Welcome to the Littelfuse, Inc. first quarter 2008 conference call. (Operator Instructions) At this time, I would like to turn the call over to Chairman, President and Chief Executive Officer, Gordon Hunter.

Welcome to the Littelfuse first quarter 2008 conference call. Joining me today is Phil Franklin, our Vice President of Operations Support and CFO. As you saw in the news release, our first quarter sales of $133.7 million increased 1% over the first quarter of last year, and adjusted diluted earnings per share were $0.36, which is at the higher end of our guidance. Our automotive business had a record quarter, our POWR-GARD business had a record first quarter and our electronics’ business order rate has improved. At this point, I’d 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 statements. 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. A discussion of these risk factors may be found in the quarterly and annual reports filed with the SEC. Overall, as Gordon said, the first quarter played out about as we expected, the top line grew modestly compared to last year, and earnings were consistent with our guidance. The automotive and electrical businesses, which both carried strong momentum into the year, continued to perform well with growth of 8% and 5%, respectively. Electronics business had a slow start to the year, with sales ending the quarter down 1% from the prior-year quarter. This Lunar New Year, however, in early February, electronics orders have been strong and sales have been increasing. Earnings per share excluding one-time charges related primarily to the recently announced closure of the Matamoros, Mexico plant were $0.36 for the quarter compared to guidance of $0.32 to $0.37. Capital expenditures for the quarter increased to $11.5 million, due to investment in facilities and equipment mostly related to the manufacturing transfers. Cash flow from operating activities was negative $1.0 million for the first quarter, compared to positive $1.0 million for the prior year quarter. The lower cash flow result was due primarily to increases in inventory and accounts receivable. The inventory increases were planned to support the manufacturing transfers and the move away from airfreight to surface shipments. The accounts receivable increase was in part due to increasing sales at the end of the quarter. I will now pass it back to Gordon, who’ll provide more color on our performance for the quarter and review the current state of our markets.

I’ll start by providing some additional comments on each business unit and then update you on the major cost reduction initiatives and the other highlights. I’ll start with electronics, our largest business unit. Electronics sales were $85 million in the first quarter. This represents a decrease from first quarter of last year of about 1% and reflects a slow start to the year. However, we saw improvement through the quarter, and the book-to-bill ratio for the electronics business was 1.11 to 1 the end of the first quarter up from 0.96 to 1 at the end of 2007, indicating a stronger second quarter is on the horizon. We continue to see strong demand during the quarter in the flat panel HDTV market for our nano fuses where the control circuit requires its unique power handling and small form factor features. We’re also experiencing strong ESD product demand related to the flat panel TV market for protection of the HDMI interface that connects the HDTV display to the DVD player. This is consistent with the report from DigiTimes in Taiwan that indicates global large-size LCD panel shipments grew 38% year-over-year in the first quarter. The notebook PC market also continues to be strong, providing opportunities for several of our products, including nano fuses to protect against faults that occur at the power supply, thin film fuse for the inverter circuit, polymer PTC products that protect against over current faults on the USB ports and ESD suppressors at the USB ports. According to Gartner, unit growth of this market increased 12.3% in the first quarter of 2008, compared to the first quarter last year. We also saw an increase in sales of our diode arrays in the first quarter due to strength in the medical sector, where personal tests and diagnostic electronics…

As we said in the press release, our guidance for the second quarter is as follows. Sales for the second quarter were expected to be in the range of $142 to $147 million, which represents 10% to 14% growth over the second quarter of 2007 and 6% to 10% sequential growth. Diluted earnings per share for the second quarter are expected to be in the range of $0.42 to $0.48. We have not changed our previous guidance for the year 2008, which was sales growth of 5% to 7% over 2007 and diluted earnings per share of $1.80 to $1.90. Also, as previously stated, it will be a challenging year for free cash flow. We expect to invest approximately $45 million in capital expenditures net of asset sales to make severance payments for approximately $22 million. Free cash flow is expected to turn positive in the back half of the year, which is expected to be close to breakeven for the full year. This concludes our prepared remarks. Now we’d like to open it up to questions.

(Operator Instructions) Your first question comes from Ingrid Aja - Merrill Lynch.

Could you quantify how much of a Q2 sales outlook is due to seasonality versus new design wins?

Ingrid, we typically have a seasonal increase, sequential increase in the second quarter probably closer to about a 5% increase. So, some of the increment over that would be due to new design wins. I think in addition it’s just, we had a relatively weak first quarter for sales in the electronics business, and we’re starting to see a much better order flow as we talked about for Q2, some of that related to new design wins, I think some of it’s related to just improving fundamentals.

Are you able to quantify what increase you’re expecting from design wins in the rest of the year, I know you highlighted some new products. Is there any way to quantify that?

We haven’t really quantified it because it’s a little bit difficult, because some of them are new design wins that bring us incremental sales, some of them are new products that are replacing older products. But I think we’ve talked about in electronics that being mostly in the back half of the year, but we haven’t really quantified that number. But I think certainly if you look at our back end-loaded sales guidance, it is largely, the improvement in the second half is largely due to the design wins both in electronics and in the automotive business, as well.

Has there been any change to your cost-saving estimates that you are expecting starting to, you are going to start to see that at the back half of the year, and I just wanted to know if you had any update on that?

Yes, as Gordon mentioned we are very much on track on our cost programs. We are hitting our dates, and the savings numbers are still the same as we’ve given previously.

On the auto sales, is there any way to break down those auto sales or regions you mentioned that you were seeing headwinds in North America, that Europe is still progressing? I was just trying to get an idea of how the penetration in the Asian market how that’s growing.

Well, I think we haven’t really talked about specifically those numbers, but the Asia market is clearly growing in double digits. The North American OEM market has been very weak as you would expect. But we’ve made that up in some other areas, in some of the off-road truck and bus penetration, and we also have some new products that are offsetting some of that as well. So I really can’t get any more specific than that.

Your next question comes from Reik Read - Robert W. Baird.

Going back to maybe the last series of questions, with respect to the improved bookings, Phil, you talked about improving fundamentals. Can you give a little bit more detail on what you mean by that?, You had talked about the Lunar New Year going away, so it sounds like that’s one thing and then some new products coming online, but what are the behind-the-scenes fundamentals that gets you encouraged at this point?

I wouldn’t say that we’re thinking that there is going to be any big ramp up in the market here. I think a lot of it is the sequential growth it relates, I think, as much to the weak start to the year for electronics as it does to any particular or unusual strengths in the second quarter. And I think the second quarter is getting us up to levels that were consistent to where we thought we would be at this time when we originally set our plan for the year. I don’t think it’s anything more or less than that.

Can you give us a sense for if you look at the portion of your business that’s consumer related, obviously there’s some risks there. Can you talk a little bit about level of demand, inventory, design-ins that you are getting, that help offset that potential weakness?

Yes, Reik. I think that’s why we’re maybe being cautious in our statements about the second half of the year related to consumer electronics, but I think like a lot of companies that have announced recently, so far we haven’t really seen any downturn in consumer electronics revenues for, or orders for our own business in Asia where lot of it is being built. And just coming back from Asia, the feeling there is, they are keeping a watchful eye on consumer spending, but yet still it seems that things like flat screen TVs and consumer electronics are still selling here. But I think that those manufacturers in Asia are really trying to make sure that they’ve got strength in Europe and Asia in case there is a downturn here. Certainly we are looking very carefully everywhere, and in fact I think we have much stronger POS data and tracking data, inventory data from our distributors in Asia than we used to have. That used to be something we could track very well in North America. And we are now able to track that in Asia and in Europe, and we really believe that inventory levels are at appropriate levels in our distribution channels and that their sell-through, the POS from the distribution channels, has been strong. So, things are on track, but I think that, of course, with the macroeconomic picture, we have to be cautious about there possibly being a slowdown in consumer electronics spending that we have not yet seen.

And Gordon is that perhaps what you are referring to in your comments when you said you’re watchful back half of distribution inventory levels, is that those people may elect to lower further if there is some weakness? Or is there something else behind that?

Absolutely, it’s a macro picture other than our own data. If I look at our own data, we are very comfortable with the inventory levels. We are very comfortable with our distribution channels. I do think that we are getting more success at distribution channels by having a broader product offering and focusing more on distributor training. It’s a lot of initiatives to make ourselves the supplier of choice to all of our distributors and certainly in Asia getting better tracking data in return. But it’s more the macro picture that we face every day that we have to be some concerned about the second half of the year if there is a slowdown in consumer spending, but our own data is very solid.

On the automotive side, as I recall, you do have meaningful exposure to the North America market and obviously as part of your comments you talked about that being fairly weak. Phil, you talked about new products and off-road truck and bus maybe being the keys to offsetting that, but as I recall off-road truck and bus at this point is still a relatively small part of that overall segment. So am I to understand by that that you really think that there is a series of new products that get you on new platforms to offset that weakness.

Absolutely, Gordon talked about some of our MasterFuse programs, CablePro programs that we have design-ins for that are ramping up as we speak and will ramp up further in the second half of this year and into 2009. So clearly it is on the automotive side. A significant part of it is a new product story, almost all of which we already have design wins for. There is the off-road truck and bus, it’s starting to become a meaningful segment and still only a little over 10% of our automotive revenues, but it’s growing at significant double-digit rates. And then there is the penetration into Asia that is also contributing.

Your next question comes from Alexander Paris - Barrington Research.

Could you just give us a just a general idea of the North American auto sales as a percentage of the total?

Yes, Alex, it’s about, North America including OEM aftermarket in off-road truck and bus, it’s about 45% of the total.

You’ve talked about $3 million a quarter, then you had $5.2 million in the first quarter related to Mexico, now, did that number include your estimated $3 million or was that assumed in your $3 million ongoing forecast? Well, you’ve been talking awhile about your restructuring costs running about $3 million a quarter. Now that $5.2 million, was that in addition to that?

Yes, the $3 million, those are the ongoing costs that are running through the P&L that we’re not separating out and calling it out and pulling out in a supplemental schedule. The $5 million was a one-time, upfront severance charge that we did in the supplemental schedule and in the $0.36 that we reported we did pull that out. The $0.36 that we reported on an adjusted basis for the first quarter, that did include those ongoing costs related to doing the transfers.

So that was all part of this adjustment?

The $5 million was out of that, but something approaching $3 million a quarter, which we expect it to be for the second quarter through the fourth quarter. Those will be included in the numbers that we report, even on an adjusted basis.

So the $0.36 included taking out the $5.2 million and also taking out what you think is the non-operating part of that $3 million the quarter. And it sounds like, from all your comments that at least the current restructuring program is going to be pretty much done by mid-2009?

Well, the one large program that won’t be done by mid-2009 is some of the big silicon moves that we are doing out of Irving, Texas, and out of Matamoros. Those will be very far along by the end of 2009, but they will even continue a little bit into 2010. So, but by mid-2009, just about everything other than the silicon moves will be done.

Your tax rate, will that be changing as we go forward? What are you assuming for the full year still as you get more and more foreign business?

Yes. if you noticed, it has been coming down. It was a little bit unusually low in Q1 and it will bounce around a little bit from quarter to quarter. But we’re still expecting the number for the year to be in the 28% to 30% range, and I think as we look forward, we think that number could gradually come down maybe another couple points over the next several years as we generate more income in some of those below-tax jurisdictions, particularly in Asia.

Shock Block, I know it’s a small acquisition, but this fault protection, does that mean static electricity, or are you talking earthquakes?

No, this is a ground fault protection, so if you have water around in an electrical system, that it would protect personnel. It’s a larger, more industrial version of the outlet you would have in a bathroom now by code as a ground fault protection.

Is that your first foray into that?

It is, and takes us into some of the OEM segments that we’ve been penetrating with our fuse products, and it gives us some additional technology. It’s a very interesting niche that fits the customer base that we’re focused on. So, we’re very excited about that, not just for its current revenues but where it will lead us in terms of having a broader product offering in this whole area of electrical safety, which we think is something which obviously the function that fuses do protect against. But we think we have a lot of expertise in understanding the application around electrical safety, and we believe we can broaden the product offering and the service offering around the electrical safety. And the National Electric Code continues to get stricter on that, so we believe that there are opportunities for us to grow.

In your cash positions, do you have anything like resembling auction securities or anything in there?

No, we don’t, Alex. We’ve been pretty careful, conservative about how we have our cash invested, and we haven’t had any issues there at all with either liquidity or any impairment. Alex, just to clarify one of the comments I made previously on the automotive business, the 45% North America number I gave, that would’ve been where we would’ve been last year. This year it’s probably closer to 40%, as some of the other areas have grown. And of that, it’s only about 27% or 28% of the total is specifically the OEM part of the automotive business.

Your next question comes from Jeff Rosenberg - William Blair.

Looking at the second half of the year, it sounds like you are still expecting a relatively similar outlook on the top line. So I think that implies you’re thinking of some good margin improvement on seasonal growth, and I know you’ve talked a lot about how the cost savings layer in ‘09 and in ‘10. But can you talk a little bit about how you get that margin improvement in the second half of the year and how your confidence level in hitting those targets?

Yes, Jeff, yes, you’re right. It’s partly related to volume leverage as we expect another sequential increase in Q3 over Q2. But it’s probably more related to the savings starting from some of these programs starting to show up in the back half of the year. So, we start to both see savings kick in and as we get towards the very end of the year, we’ll see these transfer-related costs that we keep talking about, the $3 million a quarter start to subside a little bit as well. So, if you look at the whole equation between cost of the transfer and savings coming from the transfers, we are in a better position in the back half of the year, and the closer we get to the end of the year, the stronger that position is. So, a significant part of the margin improvement we’re expecting to get to our $1.80 to $1.90 for the year is going to be driven off the shape of those savings.

And that $3 million number, is that number materially lower by the fourth quarter, and what run rate do you think will be on exiting the year in terms of cost savings?

It’s peaking, the number peaks in Q2 and Q3, and then it should be a little bit lower in Q4. And then the savings exiting the year, I think are at an annual rate of maybe $4 million, something like that.

It was interesting to hear the various design wins that’s in new product introductions, but trying to maybe focus in on where you really believe you’re gaining share in terms of which maybe product families or product categories where you’re seeing the most significant growth relative to the market?

Yes, I think we believe that our silicon products, our silicon protection arrays for ESD, we think that’s a growth segment, and we haven’t really had a very strong offering there. We’ve put a new design team in place and invested new product development. I think that the ESD segments that we look at for handheld devices, consumer electronics; I think that that area is one that we’ll really penetrate. The TVS diode business that we got from, when we acquired the Concord Semiconductor business, is a broad product offering. That company was really only able to sell those products in Taiwan, and now we’re able to take those products globally. We’re seeing success through all of our global distribution channels. So I think that just, in general, our distribution channel programs as we’ve got a broader product offering is giving us more presence to our distribution channels into several of those segments.

I know you talked about one divestor product, but it’s mostly outside of TECCOR where you’re seeing the over-voltage protection, semiconductor business really the strongest?

I think that we’re confident in the TECCOR business, which also is being sold through distribution, and we have two new TECCOR SIDACtor products that were released in the first quarter. So we are developing that product line and still confident that we will see growth in the SIDACtor products, too. And I believe that we’re gaining share in that segment. I think that’s a strong segment for us.

So if you roll it all together, do you have off the top of your head a feel for how much of the electronics business represents semiconductors, at this point, or maybe at some point in the future, your targets there of total business or total electronics, either one.

It’s a little bit less than a third of our total, but 30% to 33% of our total business, which is the SIDACtor products that we got from TECCOR, the TVS diode products that we acquired from Concord and then our increasing sales of the silicon protection array of products that we are designing for ESC.

But that percentage will be going up. It’s about a third today, and then if we look at where we expect to be a couple of years from now with some of the growth in some of those silicon products outpacing growth in products like fuses, particularly given the new product investments we put in there, we would expect that percentage to increase.

And that’s a third of electronics or a third of total Littelfuse.

Electronics.

Your next question comes from Shawn Harrison - Longbow Research.

Could you remind us what distribution represents as a part of electronics sales?

It’s approximately 80% of electronic sales.

Would you expect that ratio to go up, going further, looking ahead? It sounds like you’re expanding your presence there.

I don’t think we’re predicting it to significantly change. We are certainly supporting distribution with better training and tools and a broader product offering and being much more relevant to them, and that’s very important part of our strategy. But we also have always stated that our design and activities at key accounts, such as the Samsung that’s making the next generation flat screen TVs, it’s very important for us to have direct access as much for us to develop new products and understand the road maps of those companies. So I don’t think that we would see that we’re going to change the strategy much in that area.

On the cost side, what are you seeing in terms of raw materials moving in either direction?

Unfortunately most raw materials are moving all in the same direction right now. We’ve talked in the past about we certainly have some exposure to copper that would be of the metals. That will be our most significant material buy, and everybody has been watching that. And that price continues to go up. Interestingly, though, the one that hasn’t gone in the wrong direction for us, probably about the only major one, is zinc, which is a major input into our automotive business. And the price of zinc has actually come down from where it was six months to a year ago, is down near a dollar a pound right now, which, at one point, it was about half the price of copper. Now it’s about a quarter of the price of copper. So copper has gone up; zinc has gone down. So we got offsetting effects there, and certainly we have some exposure to things like tin and silver, which have both gone up, not so much to gold. We certainly have been impacted and will continue to be by the price of oil going up, which the major impact there is on our transportation cost. And we continue to see pretty heavy surcharges on both surface transportation and in air freight, and we are doing things to try to offset that like moving more and more to sea transportation rather than air transportation. But it’s going to be hard to offset all of that if the price continues to go up like it has been.

I know typically there is no price increases within the electronics industry, but are you having an ability to get some price offsets maybe in terms of less annual pricing declines or things of that nature?

Yes, I think the other thing is bringing new products, bringing new features. I think that’s the way to alleviate the constant price decreases are bringing products that have new features that fit the roadmaps of our leading OEMs. And I think that the examples that we mentioned earlier about those silicon protection arrays and our new SIDACtor products, having new features that fit the latest network equipments, that’s the best way to avoid constant price pressure. Certainly you don’t get price increases, but if you’ve got some new innovations and new features that are needed, there’s an ability to get premium pricing at the beginning of the life cycle of those products.

SG&A ticked down a little bit this quarter. What would you expect it to do for the rest of the year, hold relatively steady on a dollar basis?

Yes, I think it’ll be relatively steady. We’re certainly not adding cost to our SG&A structure. In fact, as we get into the end of this year and into next year as we start to shut down some operations as part of these plant consolidations we’re doing, that will actually help our SG&A as well. There are some things pressuring it towards the upside, and one of those would be the weak dollar. Where we have SG&A in places like Japan and Europe, obviously those are being affected by currency. So, I think there is a general trend towards flat to declining SG&A, I think overall, but right now that’s being offset by currency.

Your last question comes from John Franzreb - Sidoti.

Gordon, I know I have learned over the years to listen to you when you talk about a cautious outlook, especially in the electronics business. Last quarter, the book-to-bill was 0.96. It’s accelerated into this quarter at 1.1. What I’m wondering here is your concerns about the inventory level at the dealers, is that more based on your visibility and past instances on the ODM side, or just talk a little bit about the cautious outlook that you put out there.

Yes, I think we tried to emphasize in the past, we used to say we had better data from North America, not from Asia. And as our business moves more and more to Asia, we’re more likely to be caught out with excess inventory in the channel, either in the distribution channel or at the OEM or the ODM. I think we have better data rate in Asia. At the moment, our data is that we don’t excess inventory, we don’t have distribution that is ordering ahead of their own sales out from the distribution channel. My caution is just that the business is strong, it’s healthy. But on the macro side, the economy that we hear about, at some stage are we going to see a real drop off in consumer spending on consumer electronics, which does not seem to have happened as much as you might expect given the price of gas and the credit markets. So I just think that, I don’t think we’re in bullish times in terms of consumer spending in the country, and it wouldn’t be a great surprise that in the second half of the year that comes through to people no longer buying flat screen TVs. I think that’s just a macro picture. We are very cautious and very diligent at looking at our own distribution inventories, and we’re not seeing a problem there at the moment.

On the electrical business, that was up despite you had voiced some concerns in the first quarter. You said only about 1% of it was price, but you also highlighted the services part of it. Could you talk about what’s going on in electrical and also how much is services as part of segment sales?

Yes, the services are still a relatively small amount in terms of sales less than a $1 million. It’s growing. It’s a very interesting way for us to be able to also complement our product offering, but I think that the new product development and the OEM focus is very critical for us. We used to really look at our products being sold through distribution and not really calling directly on OEMs, people who make equipments such as air-conditioning equipment or white goods equipment. And now we find that we actually can design new products, even new configurations of fuses that can make that a growth business and offset the headwind that might be market related. So, both the OEM initiative and the services initiative give a few percentage points of growth. And then price increases, it’s been a market where we’ve constantly managed to be able to pass through increased cost, and there’s a lot of copper content in the large electrical fuses. And we’ve been able to pass that through the channel and keep this business as a growth business, and we still think that can happen for the rest of this year.

The restructuring charge is $5.2 million in the quarter, you alluding to the fact there is roughly going to be $12 million this year, that’s just in coming quarters it’d be closer to a $2 million number?

No. So, clarifying that, the $5 million doesn’t relate to the $3 million a quarter that we talked about in anyway. That’s a separate charge related to a upfront severance charge for the closure of the Matamoros, Mexico facility, which we announced in the first quarter. The $3 million a quarter we talked about is these ongoing costs of moving equipment, of paying out retention incentives to people, to higher overhead in the new location before we wind down the old location, those duplicative overhead costs. All those costs are running through the P&L every quarter. They were a little bit lower than $3 million in the first quarter, but it’ll be ramping up to probably at least $3 million in the second quarter, and they’ll be at that level until we get towards the end of the year, and they’ll start to come down a little bit.

That keeps the pressure on the margins right there. Could you fill in the gaps on the rest of the automotive business, the geographic sales mix, 40% North America, how does it look for the balance of the world?

It will be 40% North America. Asia is today, it’s about 10%. And then actually, so the European piece is actually now become bigger than the U.S. piece largely because of the Euro-dollar exchange rate. And also it’s where the things like off-road truck and bus business; it’s a bigger piece of that market than it is in North America at the moment.

There are no additional questions.

Well, thank you all for joining us on the call this morning. We appreciate your interest, and we look forward to talking with you again next quarter.