Good day, everyone, and welcome to the Littelfuse, Incorporated third quarter 2008 conference call. Today's call is being recorded. At this time, I will turn the call over to Chairman, President, and Chief Executive Officer, Mr. Gordon Hunter. Please go ahead, sir.

Thank you. Good morning and welcome to the Littelfuse third quarter 2008 conference call. Joining me today is Phil Franklin, our Vice President of Operations Support and Chief Financial Officer. As you saw in the news release, our third quarter results came in at the high end of the revised guidance that we issued on September 29. Sales of $141.5 million were slightly above the $140 million we indicated and adjusted diluted earnings per share of $0.35 were at the high end of the range we provided. As we anticipated, automotive sales decreased across all geographies due to the weakness in the passenger car market. Our electronics business came through with a small increase in sales; however, the trends going forward are considerably more challenging. A bright spot to the third quarter was our electrical business, which continued at strong momentum for another record quarter. I will now turn the call over to Phil Franklin, who will give the Safe Harbor statement and a brief summary of the news release.

Thanks, Gordon. 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, 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. Sales for the third quarter of $141.5 million were $1.5 million above our most recent guidance as Asian customers pulled forward deliveries into the last week of the quarter in the advance of shutdowns for Golden Week in the first week of October. While this helped our third quarter, it contributed to a slow start for the fourth quarter. Compared to the prior year quarter, sales for the third quarter were up 1% as strong growth in the electrical business and moderate growth in the electronics business offset a 15% decline in the automotive business. Gordon will provide more specifics on these performances in a moment. Earnings per share before restructuring charges were $0.35 for the quarter, which was down from $0.48 for the prior year quarter. The lower earnings were due to additional costs in 2008 related to manufacturing transfers and freight surcharges, as well as price erosion in excess of cost reductions in our electronics and automotive businesses. Cash performance was good given all the cash demands related to the manufacturing transfers. Free cash flow was positive $1.3 million for the third quarter after funding $12 million of capital expenditures, $7 million of severance payments, and $3 million of inventory safety stock to support the manufacturing transfers. I will now pass it back to Gordon, who will provide more color on our performance for the quarter and review the current state of our markets.

Thanks, Phil. I'll begin with some additional comments on each of the business units, then I'll update you on our cost reduction initiatives and the outlook for the fourth quarter and into 2009. I'll start with automotive because this business had the most challenging third quarter. Our automotive business contributes about 25% of total Littelfuse sales. Let's begin an industry overview. The latest data from J.D. Power shows that North America passenger car production declined 13% sequentially in the third quarter and 14% year-over-year. However, production of larger vehicles was down 34% sequentially and 44% year-over-year. In addition, European car production was down 18% sequentially. Within that industry environment, our global automotive sales decreased 15% from the third quarter of last year to $28.9 million for this year's third quarter. Geographically, our automotive sales were down most significantly in the Americas, followed by Europe, with a slight increase in Asia. As the industry numbers illustrate after a strong first half of the year the automotive market has dramatically deteriorated. This is due to a number of factors. The economic uncertainty is causing many potential buyers of new cars to delay their buying decisions. For those buyers who do want to buy, the tight credit market is making it difficult for them to finance their purchases. Coupled with this, higher gas prices, and overall economic concerns are driving those buyers that are still in the market to smaller, more fuel efficient vehicles. And while this is positive from an environmental standpoint, it's not as good for Littelfuse. These smaller cars have less electrical systems and electronic content, which in turn drive down the total market for electronic components, and correspondingly, our sales at least for the short-term. I said short-term because the same trends that drive increased electrical power consumption in…

Thanks, Gordon. Our guidance for the fourth quarter is as follows. Sales are expected to be in the range of 12% to 16% below the third quarter of 2008, reflecting continued weakness in automotive, declining electronic sales and negative currency effects on top of the normal seasonal weakness. Personally offsetting these negative effects will be the acquisition of Startco, which should contribute $4 million to $5 million of revenue for the quarter depending on the Canadian dollar exchange rate. Overall, negative currency effects are expected to have a negative impact on sales of three percentage points for the fourth quarter, which is included in our guidance. Diluted earnings per share for the fourth quarter are expected to be in the range of $0.04 to $0.14 before restructuring charges. We expect to incur approximately $0.09 of restructuring charges in the quarter, which will be mostly non-cash. As Gordon mentioned, there is still a great amount of uncertainty regarding 2009. Lack of end market visibility, combined with high volatility in exchange rates and commodity prices make forecasting a major challenge to say the least. That said we believe that the global credit crisis, weak consumer demand, and a weaker dollar, will likely cause our sales to be down year-over-year with the inclusion of Startco. On the positive side, our costs will be significantly lower in 2009. Our manufacturing transfer projects are on track and are expected to deliver approximately $20 million of savings compared to 2008. We are streamlining our SG&A and as a result expect operating expenses to be down more than 5% compared to 2008, excluding Startco. Finally, commodity prices including copper, zinc, silver, and tin, not to mention oil, are all down substantially from their 2008 averages should provide significant benefit in 2009. In summary, we expect 2009 to be a very tough year with major top line challenges. Nevertheless, with our cost initiatives and some help from commodity prices we believe we can still achieve significant margin improvement and meaningful earnings increases compared to 2008. This concludes our prepared remarks. Now, we'd like to open it up for questions.

(Operator instructions) Our first question will come from Ingrid Aja with Merrill Lynch. Ingrid Aja – Merrill Lynch: Good morning.

Good morning, Ingrid. Ingrid Aja – Merrill Lynch: Wondering if you could tell me a little bit more about the pricing pressures that you may remarked on in your prepared remarks. How much extra pricing pressure do you see? And how much of that is baked into your guidance at this point?

It's a tough question looking forward. I think if we look back to the most recent quarter, the price erosion and the price pressure has been pretty similar to what it was in the earlier part of the year and even back into last year. Going forward, it's a hard thing to gauge, particularly with commodity prices coming down and other things coming down and also volumes, the expectation would be that there should be – that there probably will be some additional price pressures. And we have baked some amount of that into our guidance. But we're not expecting that – I mean, we typically see 5% or so price erosion in electronics and 2% to 3% in automotive. While that could tick up modestly above those numbers, we don't see it going dramatically higher than those. Ingrid Aja – Merrill Lynch: And you think with the electrical business that you're not going to be able to continue with the price increases that you've been able to?

I think it's pretty safe to say that we won't be able to continue at the levels that we've had over the last year or so, some of which were justified and rationalized by price increases in things like copper that were pretty significant. With those prices going down, it's clearly going to be tougher to put through price increases in the electrical business. So, yes, I would say that's a safe statement. Ingrid Aja – Merrill Lynch: Okay. And then, on the transfer costs, since you're slightly ahead of schedule, do you see that rolling off more into Q4 than you originally expected?

I don't think – you mean getting more benefit in Q4? Ingrid Aja – Merrill Lynch: Right.

Not – I don't think so necessarily. We have pulled a few things ahead, but we're still going to have substantial transfer costs in the fourth quarter as well although we will start to get some savings benefits in the fourth quarter from some of these programs that completed a little bit early. So I would say net-net not tremendously different than what we previously thought. But fourth quarter from the cost of the transfers and savings from the transfers perspective should be somewhat better than the – or the fourth quarter should be better than the third quarter was, and then it should get consistently better and pretty significantly better as we start to roll into 2009. Ingrid Aja – Merrill Lynch: Right. So I mean looking at gross margins, what kind of benefit do you think you're going to be able to get this quarter given that you're seeing such a decrease in volume?

Yes, so that's the big question. If you look at the guidance that we have given it would imply that we're able to offset most of the negative operating leverage that we're going to get in the fourth quarter from the lower volumes with the combination of savings from transfer programs and lower commodity prices. So we may see some modest or minor drop in margins from the third quarter, but we would expect them to be roughly comparable to the third quarter margins. Ingrid Aja – Merrill Lynch: Okay. And then if you could just maybe expand on the order trends that you're seeing in October. You're saying that they've actually weakened since September. Have you also seen any push out?

When you say push out, do you mean push outs of our own ordering on our products? Ingrid Aja – Merrill Lynch: From your customers if they're pushing out the orders?

Yes, the automotive system, particularly for the passenger car world, pretty much works on a pretty fast reacting pull system. When they decrease their production volumes, they very quickly order less on us. So there is not really very much inventory really held anywhere that would be giving a push out. It's more that the response, for example, in the month of September, the decrease in production volumes was pretty dramatic and it was fairly quickly transferred through to us. And so I think the automotive industry is characterized more by us responding very quickly to a decline in production, which actually declines fairly quickly in line with a reduction in demand in sales. I wouldn't say it's a push out. I think it's more just very quickly reflecting the lower production volumes that really dramatically reduced in September, but are forecasted to continue through the rest of this quarter and into next year.

In the electronics business, Ingrid, I think that we haven't seen – I don't think we've seen a lot of push outs. What we've seen is very cautious ordering through really all the third quarter and certainly into the fourth quarter from distributors, particularly, who are placing orders closer to the time they need the product than probably they were before. But given that we didn't have big backlogs going into the quarter or exiting the quarter that we – I don't think we haven't really seen a lot of push-outs per se. Ingrid Aja – Merrill Lynch: Are you expecting longer plant shutdowns from some of your customers and is that factored into your guidance?

I think we – there may be some shutdowns. I think it's more just decreased production volumes. I know there are some European car manufacturers that have gone to producing fewer days per week, but cutting back production. I think that the forecasts that we have fairly pessimistic in terms of automotive growth next year, but based on either extended shutdowns or just decreased number of days of production. Ingrid Aja – Merrill Lynch: Right. Okay, great. Thank you.

Thank you.

And our next question comes from Shawn Harrison with Longbow Research. Shawn Harrison – Longbow Research: Hi. Just looking to get a clarification. I want to make sure I heard the number correctly. It was $20 million in savings from the transfer programs next year that would be up from the $18 million forecast originally?

Yes, it's really a net of savings and lower transfer related costs. So I think that probably the 18 – we had talked about an $18 million number previously. That number, as we've said, our programs are pretty much on schedule and intact. And in addition to that, we get some benefit from fewer transfer related costs. So the net benefit, when you take everything into consideration year-over-year we think is going to be at the volumes that we're expecting for 2009. We think it's going to be in the neighborhood of $20 million. Shawn Harrison – Longbow Research: Okay. And that's still more loaded toward the back end of the calendar year?

Yes, it will. It will accelerate as we go through the year. The first quarter will be quite a bit lower in terms of benefit and then we'll get a big jump in the second quarter, and then it will increase each of the next two quarters as well. Shawn Harrison – Longbow Research: Okay. And then, your commentary on SG&A, do you have kind of a target here for the fourth quarter? I'm guessing it's probably maybe down a little bit, but not much, then you start to see maybe more of those savings as we roll through 2009?

Yes, I would say that would be the way to look at it. Shawn Harrison – Longbow Research: Okay. On the R&D side, I'm guessing you're not going to see any pull back there, probably just maybe hold steady kind of the current level best way to work?

Yes, you actually will see some reduced spending in R&D, but not so much because we're pulling back resources. As we move some of our factories over to China and in Mexico, we're also seeing more of our R&D resources follow the manufacturing. So you'll see similar level of R&D resources cost at a lower dollar, so you will see some savings in R&D as well. But that's not included in that $20 million forecast?

No, that's not included in the $20 million forecast. That would show up in the SG&A, the operating expense forecast that we did in the guidance. Shawn Harrison – Longbow Research: Okay. And then two follow-up questions. I guess what is the margin profile of Startco? I thought maybe it would be a little bit more accretive this quarter than it is – or maybe should we expect more accretion as we get into 2009? And then just secondly if you could talk about some of the logistics costs, I know they were a headwind for you in the third quarter as well as the second quarter, what are you seeing there?

Really, in Startco, you're right. We – we expect that to be a very accretive acquisition as we get into the back half of '09 and certainly into 2010. We think it will be significantly accretive. We do have some one-time costs that we're going to be incurring related to integration and trying to drive some of the sales growth initiatives that we have there that will happen over the next several quarters. But as we get into late '09 and certainly into 2010, you'll see much more accretion coming from Startco than we talked about here. And then your other question is related to logistics. And I think primarily you were referring to transportation costs, Shawn? Shawn Harrison – Longbow Research: Yes.

Yes, we – yes, we expect those to be coming down significantly. If oil prices stay where they are today, we'd see a big ramp up in freight surcharges through the first half of 2008. We're starting to see those surcharges come down. They tend to, tend to sometimes come down slower than they go up. But certainly, we expect to see some benefit in the fourth quarter from those, and meaningful benefit as we get out into 2009. Shawn Harrison – Longbow Research: Okay. And then just back to Startco. Would using something like potentially up to $0.10 accretion for 2009 be too aggressive at this point in time?

I think it will be that order of magnitude. Maybe – it could be slightly less than that, but it's going to be that order of magnitude heavily weighted towards the back two quarters. Shawn Harrison – Longbow Research: Okay. Thank you.

Okay, Shawn.

(Operator instructions) And we'll go to Alexander Paris with Barrington Research. Alexander Paris – Barrington Research: Hi.

Hi, Alex. Alexander Paris – Barrington Research: Just looking at your fourth quarter earnings estimate, that's a very big range from $0.04 to $0.14. What kind of assumptions do you have there at the extreme? Something really good to have to happen to get to $0.14? Is that related to the savings or what?

Savings is a pretty – that's a pretty defined number at this point. We pretty much know what that's going to be and have that factored into numbers. The variables are certainly – revenue is a variable. We still had a pretty wide range on revenue, four percentage points, which translates to about $6 million of revenue range. So that's certainly from the top to the bottom of that range that accounts for a big part of the earnings. The other things would be things like exchange rates and commodities, which as you know, have been all over the map recently, generally coming down, but in currencies weakening against the dollar. But those have been pretty volatile, too. So that – -those would be other variables that we factored into the guidance that are uncertain at this point. Alexander Paris – Barrington Research: Just focusing on 2009 on almost every conference call I hear talking to people and managements, too, is fourth quarter is you can see the economy kind of ran into a brick wall late in the third quarter and it's continuing, and they have a pretty good feel for that. But once they go past the – past December, they most admit they don't have the foggiest idea what's going to be happening. So when you look at your – if you're going to be down to 16% in the fourth quarter, that brings your 2000 revenues – or 2008 revenues to about 544, you think they're going to be down from that. I'm just wondering just where you're getting some of that. Like in the – in autos, for example, what's your assumption for the 2009 car build? Do you pretty much use J.D. Power and then adjust it or what?

Yes, we do, actually, Alex, use J.D. Power and that's a number that their latest forecast has it down worldwide for 2009 by 1.4%. I've said they've been changing that quite a bit recently, but their very latest forecast has got that down and, of course, the places that are suffering most is North America is down 6.2% and actually, Europe is the same down 6.2%, with Western Europe down 12%. And of course, there's still growth in places like India and China, in particular, growing at 13% and 9%. But the J.D. Power number is what we really do use. And what we then try and do is take from there what it means to our real customers and the vehicles, as I mentioned, that really impact us most. And there is almost as much of an impact in the movement from large vehicles and SUVs that have been very prominent in North America last few years to the small vehicle. But certainly, the J.D. Power forecast is down for the year-over-year.

Alex, also, I think that the guidance – the assumption that revenues are going to be down year-over-year would assume that the downturn that we're in now persists through at least the first half of the year and doesn't get significantly better in the second half of the year. Alexander Paris – Barrington Research: And if you just looked at your three areas, autos, electronics, and electrical, where would you expect the most weakness in autos?

Autos is going to be down – it's going to be down because we had a pretty good first half of 2008, right, so I mean, our first half of the year in '09 is going to be down, fairly likely going to be down pretty substantially from the first half of 2008 when things were still going pretty well for us in the auto business.

Yes, in particular, we were very strong in Europe. We did point out that our European strength in the first half lot of that was from currency and tell you where it stands today, the currency impact of that significant amount of automotive European business on lower volumes is going to be significant for us. Alexander Paris – Barrington Research: And the electronics, just roughly, how do you–do you get any kind of a feeling directly from your clients saying we're cutting back in the first half or so forth, or is that just kind of related to general conditions as you voiced around the Wall Street and so forth as far as the downturn? Are there any specific areas of weakness?

I think that's probably the least clear of all the areas. I think the Asia manufacturers, whether it's the OEMs, like Samsung and Sony, or more and more the OEMs like Fox Kan [ph] that make the equipment. I think they are really trying to read the economies and the consumer health or consumer spending and see if as we get into the new year do people feel little more confident to be spending money on discretionary purchases like consumer electronics, both in Europe and here. Certainly, in the last quarter I mentioned that I had visited Samsung with the LCD group there and frankly they were asking me what we thought that the consumer demand was going to be like here, and really until fairly recently it was holding up quite well. I think that even last quarter Best Buy still recorded quite strong sales growth. So it's changed quite quickly I think in the last month and I think it gives people sort of some concern to try and make any predictions for next year. Alexander Paris – Barrington Research: Your electronics business fairly high proportion of it in terms of your end market customers is really tied into the consumer. Is that right? Is it kind of a rough percentage? I know you've got the infrastructure in telecom and –

Consumer would be probably in the neighborhood of a third, and then we've got a piece of that is – smaller piece is telecom, and then the largest piece really, Alex, is in the – what we call industrial general electronics, all the – this broad market for things like test and measurement equipment and medical devices and lighting applications and white goods and all these things. Alexander Paris – Barrington Research: But the white goods is really part of the consumer –

Yes, they're – it's a good point. They're probably – we don't – we categorize – I mean the 30% or so or the third is more the digital consumer stuff, we have some non – some consumer weighted items that would also be in the general electronics, but not a big number of that. So maybe bump that by another few points, but it would still be less than 40% of our total electronics business I believe. Alexander Paris – Barrington Research: Roughly, if you were looking at a number not to say there is a real close correlation, but the 40% of your business is maybe more related to industrial/related capital spending and 40% consumer and the rest maybe miscellaneous, something like that.

That's a good assumption.

Probably not a bad assumption. Alexander Paris – Barrington Research: Okay. And just one other thing, your tax rate, do you think it will stay the same in 2009? Was it 29%?

Yes, I mean, it's – with everything else being as volatile as it is, it could also affect where our earnings come from, which would really determine the tax rate. But right now, there is nothing I can see that would cause us to think that it would be much different than it was this year. So I would say in the 28 range to 30 range would be our best guess. Alexander Paris – Barrington Research: Okay. Thanks very much and good luck.

Thank you, Alex.

(Operator instructions) We have a follow-up question from Shawn Harrison with Longbow Research. Shawn Harrison – Longbow Research: Hi, just two quickies. The other income number this quarter, I guess what comprised the majority of that how should we think of that going forward?

Yes, it's a good question, Shawn. We're really – we're talking a number that was roughly $3 million in other income. Probably – I think it was about 60% of that number was currency related, so it was mostly balance sheet currency translation. So that one's a difficult one to call going forward as to what that's going to be. Certainly, if current trends continue we'd probably get some currency benefit in the fourth quarter as well on the balance sheet from balance sheet translation. The rest of it is related to – it's just other income items, such as royalties, interest income. We had some small dividends in there. It was a number of items, miscellaneous items that show up from time to time in our numbers that are generally a little bit lumpy. But we certainly will have in total during the year next year we'll have similar numbers on those items. The real question mark is on the $1.5 million to $2 million of that number for the quarter that was related to currency. Shawn Harrison – Longbow Research: Okay. And then do we have a final purchase price related to Startco that we can model? I guess how would you – how do you fund that?

We haven't announced the purchase price yet, but you'll see it shortly when we file our 10-Q. But it will – and we did do – we did the financing through a term-loan that we took down at the beginning of the fourth quarter. Shawn Harrison – Longbow Research: Okay. Thank you very much.

Okay. You're welcome.

And this concludes our question-and-answer session. At this time, I would like to turn the conference back over to Mr. Hunter for any additional or closing comments.

Thank you for joining us on the call this morning. I hope our comments have addressed the current economic environment for our business and what we are doing, both short-term and long-term to meet the challenges ahead while continuing to build our position as the global leader in circuit protection. We very much appreciate your interest and look forward to talking with you again next quarter.

This concludes today's conference. We thank you for your participation. Have a great day.