Greetings and welcome to the Methode Electronics fiscal 2011 second quarter earnings presentation. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded. This conference call does contain certain forward-looking statements, which reflects management’s expectations regarding future events and operating performances and speak only as of the date hereof. These forward-looking statements are subject to the Safe Harbor protection provided under the securities laws. Methode undertakes no duty to update any forward-looking statements to conform the statement to actual results or changes in Methode’s expectations on a quarterly basis or otherwise. The forward-looking statements in this conference call involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in Methode’s filings with the Securities and Exchange Commission, such as our annual and quarterly reports. Such factors may include, without limitations, the following dependence on a small number of large customers, including two large automotive customers; dependence on the automotive appliance, computer and communications industries; seasonal and cyclical nature of some of our businesses; dependence on the availability, price, and risk of substitution or counterfeit of components and raw materials; ability to compete effectively; customary risks related to conducting global operations; ability to keep pace with rapid technology changes; ability to avoid design or manufacturing defects; ability to protect our intellectual property; ability to successfully benefit from acquisitions; currency fluctuations; unfavorable tax laws; and the future trading price of our stock. It is now my pleasure to introduce your host, Don Duda, President and Chief Executive Officer for Methode Electronics. Mr. Duda, you may begin.

Thank you Kristine, and good morning everyone. Thank you for joining us today for our fiscal 2011 second quarter financial results conference call. I am joined today by Doug Koman, Chief Financial Officer; and Ron Tsoumas, Controller. Both Doug and I have comments today and afterwards, we will be pleased to take your questions. This morning, I am pleased to report that the second quarter of fiscal 2011, Methode continued to post strong net sales, which improved 8.2% year-over-year, and 8.5% sequentially over the first quarter, led by improved sales in our Asian automotive and power product segments as well as in our North American and European semiconductor segments. We achieved this revenue improvement despite the loss of the Delphi business, which represented 6.6 million in sales in the second quarter of last year, and planned lower legacy automotive products sales of 3.9 million. Excluding these two items from the year-over-year comparison, second quarter fiscal 2011 sales increased 18.6 million or in excess of 21% over the last year, which I believe reflects the true measure of our success. For the first six months of fiscal 2011, net sales increased 8.8% compared to the same period of fiscal 2010. Excluding the loss of 14.1 million in sales to Delphi and planned lower legacy automotive products sales of 10.2 million, sales increased 40.9 million or almost 25%. As we announced this morning, Methode recorded an expense of 3.8 million in the second quarter for unsecured claims Methode had filed against Delphi in Delphi’s bankruptcy proceedings, which we sold to Credit Suisse in 2006 and they subsequently assigned to Blue Angel. We recorded this expense as mandated by accounting rules, although we believe we have defenses to the complaint. This expense adds a considerable negative impact in earnings in the second quarter…

Thank you, Don, and good morning everyone. I am glad to keep my comments brief today, since we provided detailed information about our consolidated and segments’ results in both our earnings release and 10-Q filings. Don mentioned that we had some significant items in both the current and last year’s results that makes for our difficult apples-to-apples comparison. Let me walk you through some non-GAAP adjustments. For the second quarter, we reported a net loss of $0.5 million or $0.01 per share. This compares to net income of 2.1 million or $0.06 per share in last year’s quarter. Excluding the 3.8 million Blue Angel charge and the negotiated program termination charge of 1.3 million, the current quarter’s net income would be 4.6 million or $0.12 per share. In last year’s results, if we excluded the negative effect of the 3.2 million of restructuring charges and the offsetting favorable effect of reversing a 1.7 million one-time pricing accrual, then last year’s second quarter net income would have been 3.5 million or $0.10 per share, therefore, on an adjusted non-GAAP basis, net income was 4.6 million this quarter compared to 3.5 million last year’s quarter or $0.12 per share this quarter versus $0.10 last year. For the six-month period, we reported net income of 3.6 million or $0.10 per share. This compares to 2 million or $0.06 per share in last year’s six-month period. Excluding the $3.8 million Blue Angel charge and the negotiated program termination charge of 1.3 million in the current six-month period, net income would be 8.7 million or $0.23 per share. If last year’s results excluded the negative effect of 6.8 million of restructuring charges and the favorable effect of reversing a $1.7 million one-time pricing approval, then last year’s six-month period net income would have been 7.1…

All right. Thank you, Doug. Kristine, we are ready to take questions.

(Operator instructions) Thank you. Our first question is from Jeremy Hellman with Divine Capital Markets. Please proceed with your question.

Hi, good morning guys. Congrats on a nice quarter.

Thanks Jeremy.

And thanks also for putting out that 10-Q earlier, I like that, makes my job easy. A number of things on my end. Just trying to get to what is, if you will normalize SG&A expense level, if you back up Blue Angel, that gets it down to 17.5 million for the quarter, and then there was program termination costs and write-downs and vendor supply, that’s another 2.6 [ph] or so, am I right? And thinking that will be backed out getting me down to about 15 million or so for kind of a base SG&A level?

Jeremy, just didn’t quite hear you, what were you backing out in Blue Angel?

Blue Angel, then 1.3 million of program termination costs, 0.7 –?

Yes, Jeremy, those are in cost of products.

That’s simple. That’s right, yes. So, I actually had my question upside down, and if I back those out of cost of products sold, that comes out to about 4.7% of revenues. So, for the auto gross margin, let me say, it’s going to pick up anyway based on what you have got coming down the pipe, but that gets it up to around 22 in change is kind of a go-forward basis for gross margin, is that, I am thinking about that right?

I think we have said that we were in the – going forward, probably the high teens. Yes, I don’t know that I would go as high as that – what you have taken out there, but I don’t think we would see that, I think high teens is a little bit –

Okay. And then, kind of thinking about the margins, again, when you mentioned your 2014 goal of hitting that $551 million revenue target, do you have any kind of framework around where you would like margins to be with that revenue level?

I would refer you to the – you are talking about gross margins?

Whichever margins you would care to comment on, EBITDA margins, gross margins, that margins, if you want to go that far.

I will let you go from a gross margin line down, but I would use what we put out recently on the gross margin ranges by segment.

Okay. Legal expense, I think in the Q, you mentioned that, that has come down a bit, how much was legal expense in the quarter?

There is 600,000.

Okay. Legal?

I am sorry, it was 600,000 less I think – I am sorry, it wasn’t 600,000, it was 600,000 less than last year.

Okay, last year.

And as we commented, that will (inaudible).

So, is there anything in this quarter that’s currently scheduled that you would look to skew it in this quarter?

No, it’s hard to predict.

Okay.

No.

All right. One last one from me, and then I will jump back. Have you seen anything that would cause you to change your assumptions with Ford in the MyFord Touch with about 12 million second half this year, ramping to 40 next year and beyond.

We had a good launch with them from a standpoint of them filling their pipeline. They had a delayed launch. So, they picked it in the high gear recently. We are probably going to be into the mid-teens. I think we said 12 million, I think we will be in the mid-teens for the year, so that’s going to update slightly in the second half.

But and then looking into next year, any –?

I don’t know if I want to go that far. Let’s see how those products receive in the marketplace.

Okay, thanks.

Thanks Jeremy.

(Operator instructions) Our next question is from David Leiker with Robert W. Baird. Please proceed with your question.

Hi, good morning. It’s Keith Schicker on the line for David.

Hi Keith.

If I step back, it looks like the quarter came in better than what you guys were initially looking for and an outlook provided in the last 10-Q, could you just comment on just indeed that is the case, how the results are compared with what your initial expectations were and what the swing factors were one way or another that push it higher or lower?

Certainly in automotive, we benefited from the uptick in the U.S. automotive business and then that drove in our Asian sales, T-76 Lead-frame sales were very good, (inaudible) sensor business, which all comes out of the Asians was quite good. So, that really helped us interconnect, which is a little harder to forecast, was stronger. So, I think this kind of a, maybe than expected takeaways from our customers across the board certainly benefited us.

Okay. And then if I look at some of the items, the vendor supply agreement and the customer cancellation, a, if I want to back those out of the number, should I or is there any tax effect that I need to consider there, and, b, are those things that you would expect to continue going forward or are those just one-time items during this quarter?

The customer cancellation, those kind of happen all the time. We just commented on that, because it did happen in fact year-over-year. The negotiated program charges, it was different, because that was kind of a quick pro quote as Don mentioned in his comments in order to win some new business. So, that one, we consider that’s more one-time, I think we have seen that before. As far as the tax front on that, that happened to be business in Malta, and in Malta, there is no tax impacts of both pre and post-taxes, the same amount likewise on – you are going to ask about the Blue Angel in the U.S. because of our situation with net operating losses, we have taken full evaluation allowance from that. And so, there is no tax benefit to be recorded on that.

And then vendor supply agreement, is this component shortages, maybe we have heard other supplies talk about some electronic component shortages, is that what the issue is there?

No, in that case, it was really a capacity issue at the supplier. They ran into problems, we incurred premium freights and significant overtime. You can treat that as one-time, but every couple of years, you have something like that. That’s not something that you have routinely. But occasionally, supplier has a problem, and last one was about five years ago, maybe with Setco [ph] when they went under. So, I will leave that to the side.

Okay. And then if I look at the legacy business and the Delphi business, are we through the point now where that’s out of the prior-year comparison right now and that’s not going to be something that depresses the year-over-year revenue growth comparison as there is still a little bit more to roll off?

Yes, going into third quarter, fourth quarter, it will be a good comparison, but obviously the year-to-date will have a little bit in it.

Okay. And then Don, I got caught up with one of our comments before. The new T-76 lead-frame business, is that something that’s just newly announced this quarter, or was that just about the last quarter when you reported earnings as well?

We discussed it last quarter.

Okay, so that’s –

I wanted to update from third quarter of last year where we had listed out the opportunities. (inaudible) Those are all included in the numbers you saw at the Baird Conference.

Okay. And so, it looks like that revenue opportunity went up a little bit, though you are talking about $38 million now. I thought we had written down to 20 million last quarter? That, maybe I need to follow-up offline?

Let us follow up on that. It may just be the difference in the fiscal years, so let’s look that.

Okay. That’s all I had for now. Thank you.

All right. Thanks Keith.

Mr. Duda, there are no further questions at this time. I would now like to turn the floor back over to you for closing comments.

Thank you, Kristine. That will conclude the call, and we wish everyone very pleasant and safe holiday season. Thank you.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.