Good morning, ladies and gentlemen and welcome to the Welcome to the Plexus Corp. conference call regarding its Fourth Fiscal Quarter 2008 Earnings Announcement. [Operator Instructions]. After a brief discussion by management we will open the conference call for questions. The conference call is scheduled to last approximately one hour. I would like to turn the call over to Mr. Angelo Ninivaggi, Plexus’ Vice President, General Counsel and Secretary. Angelo you may begin. Angelo Ninivaggi - Vice President, General Counsel & Secretary: Thank you, Cherish. Hello and thank you for joining us this morning. Before we begin, I would like to establish that certain statements made during this conference call that are not historical in nature are forward-looking statements. Forward-looking statements are not guarantees since there are inherent difficulties in predicting future results and actual results could differ materially from those expressed or implied in the forward-looking statements. For a list of major factors that could cause actual results to differ materially from those projected, please refer to the company’s periodic SEC filings, particularly the risk factors in our most recent Form10-Q filing. The company provides non-GAAP supplemental information such as earnings or earnings per share, excluding restructuring costs and adjustment for the valuation allowance on deferred tax assets. These non-GAAP financial data are provided to facilitate meaningful period-to-period comparisons of underlying operational performance by eliminating infrequent or unusual charges. Similar non-GAAP financial measures including return on invested capital or ROIC are used for internal management assessment because such measures provide additional insight into ongoing financial performance. For a full reconciliation, of non-GAAP supplemental information, please refer to yesterday’s press release and our periodic SEC filings. Joining me this morning are Dean Foate, President and Chief Executive Officer, and Ginger Jones, Vice President and Chief Financial Officer. We will begin…

Thank you. [Operator instructions]. Your first question comes from Shawn Harrison with Longbow Research.

Good morning, and congrats on the quarter. Just a quick clarification. What was the forecast for the medical, as well as the defense and aerospace business here for the first quarter?

Sorry, we’re just shuffling papers here, Shawn trying to catch with the raw material.

I guess while you’re looking for that maybe if you could comment with the $200 million programs wins, maybe break that out between new and existing customers, the end markets, and how you expect that business to ramp through 2009?

Yes, and your first question was medical and industrial?

Medical and defense and aerospace?

Yes, we set the outlook for Q1 for medical was going to be up. I think I said the mid-teens strength, and then defense care and aerospace I said was going to be up in Q1, at about 33%.

Okay.

And then in terms of new business wins, we had, I think I characterized, 19 of them. The vast majority of those wins, I think 17%, 18% of them, were actually increased share with existing customers. In terms of quantity we did manage to get wins in all of our sectors. The largest numbers of them was 8 of them were in the industrial sector, and then 4 in defense care and aerospace, 3 medical, 2 in wireless, and 2 in our wireline sector. But I’m not going to break out the revenues associated with them individually at this point.

Okay. But maybe how you would expect maybe that 200 million in aggregate to ramp throughout the year. It seem that it’s really backend loaded and nothing really in the first half of the year, if that’s safe to assume?

Yeah, it is safe to assume. Anytime we announce wins. there is quite a bit of variability as to when the wins ramp up, but we do expect to see a fairly decent amount of it at this points, currently, in.09 but as I said, right now, uncertainty is I don’t know that we can anticipate normal performance out of new business wins, given the current environment. In other words, you know, will that 200 million hold up in terms of revenue volume, given just end market demand. If we’re seeing end market demand programs as well with new program wins. But if you kind of dissect this, there is probably right now about 50% of that 200 million or so that we would expect to see in fiscal 2009.

Okay. And then I guess Ginger for you, on the operating expense profile, you know, ticking up only marginally here in the first quarter. It sounds from your commentary that maybe we should expect that to hold relatively firm on a dollar basis through the year, maybe not have some of the variable compensation upticks that we’ve had in prior years past?

Yeah, I think that’s a fair assumption for ‘09 at this point, so I’m guessing if we look at SG&A, it should be in that 26.5% to 27% to27.05% range for ‘09.

Okay. Thank you very much.

Thank you.

Thank you. Your next question comes from Jim Suva with Citigroup.

It’s actually Jason Garcia calling in for Jim Suva.

Hi Jason

Good morning, everyone. Congrats on the new wins. Just a quick follow-up to that. Any reason to think that ramp costs for these programs would be any different than historic ramps, as far as the costs are concerned? And then secondly is the 30 million mechatronic win included if the 200 million or is that separate?

The first on the 200, well, let me address whether the 13 is included. The 13 is not included, it’s outside of that and we took it outside the 200 million because pretty significant at the 30 million in the quarter. More importantly that program could be a top 5 customer program for Plexus as we move through fiscal’10. So, it could be a significant program for us. Secondly program on out separately plus the ramp cost with that program will be a little more burden. So, as we need to have physical capacity to support the program in North America. The remainder of the 200 million are as I said to Shawn earlier, that they are mostly incremental business wins with existing customers. So, we would expect those programs to ramp up with pretty decent returns, nothing unusual in terms of the challenges, especially with bringing on that business.

Okay, great. And then, obviously in order to get to SG&A at 5% of revenues, you’re going to have to see some revenue come in at the top, to be able to drive the leverage. I’m just wonder, how realistic do you think that is in this type of macro environment, and at what do you start making plans to engage in cost cutting, or is this going to be a process of continuing to invest and waiting for the revenue the catch up?

I think a couple of comments on that Jason. First, we made some invest .s in our customer spacing market sector teams in ‘o, and we feel like most of that, those teams for place now, and beer going to be average able to leverage those teams for team 2009. And clearly we will have revenues, you’re going to have to see some revenue come in at the top line so we can leverage those investments and get SG&A closer to our 5% margin. So it is obviously a combination of both of those for us. I would also say we are thinking about what to do in worsening economic environment and we’ve season done some what ifs, and that it about a number of options. I think we you know, investors should know we’re taking that seriously, and want to make sure we have plans in place should our forecasts look like they’re going to get worse.

Okay, great, thank you.

Thank you.

Thank you. Your next question comes from Kevin Kessel with JP Morgan.

Hi, guys, good morning. I just wanted to, I guess, further clarify the mechatronics, when you spoke about this quarter, $30 million is second and the year. Is this the same win that you had alluded to a couple of quarters ago that you said at some point would likely ramp up in Mexico?

I don’t know that we alluded to this one before. We did win a new program for mix co separate from this piece of business, that’s going to contribute mightily to the Mexico situation in ‘09. The $30 million is this problem is not likely to have any impact at all on Mexico, although we believe as the program gets larger, fits successful in the end market, that our Mexico facility will be a part of the solution as we look out into ‘10.

I guess when you refer to that one program, I don’t remember, a couple of quarters ago, thought you said could be 10 million or so roughly per quarter, and would maybe, just on its own, be big enough to tilt the lever towards profitability, that’s separate entirely from this?

That is correct.

Okay. That’s it, I appreciate that. And then the other question have is when you look at the overall balance sheet Ginger for the customer deposits line that you guys break out, it looks like it’s up 2.5 times from where it was a year ago. Is that a function of you guys, of, you know, becoming more, careful around the customers that your engaging with that might be, you know, less financially able or is it I guess, the question is, are you dealing with more customers that are in a weakened financial state. And therefore you’re seeing higher customer deposits, or have you changed your overall Terps in terms of taking customer notes from folks?

Yes first I don’t see any change in the mix of customers, and customers that we’re taking on, and their financial stability. I think we have a pretty good process of managing that, and so I don’t think it’s a reflex of out customer base. I think it is a reflection of our discipline internally, and generally as inventory ages or becomes obsolete, we have a process in working with customers to make sure they either take that inventory, and we actually sell it to them and move it off our balance sheet, or if they don’t want to do that, then we like to have a customer deposit, so, in essence, that’s reserving against potential inventory issues in the future, not just a very practical and disciplined way of managing our inventory risks. So, I think is that’s a good reflect of our discipline around managing inventory.

Did any of the other reserves that you had taken previously out of Mexico and is mainly vertic any of them reverse in the quarter?

I think they were very small reversals in Mexico, nothing significant.

Nothing significant. And can you update us on whether or not, where it was, I guess relative to breakeven in that quarter?

To the Mexico facility lost $500,000. That’s about half of the loss in the third quarter, which is $1,1million. For the full year the loss was $2.6 million and as Dean. said we have good visibility to breaking even in the first half of ‘09.

Thank you very much.

Thank you. Your next question comes from Amit Daryanani with RBC Capital Markets.

Thanks a lot, good morning guys. You talked about CapEx being $70 million to $75 million range for fiscal ‘09?

I did.

So, I guess if I look at that, looking at about a 36% increase in CapEx year-over-year, despite, I think you guys talking about you are not providing ‘09 guidance because visibility is bad, and markets relatively unstable. Can you help me understand why we have such a big CapEx when we’re unsure about what end markets are doing right now?

I think the first answer to that is if you look back we’ve had 18% revenue growth over the last five years and that growth has to go somewhere, and so as we look forward, although we’re not willing to give guidance for ‘09 yet, we still feel like we have a decent shot at growth in ‘09. There is a significant portion of that capital that is related to new facilities to support that growth, and we obviously manage that prudently. If we see forecasts change significantly, we will adjust our capital spending appropriately, given our outlook now we think that’s a reasonable guidance for you to start from.

All right. And then, just kind of going back to the comment on inability for fiscal ‘09 guidance. Can you talk about what the linearity saw in fiscal Q4? Are you essential seeing audit cuts in OEMs, or you just seeing the incremental orders being a lot more cautious than they have in the past?

Let me characterize Q4 in couple of ways, one, is that we did see certain customers start pushing we called it pole signals towards the back end of the quarter. So, we saw from the way we started the quarter, we thought we assumed that certain level of linearity, and it became more backend loaded as we moved through the quarter. Second, I would say that when we entered the quarter, we took a different bias in our guidance so we biased our guidance more pessimistically, I would say, than our typical conservative guidance that turned out be to a good decision. So, we did see a degradation of demand, fairly broad swath of customers as the quarter unfolded. So, as indicated that part for we took the same approach here in our fiscal Q1, when we rolled up our forecast, we took a different approach again in our guidance, and we biased it pessimistically off of our forecast with the assumption that we would achieve further degradation in demand. So, just to give you a little sense of color on how we’re viewing the world at this point, well we have not seen a mass capitulation of customer forecast at the point. Looking forward right now our forecasts appear, reasonably, healthy and normal, and as Ginger said, as she kind of signaling on the CapEx, we currently -- forecasts would suggest we’re going to grow this coming year but you know what’s happening on Wall Street and look at how the stocks are trading for our customers, there’s quite a bit of uncertainty, which causes us some pause in terms of what we’re willing to go out on a limb for here in terms of our revenue growth range for the year.

Got it. It essentially sounds like had you guys are reading Wall Street Journal, you would feel better about your business?

Yes, if would turn off the TV, stop reading the papers and watching the ticker, we would be all right.

Okay. Fair enough, thanks a lot guys.

Your next question comes from William Stein with Credit Suisse.

Thank you. Thanks for taking my question. Just want to make sure I heard correctly, the wire line networking sector, you’re expecting that to be down, I think if I put in all of your guldens for the other segments in my model, it looks like down about 10% at the mid-point? Is that kind of a fair assumption?

You said a wireline, or wireless, I’m sorry.

Wireline?

Wireline? We’re projecting right now to be flat to down slightly. So not quite the severity of the decline that you’re looking for. We’re talking about Q1.

Okay. I guess normal, if there is a normal seasonal pattern here, I think it’s up a little more than that, can you talk about and of course the, similar little bit of weakness, I guess, in the last quarter, and you mentioned that and of the top customers were weak there, is there any outsized weakness at your number one customer, and any update on the relationship there? I know that there has been some move of some of the business that you that wasn’t really well suited for Plexus, lower end product that shipped it to another contract manufacturer. Any extension of that activity?

Yes, let me just be clear on Q1 and wire line. I did say that we expected our top three customers to be up in Q1, so there is strength there, and but we are going to end up flat to down slightly, because the rest of our top 10 customers, 7 of them, are all down in the quarter, so it’s quite a mixed bag here of performance so we’re seeing the strength of the top 3. Relative to our top customer, what would say is in fiscal 2007, we grew revenues 15%, in fiscal 2008, we grew revenues 15%, in fiscal 2009, we would expect to grow revenues again. And so we feel good about our position with that customer and with the portfolio of products that we supplied for them. The relationship continues to develop at a strategic level. I talked about the investments that we’ve been making at our largest facility in Penang, Malaysia, and of course part of those investments are to support our growing relationship with Juniper Networks.

Great. I appreciate that. Just one follow-up. Can you talk about the competitive environment as it relates to pricing? Are you seeing any undisciplined competitors come in and offer pricing that doesn’t make sense?

We’re hearing a lot of that chatter in the marketplace. I don’t know that we have experienced anything significant at this point. I would say that it is one of the situations where we recognize that we have a number of competitors that are in a weak position One might immediately assume that they’re going to become irrational in terms of pricing to gain additional business, but on the said I’d of that, I’m not sure they can afford to take on additional programs where they tonight make money, because they’re not making any money now. So I don’t these going to be some, no question, I think that we’re going to see probably an increase of some desperation pricing in the marketplace, but I think that it’s going to be easier for the stronger competitors to go hunting else where than it is to go hunting against the Plexus customers.

Great, Thank you.

Thank you.

Thank you the next question comes from Reik Reed with Robert Baird and Company.

Hey, good morning. Can you guys just talk a little bit about, as you look at your forecast, the level of volatility that you’re seeing, and are there any discernable trends that you’re uncovering, and by segment to the extent you can talk about it?

Well, I would say that, it’s not a fire sale, so we haven’t seen what I would call just exceptional volatility. I would say when we do see volatility, it intends to be more biased down than it is up. I think that the wireline kind of networking sector probably is probably moves the most, but it’s not surprising, given that the demand fulfillment model, in terms of how lean the supply chain is, and how we deliver completed producing to the customer our customers end customers, causes quite a bit of volatility as we move through the quarter, and it’s a little bit more difficult to have a kind of a level forecast there. So, I’m not surprised by that volatility. I also see right now that we have some of our strongest competitors in this market place seem to be doing and biggest customers tend to be doing okay, at least the way we look at it going forward at this point. Wireless for us is always a little bit volatile. We don’t have a very large portfolio of customers, so we don’t get the smoothing effect you would get when you get a larger portfolio. But those customers tend to be, at this point, most of our customers in that market tend to be, I think, in a position where they’re going to be, you know, able to grow in the current market place, unless there’s. like I say, a complete meltdown. Medical, I think, is going to hang in there pretty decently. We’re currently projecting medical to be up through the fiscal year, and I think that’s just, you know, the nature of that segment tends. to be a little bit more immune tow the current, you know, economic pressures, although it’s not as immune as…

Okay, great, thank you Dean.

Thank you.

Thank you. Your next question comes from Shawn Hannan with Needham & Company.

Yes, thank you. Good morning. If I could just follow up on the mechatronics program, if you could elaborate on the nature of these programs in general, how you would view the stickiness of these types of programs or customers, in terms of fall on revenues say versus your other industrial customers and then also as part of that, how do we think about those types of margin profiles for your business?

Well, I’ll let Ginger talk about the margin profiles, but in general, the programs are different in their nature, in that they tend to take up quite a bit more floor space in our facilities, although the floor space needs tend to be less expense on a per square foot basis, and the term of mechatronics applies to devices that have a lot of mechanical components, but some fluid or motion mechanisms in them, as a greater percentage of the assembly than typical electronic product, which it would some electronics with a plaster or metal wrapper or both around it. In terms of the stickiness of the business, I think that the business can be sticky because the supply chain challenges of establishing these programs are pretty significant. You’ve got a lot of materials moving a at fairly high velocity. You do need to have, like I said, quite a bit of floor space available in order to bring these programs up, and so I think there’s from the standpoint of the way we look at it, and the standpoint of our engineering solutions capability to out customers design kind of products and make improvements and also to make evolutionary changes to the product to go after additional markets, I think is quite good. So, we feel quite strong about the possibility of Plexus growing our business substantially in thus market. We think it’s one that’s quite underserved by the EMS industry, and we think we are uniquely positioned to be able to have success here. Ginger, did you want to comment about the margin, or perhaps the ROIC component of these programs, probably useful information.

I would say that at this point we don’t see any significance variance from our kind of normal programs. This is still a product that would fit our sweet spot of lower volume, higher complexity. I think the one differentiation is going to be on the working capital side as Dean alluded to. These are going to have a number of components, and there will be investments on the balance sheet for that, but I also thing they’re going to turn much more quickly. So, I think as we look at the combination of all of that, we would expect a similar ROI profile to the business we have today.

Thank you that is very helpful, thank you. If I can also just follow up on your guidance for next quarter, specifically within medical, I think that there’s been a lot of commentary out there, and correct me if I’m wrong, that there has been a lot of pull back, Dean I think you had alluded to this earlier, in that some of the purchasing decisions are becoming little bit more in line with other types of verticals, there’s been an inventory, I guess, correction in the marketplace in the imaging space overall, medical over the last year or two. So, just was curious in terms of what specifically is going to be driving the growth for next quarter, and this outlook?

It’s a number of things, I think. One is I think just in generally we’ve done a better job of increasing our share of business in this space. We’ve won a number of new programs here over the last year that are going to help us in the medical sector. Also, when you look at the ‘08, suffered from the kind of reset in demand in imaging with the reimbursement changes of the Federal Government, and also in our largest customer there, GE, had these difficulties with the FDA at one of their facilities, which hampered growth in medical for us in 2008. So, ultimately in 2008, we’re up about we’re up about 4% in medical, it’s not at all where we would have liked to have been, but when you look inside that number, if you set aside the FDA-related issues and reimbursement challenges, we actually had a pretty decent year in medical where we gained a couple of very significant new accounts, new program that kind came through our engineering organization, and is now moving into manufacturing. So, when you peel it back, it was actually quite a good year. As we look into ‘09, we expect to carry that momentum, so the prior programs, the ones out of engineering, the gain share that we’ve had during the course of the year, would expect a drive top line as ‘09 unfolds.

That’s terrific thanks very much.

Thank you.

Thank you, your next question comes from Kevin Kessel with JP Morgan.

Just a follow up, Ginger I just wanted to clarify on the free cash flow you gave earlier you said, I think $30 million to $35 million?

Yes its $30 million to $40 million.

$30 million to $40 million of free cash flow?

Yes.

Okay. So then, we’re talking essentially like $110 million or so for cash flow from operations, give or take, for this year?

Yes hold on just getting there, yes exactly.

And then, also, can you say of the CapEx, is any -- is there a component of that $70 to $75 million that right now is being incorporated into an Eastern European expansion effort, or expectation of one happening?

No at this point this CapEx does not anticipate any investment in Eastern Europe, although as we talk that we are getting further down the path of making a decision about both the right location and how we make that investment.

Okay, is that something that at this point could very well happen in fiscal ‘09, or is it still too hard to say?

No, I think we will have a decision in fiscal ‘09.

A decision would happen, and you think actually something would from the perspective of investment also happen?

It’s one of those investments, Kevin, that if things go bad, we could defer until later, but at this point, we’re moving ahead and trying to get to our chosen location, and the specific opportunity for entry, and then we’ll look at how we feel about our forecast and the economic situation looking forward and we’ll make the call, but we’re very close, I think, to deciding what we want to do, it’s just to whether or not we’re going to pull the trigger is yet uncertain. And we’ll be talking about that here in a couple of weeks, so when we have a board meeting.

Got it. And then, Dean we are in the new wins from existing customers, did you say 17 to 18 of the wins were from existing, or percent of the wins were from existing?

That was a quantity so we said 19 wins, separate from this one large program, and I said 17 or 18, depending upon how you slice and dice it, is what the customers additional share.

Existing share was existing, okay and then just lastly housekeeping. On the stock can you give us a break down on cost of goods sold and SG&A?

For the fourth quarter?

Yes.

So for the fourth quarter of ‘08, the total dollar of stock based compensation was 2.4 million was and of that, 1.7 million was in SG&A.

Okay. And then for next year, do you guys have any sort of an expectation for roughly where stock compensation will run?

Can you tell us where our stock is going to trade, Kevin?

Yes, I’ll help you out a little bit there. I think it’s going to be roughly in line with that for the first quarter, so for the first quarter we think it’s about $0.06 of EPS, I think its about 3.1 in total, and 2.4 million on the SG&A line.

Thanks very much.

Thank you.

Your next question comes from Sherri Scribner with Deutsche Bank.

Hi, thank you. I wanted to ask a little bit about the restructuring charges you took for the Boston facility. Are we done now with those restructuring charges? And I think in the press release, you mentioned that you expected to see cost savings of 4 to 5 million from that from closing that facility, but you suggested SG&A would be similar to what we’ve seen now. So should we expect to see that savings in COGS, and when should we start to see that?

I’ll starting with your restructuring charges first, there’s going to be a modest amount of restructuring still to come as we wrap up the facility and transition out of that facility over the first and second quarter, and I would characterize that in the range of kind of $400,000, to $500,000, and most of that may happen in the second quarter as we actually shut town the facility. We do still expect savings in the range of $4 million to $5 million. I think that is going to be obviously weighted to the second half of the year, after we close the facility. And I think you’ll see we haven’t really split out how that is going to be between cost of goods sold and SG&A. I think we’ll see a model impact on SG&A, and most of it in cost of goods sold.

Okay. That’s helpful. And then in terms of your cost base. In the COGS component of your income statement, how much of that would you characterizes a fixed versus variable related to your program?

Yes, I think kind of I don’t have the specific information in front of me, Sherry. I think the general rule of thumb is it’s about 80% variable and about 20% fixed, but I happy to get you some but I happy to get you some more detail on that off line.

Okay, thanks.

Thank you. And we have a follow up question from Shawn Harrison with Longbow Research.

Hi, just two quick follow ups. Kevin’s question on the expansion in Eastern Europe, have you decide whether Europe looking Greenfield, or in turns of maybe an acquisition, I guess, has that been decided?

Our significant preamp at this point, and most likely would to be Greenfield.

Okay. And then just second question. I know Ginger you mentioned lower interest income assumption, but could you remind me what is the interest rate any the debt now, and kind of what are you using for an interest income assumption?

Sure. The interest on the new long term debt is 5.7%, and that’s fixed, and that was fully reflected in our fourth quarter, we had that debt outstanding for the full quarter, so that’s probably not a bad measurement as you look at the fourth quarter. It’s harder to give you an estimate on the interest income. I would say kind of the fourth quarter rate maybe down a little bit as we’ve moved into more conservative investments over the fourth quarter. Some of our -- we have cash all over the world earning different interest rates, so I would just ask you to take a look at I that fourth quarter and maybe move that down slightly.

Okay. Thank you.

Thank you.

Thank you. And at this time there are no further questions.

All right, well, will that I want to thank everyone for joining us today. Again, once again, we’re really pleased with the way our year unfolded, and I want to thank once again all of the employees who might be listening in, because they really did an outstanding job for Plexus this past year. Hopefully ‘09 unfolds to be a similar year, but at this point I just willing to be an oracle and predict what will happen in the macroeconomic environment, but we are realistic in terms of you, and we’re willing to do what we need to do to maintain the financial health of the Company. But, at the same time we’re optimistic about the year, and I think as you could kind of sense from us, we feel that not all things are bleak, and that there’s a good opportunity here for Plexus and we think longer term we think, we’re really well positioned to capitalize on market opportunities, given the strength of the business and the strength of the brand. So, thank you once again for joining us, and have a good day. Thank you.

This concludes today’s conference.