in Asia, good growth in China particularly and that should continue. Europe, we had a pretty strong year in Europe of course the strength of the euro contributed to that for automotive, but we also had some decent growth even in local currency and in our early business there and then the US was kind of a mixed bag for automotive, but overall, we had growth marginally, thanks for the growth in the off-road trucks and buses, and then for electronics, we had modest growth in Asia and the other two regions were down.

And just one other thing, in the autos, I think you are assuming that in the auto industry as far as industry production is concerned that North America will be down and Europe, did you say flat as your assumption?

Yes, as we said. That is sort of that. That is the industry. It would be that research data that we are using and it indicates flat pretty much in Europe.

And in Asia, up some?

And in Asia, up. I think in particular, the emerging places of China and India remain in very strong double digit growth.

Next, we will go to Robert Green at Robert W. Baird & Company. Robert Green - Robert W. Baird & Company: With respect to the transition cost, are those something that holds steady at $3 million per quarter or is that more of an average and you will see some degree of fluctuation throughout the year?

It is an average and you will see some degree of fluctuation, but the fluctuation is not going to be great. I think you are probably talking about fluctuation between $2.5 million and $3.5 million in any given quarter. And it is not necessarily building or declining during the year. It will just bounce around a little bit from quarter to quarter depending on if we happen to have like a lot of equipment transfers in a particular quarter. The cost of that could bounce it up, so it will bounce around, but generally within that range. Robert Green - Robert W. Baird & Company: So you will have something along the lines of $12 million in cost and the benefits that you will get in the back half of the year, should I think of that as kind of $4 million to $5 million?

I would say it would be probably a little less than that, but it will be several million. It will be almost on the back half of the year. Robert Green - Robert W. Baird & Company: And then with respect to the transition cost, you mentioned that dissipate in 2009, can you give us a sense for how quickly that would happen?

It will be in a declining trend as we exit the year and go to the first quarter of next year and it will decline pretty rapidly as we get to the middle of 2009, so it is going to be compared to the $12 million that we have that we are going to incur in 2008, it is probably going to be no more than a third of that in 2009. Robert Green - Robert W. Baird & Company: And then if I could just follow up on the off-road truck and bus market, you guys have talked about that for a number of quarters now as something that is a pretty good opportunity. It sounds like the penetration rate is increasing there, can you talk about what has happened in the last couple of quarters in terms of to the extent that you could quantify that increase in penetration, what the opportunity is throughout the 2008 timeframe?

Yes, it is an area that we did not focus on until really about a year and a half ago and everybody started that increased focus in all three geographies now and we see it both as a new market segment where we have got new channels to market, but also an area where we can develop more new custom products and it is much more custom smaller volumes, but we see it as an area where we can drive a much broader range of products for that. As a percent of our total business, it is still relatively small. The majority of our business is still passenger comp business, but we see it with much higher growth rates than the passenger car business right now.

Roughly, it is in the neighborhood of about 10% of our revenues today, but that should be increasing over time. Robert Green - Robert W. Baird & Company: And then just one last question on China, can you guys talk a little bit about, given that you continue to move more into that region, did China, are there labor increases there going on and the impact that might have and if you are seeing any disruption right now from some of the weather issues that they have?

We have not seen any disruption. We certainly had some surprising weather in our Xu Xiao plant, that is an area that does not typically get a lot of snow. We did have some power outages there briefly last week but has not been anything that significantly impacted us and of course we are going into Chinese New Year right now, anyway, so we have not seen that the business itself as really being impacted by the weather.

In terms of labor rates, that is obviously going to be an ongoing issue with the strength of the Chinese, the expectation would be that the strength of the Chinese currency would continue to strengthen against the dollar over time on a gradual basis and labor inflation in even local currency has been up in the 6% or 7% or 8% range as opposed to the 3% or so that it had been over here, so we will continue to see some cost pressures there and we are just going to have to deal with that through continuing to drive efficiencies in those factories as we consolidate things and get more and more efficient and get better leverage on our overhead cost.

We will go next to Jeff Rosenberg at William Blair.

First, on the comments you made about the economic uncertainty, I just wanted to be sure, I mean are you just reflecting sort of what we are all hearing everyday or is there anything specific that you are talking about relative to what your customers are saying to you or cancellations or a difference in your bookings trends at this time of the year versus what you would normally see at the beginning of calendar year?

It is really the full month, I think just the macro picture of expected decreases in consumer spending here, we are not seeing any signals of that really. I think that a lot of companies in the business we are all waiting until after the Chinese New Year and seeing how things pick up and what we see as trends, but certainly in our incoming order rate for electronics specifically, we have not seen anything that specifically would make us be concerned. It is truly the macro picture.

Are you surprised by that given there seems to be a lot of signs of weakness that would lead weakness in your end markets that has not flowed through at all or is it in your prior experience at the front end of what might prove to be a demand driven down turn, the timing of when you see it as you would not know it yet?

Well, it is a good question. I was recently at the consumer electronics show and there was a presentation there from Bill Gates and talking about their business and they were talking about the dramatic growth in gaming for their products and PC sales still being robust, still being double digit forecast for this year. Notebook PCs still being in excess of 20%, so I think that they had a theory when the question was asked to them that maybe in times of a downturn, maybe people cut back on the travel, on vacations, on meals and sports events, but maybe consumer electronics is still something that is providing good value and people will continue to maybe stay home and buy gaming PC et cetera. So that was a theory from Microsoft and certainly a very robust consumer electronic show, so we are not any more experts on that. We are obviously followers in the trends of consumer electronic spending, but that is a theory that says that maybe things will stay reasonable for the year. I think we are just trying to look at all of those things and be a little more cautious in our own forecasting.

And you characterized the fourth quarter as coming in largely as expected, I wanted to focus on that from a margin perspective. It looks like the operating margin was a little bit lower than we have been thinking about, I think it is normalizing at about 8%, is it fair to say that that was a little bit weaker than you thought and could you kind of focus in on why that might have been in terms of higher expense levels or weaker gross margins?

Yes, I mean it was certainly in the range of where we thought it would be. I think you are probably right that relative to our going into the quarter forecast, it was a tad than we were expecting and really, I guess, I would not attribute that to any real negative trends that would affect our performance going forward. It was really the fourth quarter is always a bit of crap shoot in terms of the cost and overhead absorption that you get in the quarter with plant shut downs and weakness at the end of the year and I think when you add all of that stuff up, there is probably a little bit higher cost generally in the manufacturing area than what we had built into our original models going in that was not dramatically so and we did not see anything in that that would affect our views or cause us concern in terms of our outlook going forward.

And I think relative to what you told us about the details of your outlook for ’08 three months ago, SG&A would need to go down on an absolute basis for the year if that is right, is that something that you think you can achieve the other cost reductions or is that a higher gross margin than the 33% you talked about that kind of factors in for the full year, I think you gave us some detail last time just maybe looking for an update on how you see the P&L?

Yes, I think that certainly, most of the improvement in margin, there is only going to be modest improvement in margin from 07 to 08 because of some of the transfer cost that we talked about that I would expect most of that improvement to occur in the operating expense line and it is basically going to be holding the line on operating expenses on an absolute dollar basis and we are going to get leverage on the operating expense line for probably 50 to 75 basis points.

And then last thing I wanted to ask about was just on the electronic side, the new products that you expect to drive the growth, I mean specifically, which ones, I mean you have said earlier a number of different things, anything in particular that is most important in terms of new product introductions that will contribute to growth?

There is not any one big hit. There is a large number of singles here, but the TBS diodes which are the products that we acquired from Concorde some years ago and we have investigated a broader line of those products. The silicon protection arrays that we have been investing in, even some of the increased fuse products that we talked about, higher temperature chip use, so there is a pretty broad range. It is not one major product hit.

Do you have the design wins already or the design cycle is more going on now for holiday season ramp, I mean what is visibility of the success of those new products?

Yes, it is a mix. Some of those we have design wins that we have talked about, things like the Nokia and Siemens infrastructure, the ZTE based stations, those are real design wins of real products that we are excited about. Some of them are all product launches that like the high temperature chip fuse as a more generic product that will be used in the consumer electronics applications where there is a requirement for higher temperature. So we have gotten firm design wins. Some have been products that we have a lot of on a customer request for and we need to get the product out there, sampling starting now before we get design wins.

Now, we move next to Shawn Harrison at Longbow Research.

A quick follow up question on the design wins, how much of the 5% to 7% sales growth expected for 2008 is from new product design wins?

Probably the majority of that.

So the overwhelming percentage of that with very little I guess end market growth baked into the number?

Well we have got some end market. We have got a model that would show us with some end market growth. There is volume growth and then there is price erosion to take off from there and then there is the growth from new products and that is how we sort of come to that number.

I think for us to achieve the high end of that range, we are going to have some modest market growth, but we can get most of the way to the low end of the 5% to 7% on the back of our new product efforts.

And then just secondly, looking into the lead time situations, the potential for demand to weaken if you can kind of go by each of the individual business units, how much visibility do you have out into the channel in terms of production schedules and I guess just typically if things were to weaken in previous cycles, when do you begin to see that, what is kind of the timeframe and how quickly does it occur?

In automotive, we have very good visibility to what our designs in basically for the entire year. We know what products we had designed in and kind of what the schedules are for those products. Obviously, if the end markets slow down more than expected, there can be some adjustments in production schedules that ultimately affects us there and we do not have a lot of, so we have a lot of visibility to the former i.e. what the schedules are and what our products are in those platforms. We have less visibility to kind of what is going to happen to those schedules as we go through the year obviously, that depends on end markets. In electronics, the visibility is clearly not as far out. The one thing we do have visibility to is the distributor inventory positions are in pretty good shape and that would give us at least some optimism that borrowing some real downturns in our end markets that we should be okay for the near term here. We do not expect distributors to be pointing back any further than they already have on inventories.

And then the electrical too is mainly through distribution as well, so those inventories you are happy with?

Yes, we typically do not have the same kind of inventory issues in that business as we do with our electronic distribution and that business, it tends to be pretty predictable and it tends to be driven by some macro factors or industry factors like non-residential construction and it is lagging that by nine months or so, so we have a pretty good idea how that is going to trend for the year.

Next, we will move to Satish Athavale at KSA Capital Partners.

A couple of questions here, I want to go back to the operating profit margin. You had good improvement I guess, year over year, based on higher sales, but in terms of your three major product units, where do you kind of see improvement either year-over-year or sequentially or where did you see not so good performance, if you can walk us through.

Are you talking about ‘07 performance or are you talking about going into 08 versus 07?

No, just for the quarter you just reported.

For the quarter that we just reported, well, the quarter we just reported I think, our margins were pretty much as we expected them to be. They were better than we had had in the prior year and the biggest factor there, it is a combination of small things, we have got some better leverage on our SG&A, we have really been holding on SG&A spending and with higher sales, we have got some good leverage there. We have got some modest improvement in margins, I think the biggest margin improvement that we saw in 07 was in the automotive business where we picked up about I think about 300-basis points on our operating margins due to a number of reasons. It was due to the strong top line. It was due to the fact that in 06, we had some negative impacts from the commodity price increases that we addressed successfully and got some benefit late in 07 with zinc prices and copper prices moderating a little bit.

Okay, I think in your prepared comments, you said that there are indications that non-residential market and maybe the industrial market could slow in 2008, can you provide a little more color on that?

Like in Phil’s remark, they are usually just a bit of a leading indicator that when we expect to see an economy slowing, we expect to see some non-residential construction slowing and that would usually be something that would be a leading indicator for a deep line in our sales. We have not seen anything at the moment in that business and neither in the incoming order rate of sales, but we just said, the words that I used, we are being very cautious about that, just due to the macro economic picture of the economy.

And for your automotive business, what are your assumptions on global car production either by the geography or in terms of units, what do you anticipate for 08?

Well, as you mentioned, we expect, I think the latest forecast that we have been using have shown that there is a slight decline in North America passenger car volume. Europe is essentially flat which in fact, I think as Western Europe is declining slightly, and actually fairly robust growth in Eastern Europe, but at a smaller base, so although it is gradually catching up, but Europe is essentially flat net on Eastern Europe and Western Europe and then really, it is growth in the developing world. South America growth and the main growth drivers being Asia, Japan pretty flat, but China and India having strong growth and again, those numbers now are to become significant. I mean, the volumes in China are now starting to get up there, and really moving the dial, so that is the reason for our focus in the Asian markets, very strong growth continued, maybe not projected to be as strong as it has been. I think it has been in the high single digits, and it is now, I think projected a little bit lower in the low single digits, but it is also getting a much larger base.

But if you add these all up, would you say that the overall global production will be upward the mid single digit?

I think it nets to low single digits when you take the three big regions, Japan pretty flat, Europe flat and US going back, and then you take the growth in the emerging regions of South America, Eastern Europe and Asia, it comes to low single digit net.

And last question, the assumption on euro dollar exchange rate that you have?

We are not in the business of projecting that, but what we have built into our plan is I think, actually slight lower rates, slightly weaker or slightly stronger dollar than what it is trading at right now. I think we have built into our plans a number that was probably more consistent with where the dollar was maybe a month ago or so, probably closer to the 140 level.

(Operator Instructions) Mr. Hunter, at this time, we have no further questions, I will turn the conference back over to you for any closing remarks.

Thank you, well, thanks to all of you for joining us on this call this morning. As you can see, we are very optimistic about our company and the year ahead and we appreciate your interest and look forward to talking wit you again next quarter.

And that does conclude today’s conference. Again, thank you for your participation.