Don Adam – CFO Cary Fu – CEO Gayla Delly – President

Brian White – Collins Stewart Sean Hannan – Needham & Company Jim Suva – Citigroup William Stein – Credit Suisse Steven Fox – Banc of America-Merrill Lynch Sherri Scribner – Deutsche Bank Securities Ryan Jones – RBC Capital Markets Alex Blanton – Ingalls & Snyder

Good morning. Welcome to the Benchmark Electronics conference call to discuss our financial results for the fourth quarter of 2008.

I am Don Adam, Chief Financial Officer of Benchmark Electronics. Today, we will begin our call with our CEO Cary Fu discussing the overall marketplace that we faced in Q4 and we are facing today.

Gayla Delly, our President, will then provide comments and a more detailed discussion of our fourth quarter activities and performance in addition to our outlook for Q1. I will follow with a more thorough review of our financial metrics for Q4.

After our prepared remarks, Gayla, Cary, and I will take time for your questions in our Q&A session. We will hold this call for one hour.

During this conference call we may make projections or other forward-looking statements regarding future events or the future financial performance of the Company. We would like to caution you that these statements reflect our current expectation and that actual events or results may differ materially.

We would also like you to refer to Benchmark's periodic reports that are filed from time to time with the SEC, including the Company's 8-K and S-4 filings, quarterly filings on Forms 10-Q and our Annual Report on Form 10-K. These documents contain cautionary language and identify important risk factors, which could cause our actual results to differ materially from our projections or forward-looking statements.

We undertake no obligation to update those projections or forward-looking statements in the future. Now, I will turn the call over to Cary.

Thank you, Don. Good morning.

I want to spend some time this morning, give you some view as to what we have seen recently out in the marketplace and to provide you insight of how we at Benchmark are managing through this storm and aligning ourselves and emerging from this recession a stronger organization. The macro environment that we have seen referred to has been taking new meanings.

Globalization really global low today. We are certain we are currently in – it impacts almost every business in the world today.

Because of the scope of the recession, the customer diversification we have been working towards over the last – past couple of years has provided little insulation to our customer – revenue base. In fact, our fourth quarter was different from any prior downturn in that most segments saw weakness all at the same time.

But we believe the ramp – will be the continued ramps of the number of new programs during Q4and those did serve to upset the weakness overall. For the full year 2008, we the saw the strength in three other industry sector that we serve with new program ramps although these are not strong enough to upset the weakness in the computing sector as well as in test and instrumentation sectors.

In times like this, we expect a barrage [ph] of actions from our customers, which are normal reaction to the environment such as reduction in R&D expenditures, rationalization of products, reduced inventory in the channels, factory closedowns and job – the workforce reduction. But the primary between this downturn and the one in the past is the lack of liquidity.

This, we believe, has the greatest impact not only to the consumers, but to the business which must be short of cash and work on inventories. During slowdowns, the supply chain are not generally sufficient, therefore outsourcing partners, i.e., Benchmark, to provide buffering of inventory for the OEMs.

We are often among the first one to feel either the growth or as most recently experienced the contraction in the sales we saw when an OEM responded to the end market. Our decline are more dramatic and rebound much stronger for the initial period of time.

Also we (inaudible) demand of (inaudible) growth period. Another important part of reacting to and planning for the soft end use demand is cutting cost structures.

We had worked very hard to prepare in advance for the recession. When we saw the first signs of slowdown, we began in early 2008 taking necessary steps to reduce our operation cost by implementing strong cost control, including a reduction of our global workforce by approximately 9%, majority of the workforce reduction being contract workers.

We, like others, recognize cash is king in this environment. We have currently halted repurchase of our stock.

The (inaudible) value of our cash position, and use of cash in line with our cash generation and of course any M&A activity. This is not a time for the weak.

Our Company is strong and we at Benchmark are managing through this downturn diligently to emerging a stronger organization. Now, I turn the call over to Gayla

Thank you, Cary. We believe our team was effectively – has effectively managed our overall operating performance during 2008.

We have been negatively impacted by the slowdown in demand as customers responded to the softer market by first drawing down on their inventory level. We saw this in many of the industries we serve during the latter portion of the year.

Our operational discipline was key to protecting the bottom line for the year. Our margins were impacted by only three basis points against 11% revenue decline.

The most significant declines in revenue was seen during the fourth quarter where revenues declined 21% on a year-over-year basis and 9% sequentially from the third quarter. On the positive note, we had a better revenue mix and we did drive operating efficiencies.

Even with our lowest revenues for the quarter, we had strong overall financial and operating metrics, excluding our goodwill impairment charge and other special items, which will be discussed later in the call. Our highlights are as follows.

During Q4, once again, the Benchmark team delivered on strong operating metrics. Our gross margin improved on a quarter-over-quarter basis and demonstrates our strong operational discipline.

Earnings per share excluding special items was $0.01 better than consensus with a better revenue mix although our revenue was slightly below guidance. More than ever, customers are concerned with supply continuity and the financial stability of their business partners.

Benchmark is well positioned to mange through the downturn with our strong balance sheet and financial position. Our cash and long term investments totaled $408 million at the end of the year.

Cash flow from operations was approximately $39 million for the quarter, and $164 million for the year. Bookings in the fourth quarter continue to be strong, showing that new outsourcing opportunities are available and growing.

Benchmark is continuing to focus on supporting our customers, focusing on and anticipating their needs. The softness in the marketplace, which we began to see in the high-end computing sector early in 2008, which was likely driven by the financial institution meltdown and it continued to permeate all sectors and become a pronounced global recession impacting our customers and Benchmark by year-end.

Our revenue diversification and new program wins have been strong, but they have not been strong enough to offset the overall macro downturn. During Q4, each one of our industry sectors showed reduced revenues.

As previously mentioned, we continue to see a strong a pipeline of opportunities and new program bookings and in Q4 we booked six new programs with a current estimated annual revenue rate of $106 million $127 million. These new program opportunities are with both new and existing customers within industrial controls and telecommunication industries.

So what is Benchmark doing to position for the long term growth and create opportunities in this tough market? We are continuing to differentiate ourselves with our execution and our service model.

We expect to continue to gain opportunities with new and existing customers as they seek solid supply chain solutions. Given our solid financial metrics and our strong balance sheet, we are confident in our ability to flexibly support the needs of our customers.

Until the overall market rebounds we will continue we will continue to exercise strong cost controls and invest in our future. And we will plan to emerge a stronger organization when the down cycle is over.

Based on our outlook, we expect first quarter 2009 revenues to be in the range of $525 million to $570 million and we have factored into our guidance the expectation that our organic volumes will be slightly lower than normal in Q1. You will recall that Q1 is typically a soft quarter.

The corresponding earnings per share for the first quarter are expected to be in the range of $0.16 to $0.26 excluding restructuring charges. Also, with a limited visibility and the overall uncertainty in the economic environment currently, we will only provide guidance for the first quarter at this time.

Now, I will turn it over to Don again to discuss our financial metrics in detail for Q4.

Thank you, Gayla. We completed the fourth quarter of 2008 with revenues of $582 million.

These revenues were slightly short of our revenue guidance of $600 million to $640 million provided during our last conference call. Again, the overall softer market has continued to impact our customer orders.

Our earnings per share excluding special items was $0.27 per share, which was within our guidance provided. Again, these results were good given the decreased revenue from the prior quarter and from our guidance.

Our results for the fourth quarter of 2008 includes two special items that are both a result of the global economic crisis, which are as follows. Restructuring charges of $2.5 million or $2.3 million net of tax, and a non-cash impairment of $247 million to write-off the majority of the carrying value of our recorded goodwill.

Restructuring charges incurred during the quarter were primarily severance related and were due to our continued effort to realign our global resources based on our customer and their demands, which continue to be impacted by the ongoing global economic slowdown and resulting changes in demand requirements from our customers. The non-cash impairment charge to write-off goodwill was driven by end market weakness, coupled with a significant drop in our market capitalization due to declines in the stock market.

The goodwill write-off is non-cash in nature, does not affect our liquidity or cash flows in compliance with our debt covenants. To provide a more meaningful comparative analysis, we will present certain financial information excluding these special items during this conference call.

We will call your attention to the fact that these items are excluded when we do show. In today’s press release, we have included a reconciliation of our GAAP results to our results excluding these items.

Our gross margin for the fourth quarter was 7% excluding special items compared to 6.9% for the third quarter. This improved gross margin was a result of a better product mix shift during the quarter as well as increased operating efficiencies.

Our operating margin for the fourth quarter was 3.1% excluding special items noted earlier. This operating margin was down from Q3 due to the overall decline in revenues of $60 million when comparing the quarters.

Excluding the special items, net income was $17 million compared to $24 million in the same quarter last year. GAAP net loss for the fourth quarter of this year was $204 million compared to a GAAP net income of $21 million for the fourth quarter last year.

Fourth quarter diluted earnings per share excluding special items were $0.27 in 2008 compared to $0.33 in 2007. GAAP diluted loss per share was $3.13 per share in Q4 of 2008.

Interest income was approximately $1.8 million for the quarter. Interest expense was approximately $353,000, and other income was approximately $224,000.

Excluding the special items, our effective tax rate was approximately 11.6% for the fourth quarter. On a GAAP basis, the effective tax rate was a benefit of 11.5% for the quarter due to the net loss recorded.

Weighted average shares outstanding for the quarter were 65.4 million on a GAAP basis. Please note that in this press release we have included an immaterial correction of the Company’s prior period financial statements.

The immaterial corrections for our previously reported earnings per share for 2007 and 2008 was $0.01 per share impact for each year. Our cash and long term investments balance was $408 million at December 31st, which includes $48 million of auction rate securities classified as long term and represents $6.25 per share.

These securities were classified to long term during the first quarter because of issues in the global credit and capital markets that have led to failed auctions with respect to our auction rate securities. The unrealized loss on our auction rate securities at December 31st, was $5.3 million due to changes in the market value for these securities over the last year.

Please note that the changes in the unrealized loss in these securities is reflected in accumulated other comprehensive income as a component of shareholders’ equity. Due to the liquidity and financial crisis that has continued through Q4 and into Q1, we will continue to monitor the financial institutions and cash management vehicles we are using to invest our excess cash balances.

We continually look at the overall creditworthiness of the financial institutions that we use in addition to investing our excess cash balances in vehicles where preservation of principal is a priority, i.e., money markets, government, agency securities, et cetera. During the quarter, we repurchased $7 million of common stock.

For the fourth quarter, our cash flows from operations were approximately $39 million. For the year, cash flows from operations were $164 million.

Capital expenditures for the fourth quarter were $11 million. Depreciation and amortization expense was approximately $10.3 million.

Receivables were $422 million at December 31st, an increase of $7 million from the last quarter. This increase is partially due to the increase in the back-loading of sales for the quarter.

Inventory was $343 million at December 31st. Our inventory turns were 6.3 times for the quarter compared to 6.6 times in Q3.

The decrease in the turns is a direct result of the decreased demand from our customers that we saw during the quarter. Current assets were approximately $1.2 billion and the current ratio was 3.4 to 1 in Q4 compared to 3.41 in Q3.

As of December 31st, we had $12 million in debt outstanding, which is primarily a long term capital lease on one of our facilities. Comparing fourth quarter of ’08 to the same period last year, the revenue breakdown by industry is as follows.

Medical was 14% in 2008 compared to 11% last year. Telecommunications was 20% in 2008 compared to 16% in 2007.

Computing was 46% in 2008 versus 55% in 2007. Industrial controls was 17% in 2008 versus 13% in 2007.

And finally test and instrumentation was 3% in 2008 versus 5% in 2007. Our top customer for the year had sales of 16% for 2008 and 14% for the quarter.

At this time, I’d like to open the session up for the Q&A. During this session, we will request that you limit yourself to one question and one follow-up question in order to allow enough time for everyone’s questions.

Thank you.

Okay, good morning.

Hi, Brian.

Good morning, Brian.

Just, when we look at the EPS range, I think it’s much wider than we typically see yet the revenue range is not that much different. So, what drives that wide EPS range?

Again, I think, a lot of that, Brian, has to do with certainly I guess the absorption (inaudible) fixed cost of the facility. So when you see a decline in revenue, what will happen is you won't – you will see a larger proportion of a drop on the EPS side.

So it’s really volume related.

But the volume is very similar to what you typically gave in revenue guidance in the past, but the EPS is very different.

Right, it really is going to be most significantly impacted by the mix and the variability in forecast, in essence the accuracy from the customers and so as you can see from our recent quarters we have had a pretty strong performance in operational discipline and a favorable mix. And so the market as it turns out for Q1 and the industries, which may show contraction will have an impact on the earnings range.

So we’d really try to fix that with quite a few different scenarios into the assumption of the earnings.

And how should we think about the tax rates for ‘09?

Generally in the 11% to 12% range.

Okay. We can use that for the first quarter as well?

Yes.

And I just want to be clear, on the market segments, was that for the December quarter?

Yes.

Oh, it was.

Yes.

Okay. It was for the December quarter.

So if you look out at the March quarter, what markets do you think will probably see the biggest sequential decline in sales?

I don’t think we ever guide on an industry-by-industry basis for any given quarter, but just a general lay of the land the markets we see right now performing and giving opportunities to Benchmark, which do not always equate to the general state of the industry we speak to itself. But likely where we are ramping programs and winning programs we continue to see telecom and industrial strong.

In medical you’ll see we are going through some life cycle transition and whereas some products have been introduced into the marketplace and will be declining in volumes, and other products will be brought to market. That is the one industry that I’d say it’s going to be difficult to truly anticipate how many of those will affect Q1 versus Q2.

Okay.

But we do see good growth opportunities there. I cannot snap the line and identify exactly when those will hit revenue release and ramp.

I think computing and test and instrumentation will continue to see challenges, I believe, in computing specifically as we’ve seen in other down cycles. The ability for many organizations to delay their investment and capital spending is very strong and so I would expect to continue to see that suffer in the current environment generally.

And also the fact that computing is typically a softer spot in Q1.

Okay.

In test and instrumentation, I don’t know when that hits its up cycle again, but I don’t see it in the near term.

Okay. Thank you.

Yes, good morning. Thank you.

Good morning.

Is there a way, perhaps, to provide a little bit of color around where your utilization was within the December quarter? And then how or what we should deduce on this level based on your guidance for March for ultimately where it would – might go?

I will let Don speak to the actual utilization rate, but specifically, Sean, I think that as we – now we are in business for the long haul, so we strategically align ourselves for the opportunities we see on the horizon and since we have the financial flexibility and the foresight to (inaudible) through the difficult times, not all of the decisions will be made in such a manner that you would see the benefit or the utilization rate at any given facility and the upcoming quarter what we expect it to be in the future. So, we will have some staying power and some opportunity to benefit from that staying power and facilities that in the near term may not be at their optimal run rate.

Yes, I think in terms of the utilization, prior to the fourth quarter we were probably in the low 60s. Right now we are probably around the 60% range.

Okay. Then just from a cost perspective, your SG&A ticked up in the fourth quarter despite the revenue decline.

Is there a way to explain a little bit about that and then in addition can you elaborate on some of your go forward opportunities – or just elaborate a little bit more on the ability to pull cost out of COGS as well as perhaps the SG&A line?

In terms of quarter to quarter I think the majority of the increase is related to stock compensations costs or option cost, which explains most of that. In terms of opportunities to take out cost, I think, again, we look at our customers’ demand and react accordingly.

If you look at what we’ve done during the year, we’ve seen a drop in demand throughout the year, but yet our gross margins have actually increased every quarter this year. So, needless to say, we’ll take the steps that we deem necessary and we have taken those this year.

So, Sean, ultimately what you see is we are very opportunistically kind of investing for the future and one of the things that we do during the downturn is to ensure – we know one thing is going to happen and that’s change. And customers are seeking opportunities to have a more efficient supply chain and we will make investments and continue to drive overall operating improvement although it may be that in some cases the SG&A is not at the efficiency level we ultimately expect and desire it to be at.

In the near term there may some investment to get to the longer term improvement and those will be such as sales and engineering cost that we’ll continue to incur and we believe that those are appropriate and prudent investments in the future. And we want to increase our operating efficiencies to allow us to have the opportunity to invest.

So we are going to keep driving in that direction, but not make short term decisions that we believe are truly that, short term.

Is there an ability based on your current path to get below the $20 million level?

I am not sure in dollars, but that would make sense for the business model that we have. I think, again, truly, we – our plan is to re-program [ph] the engines, continue to book the new program, which as you can see from the numbers we gave on the new program bookings, they have been kind of sized to the kind of current volumetric expectations for today’s environment.

We expect to continue to book those programs, see a good front log of opportunities to expand with customers and that does take some investments. So I do not expect that we will – we know we are not going to – the old thing.

You are not going to cut your cost to the future. We really expect to see the opportunities through revenue growth and we are going to invest to do that.

That’s helpful. Thank you.

Great. Thank you very much.

Gayla and Cary, and Don, you guys have done a great job with keeping your OpEx under control. And Gayla you’d mentioned you are not going to cut your way to growth in the future.

I guess looking ahead, at what point do you think we are going to start to see some future growth at Benchmark?

You know I don’t know that we see significant growth without some improvements in the marketplace. I think we’ll see some slight growth opportunities come about specifically in advance of the market improvement because customers have taken the inventory out of the channel that exited when the demand levels are expected to be higher.

So you’ll see a little bit of improvement from that, but I do think it takes some pull through for the inventory levels to – after they are right-sized to generate incremental revenue opportunities. Having said that, we always see some improvement.

When we continue to book these programs and we ramp those. I wouldn’t sit here today and tell you that we expected and nor can you see from our guidance we expected that our bookings would more than offset the weakness in demand in the marketplace, but we are wrong.

So –

Okay. I am just trying to see if you guys thought the bottom would be in March or June or anything around that.

I am not an economist, but I would say that the sign that we have seen recently would indicate the deterioration rate has subsided. Is that pause, is that ready to run at the race again, I don’t know that I have enough data points, but I do believe the cycle is beginning to run its course.

It’s hard to call whether it starts back in Q3 and Q4 is actually stronger than Q1. I think that’s the indication that people would have at this point in time if you generically speak to them.

I am not sure that the demand levels are out there to support that at this time. But that’s what it would point to.

Great. And as a quick follow-up, can we switch over to restructuring and just kind of talk about that about where can we – anything as far as incremental we should see in the gross margin line going ahead in the future, looking ahead or any impact to the cost outflow or cash outflow that we should expect and be modeling in?

No, I don’t see any significant – again, we kind of started on the path when we saw the impact – the knock down in financial institutions was having on computing, we really started probably earlier than most in taking the appropriate actions but I do not see that we have a major step to take on restructuring activities and a major cash outage from that.

Great.

On the other side, we do see opportunities just generally. We continue to exercise the diligence on the M&A side and I believe there will be more opportunities to increment skill and capabilities for customers in this environment.

We’ve been very successful in being able to do that in prior downturns. It’s getting just about right I think for people to need a strong support infrastructure to be able to endure this downturn and we expect to see some opportunities for that.

Yes, the restructuring charges we took in 2008 will probably generate approximately about $10 million saving in 2009.

Great. Thank you very much.

Thanks. Gayla, just expanding on that last comment, today we saw a competitor Sanmina do an asset purchase from JDS Uniphase and I am wondering if you are seeing those kinds of asset purchase deals on the table?

Perhaps you looked at that one, but I am wondering more generally, do you think that you see more of these kinds of deals or in your last comment did you mean more traditional M&A or do you potentially take out a smaller competitor?

I don’t see that there is as much in the direct competitor front. There is probably a number of OEM activities that may be underway as they look at the supply chain and there is the opportunity for some increase in some skills and capabilities that we might find that we can take on, but not as much on the competitive front.

Great. And then just quickly on CapEx, may be Don you can talk about this for second.

I think CapEx looked a little bit higher than I expected this quarter. Can you give us an idea what we should expect in 2009, how we should think about CapEx either on a dollar level or perhaps percentage of sales?

Well I think looking at CapEx for next year, depending on where the market conditions are probably the $20 million to $30 million range for 2009 and again we’ll react accordingly depending on where we are at and how the market, if there is a rebound or not.

Any reason the quarter was – there is still $11 million I think –

Some of that’s – part of the uptick is primarily related to finish out the building in Suzhou.

Great. And then one other quick one.

The sequential decline in revenue that you are guiding to is down only about 6% and that seems actually quite good relative to most of your peers. I am wondering what you think is driving your relative out performance and the sequential growth.

Is it new ramps or customer exposure or end markets, any comments around that will be helpful. Thank you.

I think in terms of the revenues, again, we’ve had very solid bookings over the last two years, and I think especially when you look at the non-traditional segments in which we operate, I think, if you look at the – on a year-over-year basis the medical test and instruments – or not, medical and industrial controls and telecom actually saw a year-over-year growth from ’07 to ’08. So I think what’s really driving those are the new programs taking hold and offsetting some of the declines that we’ve seen in the other segments.

Thank you.

Thanks. Good morning.

Just curious, Gayla you described hopefully some kind of bottoming and then maybe a little bit of a lift or if it’s a slow growth environment in the back half of the year, I guess what I am wondering is where do you see some of your cash flow ratios going such as inventory turns and receivables turns next year? I guess they were a little bit disappointing based on the timing of when you get paid, but I am wondering what you see for cash flow next year.?

Well I think two things there. First, with a little bit of back-end loading in the quarter the impact on the receivables is strong and then on inventory reacting both our customers and then our ability to react to the market environment is – it is sufficient [ph] that the inventory is taken out as rapidly as the deterioration in the marketplace to occur this time.

So we would expect that we would gain efficiency in our metrics for next year.

Yes, and if you look at – at least cash flow generation for Q1, we are anticipating probably a range of $50 million to $90 million from operations.

And any comment on where that would mean that your inventory turns go to next quarter?

Well, again, there is a range and that’s sort of dependant on the terms, but anywhere from the six three to six five range.

Okay. And then lastly, I am just not quite sure I am clear on the SG&A side.

I understand you are still investing to win other new business, but are you saying that SG&A improvement like you did $90 million – you had $90 million of SG&A in ’08. Are you saying that that – you are still going to be in that range even on a weaker sales base or could we see some improvement in that dollar number as we go through 2009?

I guess from the quarterly stand point of view we are at $22 million recoveries in stated level. But definitely is coming down from the $90 million some for the year.

Okay. Alright.

Thank you.

Hi, thank you. I was just curious about customer deferrals during the quarter and what you’ve seen into January.

Obviously I assume there was a lot of customer deferrals of programs. But could you maybe give us some more specific commentary in terms of the segments where you saw the push-out and if you are still seeing it through the month of January?

I think what we saw primarily was volumetric declines. So not – specific push-outs where program that were expected to come on to the radar screen where delayed through say R&D activities but more so specifically we saw volumetric declines.

I don’t have any specific numbers, but I can tell you that of the top of my head I don’t remember really any programs, which were moved to the right specifically as a result of the economy.

Okay. That’s helpful.

Thank you. And then in terms of the revenue number, down at the mid-point 6% Q over Q, how much of that do you – is being driven – I mean, Will already asked about the decline not being quite that ad – how much is that driven by the new customer wins versus your regular business?

I guess this is the one you all always stump me on is how we want to define new, but I do believe as we said in the prepared comments that the way that we are steering through downturn and being able to deliver results is because of diversification of our customer mix and our portfolio of business where we’ve added a number of new accounts and are continuing to ramp and grow with those programs and customers. So, I don’t have a percentage, but I would clearly say that they insulation that we had in Q1 does come from those activities and our sales activities there.

Okay, great. Thank you very much.

Hi, thank you. I am in for Amit Daryanani of RBC.

Any concerns right now on any inventory obsolescence or AR aging?

I think our credit policies and practices that we have – had in place at Benchmark for long number of years but were further enhanced following 2001, have served us very well. We do not elect to participate in a lot of high-risk accounts and therefore I believe that we are in good position with the controls we have.

Never say never. I think we’ve all seen some activities and some news of note that has been surprising, but we continue to manage very diligently on that front and you will note that while others in our industry have seen significant write-offs in current maybe even the prior quarter that we have not, and so we continue to diligently look after that.

Alright and then one final follow-up question. Your gross margins have held pretty well throughout the entire downturn.

I was wondering, as we start to return to maybe some revenue levels that approach what Benchmark was doing at the end of 2007, and throughout beginning of 2008, where can we expect gross margins to start to track?

I don’t think we completely kind of modeled forward enough to see that the impact of really the improvements, but clearly you can see that with the existing mix and the opportunities we have in front of us that we would expect to rebound with a better overall performance than what we had previously. I don’t have a specific new goal out there because quite frankly, when we have not achieved specifically the goal of 4.5% to 5%, I am probably hard pressed to put forth any numbers north of that and have you believe them.

So, we are going still put that out as our guide post of 4.5% to 5% and drive towards that, but I would expect when revenue rebounds that we would be able to continue beyond that.

Alright. Thank you.

Hi good morning. I had to get off for a minute, so if this is repetitive, forgive me, but on the telecom strengths, you mentioned that that was a stronger area in the fourth quarter because of new bookings and you expect it to continue that way in the first quarter.

Are these bookings with new customers or existing customers? And telecom is fairly well penetrated, so are you getting transfers from other companies or is there – or is this being – coming from let’s say in-house plans of companies that haven’t fully outsourced?

I presume there isn’t any overall growth of the market involved here.

Hi, so if I kept track of all (inaudible) it’s yes, yes, yes, and yes. So, we are seeing it from new customers.

We are seeing it from new programs with existing customers. We are seeing transition from competitors.

And we are seeing outsourcing of previously internally produced products. So, yes, each of those are occurring and it probably does speak to the fact that you said that the overall market is not increasing, so the increased pressure to drive improvements is clearly one of the drivers for outsourcing.

And what are the reasons for the transfers from competitors? You are more competitive, concerns about the financial viability of the competition or what is it?

I think the financial viability is clearly one that people are concerned with some suppliers. I think performance or flexibility to be able to support the customer and dedicate the resources when – what we witnessed in prior downturns is that some of the competition becomes internally focused to resolve issues internally and not externally focused on the customer and that plays out to have a customer level of dissatisfaction.

Thank you.

Thanks. A couple of quick follow-ups.

First, in the past trends that your big customer you guys have – your Number One customer, I should say, you guys have discussed some dual outsource plans that I think where then later retracted. Can you give us an update as to how your business position is tracking with your top customer relative to competitors?

Once again, we don’t speak to specific customer activities. I think if I refer to prior calls, and just kind of computing in general, we have seen softness in computing.

You are correct in the reversal of the trend, on the second sourcing, but beyond that I don’t have any specific updates on kind of how the program transitions and support are going on any specific customer.

And then also quarterly options expense pre-tax, do we have – I know you are reporting differently these days, but it would be helpful to compare.

For the fourth quarter it’s about $1 million.

Okay, thanks.

Okay.

I think that will conclude our call today. We thank you for joining us and we’ll be available in our offices for any follow-ups.

Have a great day.