Lisa Weeks - VP of Strategy & IR Gayla Delly - Chief Executive Officer Don Adam - Chief Financial Officer

Steven Fox - Cross Research Andrew Huang - B. Riley Company Mitch Steves - RBC Capital Markets Jim Suva - Citi Sean Hannan - Needham

Thank you, operator. Good morning everyone and thank you for joining us today for Benchmark's fourth quarter and full year 2015 earnings call.

My name is Lisa Weeks and I’m Benchmark’s Vice President of Strategy and Investor Relations. With me this morning are Gayla Delly, President and CEO; and Don Adam, CFO.

Gayla will provide an update on our strategic priorities and near term outlook and then Don will provide a detailed review of our financial results followed by a question-and-answer session. Earlier today, we issued our earnings release highlighting our financial performance for the fourth quarter and full year 2015 and we have prepared a presentation that we will reference on this call.

The press releases and presentation are available online under the Investor Relations section of our website at www.bench.com. This call is being webcast live and a replay will be available online following the call.

Please take a moment to review the forward-looking statements advised on Slide 2 in the presentation. During our call, we will discuss forward-looking information.

As a reminder, any of today's remarks that are not statements of historical facts are forward-looking statements which involve risks and uncertainties described in our press release and SEC filings. Actual results may differ materially from these statements and Benchmark undertakes no obligation to update any forward-looking statement.

The company has provided a reconciliation of our GAAP to non-GAAP measures in the earnings release, as well as in the appendix of the presentation. If you will turn to Slide 3, I will now turn the call over to our President and Chief Executive Officer, Gayla Delly.

Thank you, Lisa, and good morning to everyone. I am very pleased with what our results say about the merits of our strategic plan.

A few years ago, we committed to increase our efforts in our higher value markets to capitalize on the growing trend of outsourcing while balancing reduced customer spending in our traditional space. Despite the significant macroeconomic challenges in our traditional market particularly in our telecom market space our profit margins have increased.

Our mix has grown in favor of higher growth and higher margin business, so despite the headwind in the top lines our profits and cash flows have continued steady. Our top priority is to expand sales and improve our mix in the higher value markets where outsourcing rates are growing, products and contract typically have longer life cycles and customers see value in our early engagements with engineering services and value added solutions which drive a richer engagement model.

Our portfolio transition has enabled us to increase our margins. Previously we set forth the target of 4.5% quarterly operating margin on a non-GAAP basis.

We achieved that in the fourth quarter which was a full 50 basis points higher than the comparable 2014 quarter and our highest quarterly margins since 2007. For the full year, our margin was 4.2%, as we move forward we will now establish a target to exit 2016 at a 4.8% operating margins.

Recall that we are now targeting 5% as our longer term operating margin goal. A business as large and complex as Benchmark always has an opportunity for continuous improvement in areas such as production efficiency and supply chain optimization.

The transformation of our portfolio to our targeted markets which are characterized by higher mix and lower volume has temporarily increased our working capital requirement as we work to optimize the supply chains we inherit as our customers initiate the outsourcing of their increasingly complex and diverse extended supply chain. Don will detail our efforts here, but I can state stage that we are aggressively addressing our working capital performance during this transformation.

You will note that our inventory positions have improved and we have line of sight to reductions in cash cycle times in 2016 as well. We will maintain our disciplined focus on operational excellence and cost management.

As our portfolio evolves towards higher operating margins, the company continues to generate strong operating cash flows, which was $147 million in 2015. For the last 12 months, we've repurchased 3.1 million shares for $68 million and returned 63% of our annual free cash flow to shareholders.

We have a $135 million remaining on our current repurchase program, we expect to use this opportunistically. We manage our business effectively and I want to reinforce that we will continue to have a balanced approach to our capital allocation.

We will first invest in our organic business to drive growth. Second, we will make acquisitions that fit our strategic goals, and third, we will continue to return money to our shareholders.

During this quarter, we demonstrated our ability to do exactly this. We are confident that we have the right strategy in place to increase revenues across the board and raise profits and returns to shareholders.

Now, if you’ll please turn with me to Slide 4. For the full year, we achieved a record 55% of our revenues from higher value markets.

For us this includes medical, industrial including aerospace and defense, and test & instrumentation. This compares favorably to 50% of revenues in 2014 and 32% in 2007.

Likewise, our 2015 bookings mix has also shifted towards the higher value sectors with the longer term goal of generating more than 70% of our revenue and bookings from these sectors. In alignment with our target markets, in late 2015 we revitalized our go-to-market activity, adding new global sales leadership.

With this we are encouraged and optimistic about our long term top line and margin growth even in a difficult operating environment. In our targeted market many products have stringent timelines and certification requirement.

Accordingly, we continue to invest in design engineering talent and solutions. During the second half of this past year, we also incremented our engineering leadership and have recently reorganized our three regional design centers under one global leadership team.

Late last quarter, we acquired Secure Technology, a market leader that specializes in providing engineered and ruggedized products for complex, industrial, aerospace, and defense application. We are excited to add the catalog of engineered technology and proprietary solutions that Secure has developed to cost effectively deliver select solutions to our targeted industry.

To illuminate the nature of Secure's activity, Secure's engineers often design products of very limited high level specification partnering with customers in a more collaborative manner to achieve the speed and results desired. This differs somewhat from the typical EMS engineering model where services are provided primarily for designed to specification engineering requirement.

The Secure acquisition directly aligns with our strategic focus to expand both the depth and the breath of services and solutions to customers in a higher value market. The existing solutions and go-to-market capabilities serve as excellent building blocks for growth as we identify and leverage these technology solutions across our served industries and portfolio.

The integration of Secure is proceeding according to plan as expected to be EPS and cash flow accretive. And from a costs perspective we are implementing plant manufacturing procurement and corporate overhead synergies and these are all under way.

We are excited to have the talented team on board. We saw minimal contribution from Secure this quarter with a mid-November closing and we expect to benefit in 2016 and beyond as we integrate this acquisition.

Our prudent capital allocations have permitted us to continue investing in the business through both CapEx and strategic acquisitions and also return capital to shareholders, while we have transformed our portfolio. Please turn to Slide 5 for a review of outlook by market segments.

The current market environment from our view is characterized by pockets of uncertainties as well as stability. Don will take you through some of the details related to the quarter and our specific near term outlooks, but I wanted to provide you a broad view by market from the customers we serve.

First I’ll focus on the higher value market. In the industrials market this is a high priority area for Benchmark.

Our new business bookings over the past few quarters have been the highest of all sectors and it reflects our focus on this important market. Over the past years, we saw market softness due to reduced infrastructure spend and this limited the growth benefit we expected from new programs.

Our customers in the infrastructure related market expect significant macro challenges to continue in the near terms while some customers in our building automation, transportation, aerospace and defense market see a more stable level of demand. For the full year and compared to 2015, we expect 2016 growth in this sector which will come primarily from the contribution of new programs and our Secure Technology division.

Moving to medical, we are pleased that the benefit of strong bookings resulted in a full year revenue increase of 13% in comparison to 2014. Our engineering and production bookings remained strong and we expect continued growth throughout the year 2016 above the 2015 level.

Further growth is expected in 2017 as some of these newer medical programs begin to ramp into volume production. Now moving to test and instrumentation.

This is a revenue base that is comprised largely of semi-cap customers and they project relatively stable demand throughout the year with a modest opportunity for potential upside in the second half of 2016. This follows on an expected slight period of inventory corrections.

In summary, for the full year 2016, we are well positioned in the higher value markets to exceed our 10% annual growth target for these markets. Now looking at our traditional markets.

We expect continued sluggishness in computing as these end markets continue to be choppy. Overall, in 2016, we expect a modest decline in revenue from this customer base.

We do see new programs with more advanced technologies that will partially offset some of the traditional technology weakness. Telecom revenues experienced some no impact to our revenue base in 2015.

As we noted last quarter the majority of our decline for the full year related to our largest Telco customer. Outside of this top customer Telcos declined less than 10%.

We expect new program ramp in support of complex technology products to launch in this market space during 2016. However, we do not expect that these programs will fully offset the persistent weakness that we expect in Telco overall in 2016.

I will note that for the full year 2015, we had one top customer over 10%, this is a top customer in the computing space and it represented 11% of our sale and we have no other customers above 10% for the year 2015. As in recent quarters, the majority of our growth is coming from new products and new product ramps rather than wholesale demand improvements and we expect this trend to continue in the current marketplace.

Now please turn to Q1 for our guidance on Slide 6. For the March quarter our revenue is expected to be between $565 million to $590 million which is a quarterly decline consistent with historical seasonality.

Our non-GAAP diluted earnings per share is expected to be between $0.29 and $0.33. Also implied in this guidance is an operating margin range of 3.8% to 4.1%.

We do not expect significant restructuring or integration cost to be present in the first quarter. I will now turn the call over to Don Adam, our CFO, who will provide more details on our performance.

Thank you, Gayla. Please turn to Slide 7 where I will provide income statement highlights.

Our fourth quarter results and operating margins were within our guidance and reflect the continued execution of strategy to transition our business toward higher value markets. The fourth quarter was the fifth consecutive quarter where higher value markets exceeded 50% of our revenues.

Our revenues were flat compared to the third quarter and down 12% from the fourth quarter of 2014 we continue to successfully drive operating margins to our targeted goal. In fact we exited the fourth quarter at 4.5% non-GAAP operating margin which is a 50 basis point increase year-over-year and a 20 basis point quarter-on-quarter increase.

This operating margin is the highest level we have achieved since 2007. Net income on a GAAP basis was $39 million for the quarter compared to $23 million in 2014, our GAAP results include two non-recurring items; the first, the $6 million of acquisition and restructuring cost, and the second is $21 million of discrete tax benefits which primarily relates to a U.S.

tax benefit from the release of an income tax valuation allowance. Our non-GAAP net income for the quarter was $23 million in 2015 and 2014.

Our GAAP EPS was $0.77 for the quarter compared to $0.44 in 2014. Our non-GAAP EPS was $0.45 for the quarter compared to $0.42 in 2014.

The fourth quarter 2015 non-GAAP effective income tax rate was 16% compared to 19% in 2014. The tax rate for the fourth quarter was lower than expected due to recently enacted U.S.

tax legislation. We expect the tax rate for the first quarter to range from 24% to 25% based on higher expected income in the U.S.

The diluted weighted average shares outstanding for the fourth quarter were $50.9 million. Now please turn to Slide 8.

For the full year revenues were 2.54 billion compared to 2.8 billion in 2014 with the majority of this decline coming from reduced production levels from our top Telco customer. Continued progress in bookings and new product introductions in our higher value markets did not offset headwinds that we experienced in the Telco sector.

We continue to maintain excellent relationships with customers across the sector, but we do not expect Telco’s spend in 2016 to return to the levels that we saw in 2014 and early 2015. Again this backdrop, our non-GAAP operating margin improved from 3.9% to 4.2% for the full year.

Now, please turn to Slide 9 for a trending view of operating income. Our increased operating margins reflect the success of our strategy to increased sales and higher value markets and execute on our operational excellence initiatives.

These initiatives have delivered improvements in the number of areas ranging from logistics and freight to automation and efficiency in our operations. We are pleased with results from these efforts and look forward to realizing the benefits of future improvements.

Despite a challenging macro environment and end market headwinds, we are able to increase our quarterly operating margins 50 basis points year-over-year. Please turn to Slide 10 for a review of our fourth quarter new bookings.

Our bookings in the fourth quarter once again aligned with our targeted markets. We won 35 new programs including 12 engineering projects that should result in estimated annual revenues of 115 million to 135 million when fully released to production.

We continue to benefit from engineering design wins in our targeted markets which enable us to engage in a more meaningful way with our customers to drive greater value and ultimately higher margins. Please turn to Slide 11 for results and quarterly outlook by market sector.

We expect the macro trends in the first quarter to reflect what we saw flat in the last half of 2015, our first focus on our higher value markets. Industrial revenues of 223 million represented 35% of fourth quarter revenues and on sequential basis revenues were up as expected.

We expect revenues in industrials to be up mid-single digits in the first quarter. Medical revenues were 92 million and up sequential in the fourth quarter, but slightly below our expectations as we had product qualifications -- expanded product qualifications for two programs.

We expect medical revenues to remain roughly the same in the first quarter. Testing and instrumentation revenues of 51 million were down slightly quarter-over-quarter due to a lower demand pull through primarily from our semi-cap customers.

We expect sequential revenues to be flat in the first quarter. Now on our traditional markets, computing revenue of 155 million increased sequentially from our third quarter based on quarter end demand somewhat stronger than expected from our top five computing customers.

Computing revenues were expected to be down about 30% in the first quarter based on normal seasonality for this segment. Telco revenues of 105 million decreased sequentially even beyond the 20% we’ve expected for the quarter based on continued softness in capital spending.

We expect Telco to be down high-single digits in the first quarter. Now please turn to Slide 12 where I will highlight a few balance sheet and cash flow items.

Our cash balance at December 31st was 466 million, which is up slightly from the previous quarter. Our U.S.

cash balance was 42 million, total debt was 235 million. We generated 28 million in cash from operations for the quarter and 147 million for the year.

Capital expenditures were 5 million, and depreciation and amortization expense were 13 million for the quarter. We believe the CapEx will range from 40 million to 50 million in 2016.

Our accounts receivable balance was 479 million, an increase of 12 million from the previous quarter. Inventory at December 31st, which 412 million, a decrease of 10 million from the prior quarter.

Please turn to Slide 13 to review our working capital metrics. Our accounts receivable days were 69 representing a slight increase from the third quarter, because of the higher level of shipments late in the quarter.

Inventory days were 64, an improvements from 66 days last quarter, this was the first area where we are beginning to see the impact of our working capital initiatives. Of course as we improve inventory management by increasing velocity of inventory through our facilities and slowing down our in-bound inventory feed, resulting impact on payable days those initially favorable which we did see this quarter.

We expect to improve our cash cycle days between 15% to 20% as we exit 2016, from the positive benefits of our ongoing initiatives. A significant portion of this improvement will benefit or non-U.S.

sites for newly outsourced products that transition over the past year and Benchmark is building a more efficient supply chain. Now please turn to Slide 14.

During the fourth quarter, we repurchased 770,000 shares at a cost of 16 million. For the year, we’ve repurchased 3.1 million shares for 61 million, we have a 135 million remain for future repurchases.

We will continue our balanced approach to capital allocation by investing in the business to drive organic growth and operational improvements making acquisitions that fit our strategic goals and continue to return money to shareholders through our share buybacks. Now I’ll turn the call back to Gayla to provide some closing remarks.

Thank you, Don. In closing, we are excited about where we’re going and we look forward to 2016 and beyond.

Our team has made significant progress in transforming our portfolio through rebuilding our revenue structure and reducing customer concentration, while also enhancing profitability. Our expected new program ramps resulted in a greater technology mix with a more stable customer based.

We are confidence in the trajectory of our portfolio and the anticipated expansion in our higher value market. I want to thank all of our employees for their continued focus on providing excellent service and support to our customers, while executing operational and working capital initiative.

We will continue to track progress against our strategic priorities which will enable us to continue to create value for our shareholders and customers. In conclusion we are pleased with our strong performance as we evolve our portfolio and position Benchmark to driving enhanced shareholder value.

We will continue to operate with discipline and execute on our initiatives throughout 2016. Now I will turn it over to the operator so that we can open the platform for questions.

Operator?

First question, just a couple of things on the acquisition of Secure. Gayla you mentioned in your prepared remarks that they provide some building blocks for growth across your served markets.

Can you just talk about maybe more specifically what that could mean and how long it could take to get there? And then if you could be a little more specific on the contribution from secure in terms of revenues, EPS in this quarter that would be helpful also.

As we indicated I'll start backward, as we indicated Secure revenues were about a 100 million and consistent with all of our other acquisitions we will not be segregating the acquisition going forward, but you will see the impacts as they are included in our guidance and our margin profile going forward. And as we indicated they have had growth of about 10% per year.

Of course given their size and the private nature of the company we aren't giving specific margin profiles on Secure, but with that let me speak to why we're excited about the portfolio they have and the markets that they serve. So, as I indicated they are directly aligned with our industrial markets and specifically in some of the sub sectors such as defense and aerospace providing engineered solutions and collaboratively engaging with customers from the very early stages and during the design to production with very little structure as compared to an EMS engagement where you will often the -- the customer will be further along and engage an engineering team to complete the task.

And so this is really engaging much earlier and more collaboratively and some of the buildings blocks will be some of the sub-systems, some of the technologies, a catalogued, engineered approaches to problem solving which are leverageable across multiple industries. So, it will be similar to having a catalogue of a product or a widget or a gadget.

There's a catalogue of engineered solutions that can be brought forth some proprietary approaches to challenges in the marketplace today and especially as those apply to taking some of the long life products and applying current technology and approaches to updating those product which enhance the lifecycle and elongate the lifecycle of those products for a much more cost efficient and effective solution versus bringing out a new product. So, that' a very meaningful and important aspect of what they're able to do that really folds very nicely into the long life products that we're targeting in a number of our industrial markets and medical as well.

And then just as a follow-up, if I understood correctly, of a really good growth on medical, you're expecting even better growth this year and even better growth on top of that in '17. So, could you just talk, obviously you have new win momentum but specifically where the new wins are maybe benefitting from certain trends or what drives the confidence in the accelerating growth?

I believe that Medical has accelerated their pace to outsourcing in my mind for two reasons. One is that they are seeing cost pressure that they may not have heretofore seen at the same pace or intensity that they do today.

And the second reason being that in addition to their ongoing investment in R&D a number of medical equipment organizations have invested through M&A. And as they had invested through M&A they have manufacturing locations that may not align directly with their goals and objectives and therefore outsourcing whether they originally as an organization outsourced or whether they are looking at it to further align their footprint, becomes a valid solution and opportunity for them to look at more efficient ways to get products to their customers.

So we see that as a great opportunity. And of course as you know part of the reason we see some growth going forward in medical with probably greater visibility than you might generally see in other markets is because of the long time to market with the FDA approval and the period of launch as we said it's I believe last quarter we had two programs that were delayed and this -- actually last time it was three programs and this time was two programs that were delayed.

And so it becomes very difficult on a quarter-by-quarter basis to anticipate the level of revenues and throughput especially with new product introduction, but we can see how many are on the roadmap that have not yet been launched into the full production levels anticipated.

Thanks for taking my questions and congratulations on the operating margin improvement. When I think about your longer term operating margin targets of over 5%, will we see some improvement in the gross margin, or will that be entirely driven by operating leverage?

That’s a good question, I think you will see a little bit of both, but as you can see no doubt in the model we have some clear opportunity on the SG&A line, the operating expenses to drive efficiency back but we would expect there would be contribution both in the gross margin and the operating margin.

And then I think in your press release you talked about targeting 15% to 20% reduction in cash cycle days, exiting 2016. So could you give us a feel for where most of that’s coming from, is it going to be inventory or receivables, or payables?

I think we’ll get a contributions from all three, but the majority of that increase will come from inventory, and then the corresponding impact on payables.

And then if I could squeeze in one last question on Secure Technology, when I look at 2016 are there going to be opportunities to optimize SG&A for that business?

Again specifically for Secure, we are integrating, so we would expect for some of the normal business systems and tools to enhance the engineering toolsets, enhance some of the back office operations that we would probably have some cost in front of the savings but yes we would get those savings through that area.

So I guess I’m going to start on the Telco side of the business. Could you just walk us through what’s happening for the Q-over-Q, is that still a single customer specific issue?

And then secondly, I know you can’t talk about this or name of the customer. But can you talk about product lines are doing better or worse than others within Telco?

Mitch I think sequentially I think, I would say most of the customers in our sector saw continuing declines from Q3 levels, much the same as we experienced from Q2 to Q3. So, the declines that we’ve seen are very long broad based.

We serve a number of customers in the Telco sector, there is not one specific product line, it’s across the board.

And in fact we serve a number of different technologies within Telco and we’ve seen demand there remain lackluster and I believe some of it’s with carrier spend, some it's associated with the M&A activity that has been undertaken and then of course in other cases I believe it's associated with inventory corrections that are taking place. And last that I think we pointed to is there are some new technologies, some innovation that’s coming to market and normal delays there I would say on getting those engineered solutions dialed in.

So it really seems to be a challenged marketplace as they are looking at the appropriate type of products to into the infrastructure to support all of the conversions, the Internet of Things, there is a lot of moving parts there and what we’re excited about is specifically some of the new technologies that we’re supporting. But we don’t expect that those are going to, as I said in my prepared remarks that that revenue size will outpace or meet what we saw in 2014.

If you recall part of the reason we’re seeing the follow-up is just because the impact really outsized performances in 2014 and early 2015 and I would say and I was going say that is going what we're comparing to and I don’t see that type of marketplace and I would say some of that probably had to do with emerging market infrastructure built out, although I don’t have all the details around that, that’s what I truly believe was taking place that allowed for such significant increase in 2014.

Yeah, that makes sense. And secondly if I could ask another on the end markets.

You guys are talking about the growth essentially for 2016 for the combined company is there any sector that’s going to be better than season particularly in the back half of the year, I am not looking for your guidance, just looking for rough essentially seasonality or uptake on the specific end markets.

I would say I don’t see anything in the overall marketplace where we see conditions changing dramatically in the second half at this point. We see mixed signals from customers and again the excitement seems to be conversion around new technologies, but I don’t see anyone pointing to global economic changing to the macro environment supporting increased or enhance performance overall.

I don’t see any one industry, our excitement is primarily around the new products and new customers versus volume of production improvements expected.

Thanks very much. If we look at your full year outlook for 2016 and we roll up the different segments and we pull out the Secure Technology.

Does that means that you are looking for relatively flat organic growth, or is my math wrong there because flat organic growth in this [indiscernible] actually seeing is quite encouraging or maybe my math is wrong there. I am just kind of thinking about organic growth for this year.

I think it’d be flat to slightly up overall and again as you pointed out, we feel that that is strong given the current marketplace. But again we are not giving guidance for the full year but knowing the overall environment and soft demand environment that our customers see, there is growth from new product and it’s a matter of trying to identify what your belief is about the longer term macro-environment and again I'll point that we have maintained customer relationship, it’s not the departure of a customers, it’s the departure of volume for customers that will drive whether the -- and macro-environment that will drive whether that is substantial, moderate, or no or slow growth in our core base of business.

And then as a follow up, you mentioned the March quarter outlook is relatively seasonal. Is that when you also include, you added in I believe your acquisition in the December quarter and it may have likely only have impact for the December quarter, so you get a little bit of a boost.

Are you excluding that in your comment about seasonal or how should we think about your comment for seasonal? Does it include that in a really organic and macro conditions are a little bit sub seasonal where margin and acquisitions helps?

Let me take it the other way, and see if this helps answer. And if you go back a couple of years when we had a greater portion of our businesses associated with Telco and in concluding you would see kind a stronger boost in Q4 and then as follow up that was more substantial in Q1.

So, I believe it was two year ago we saw about a 16% quarter-on-quarter decline. A couple of year -- last year it was like a 12 and this year it’s about 8.

So, that’s an all in number, so all of our business and all of our guidance. So, it does have the season impact in there, it also has the shift in business.

And my final question is on the telecom softness you've mentioned. When you go back and talk to your market intelligence people, is it just the overall market, is it your geographic exposure to where the products is going, is it your customer concentration or do you just expect that entire market to face those challenges?

Thank you.

It’s what we see across our customer base which is as you said it’s product, it’s geography, it’s customers. So we don’t see it isolated to a specific sub-segment and I believe some of that again is probably timing related and some of it probably is related to geographic.

Great. Thank you very much and congratulations on the good results.

[Audio Gap] If I were to consider the tone and what appeared to be ambiguity of your outlook for '16 coming out of the last quarter call, it appears that there seems to be an improved feel that you folks have in the opportunity for growth this year. Of course Secure is helping that, but again you do the math and it suggests, you've got 58% of your business that in aggregate should do over 10% growth and the rest of it’s kind of a GDP-ish macro related kind of decline, I mean net-net that should be up for the year.

So it seems like that perspective has changed and improved, can you help to just make sure we -- to validate this and make sure I'm thinking about this the right way?

Let me answer it this way, I think if you look at our higher values versus our traditional side as we've stated in our comments we believe the higher value portion of our business will have about 10% growth. Now flipping that over to your traditional side, the one -- sort of the wild card in there is how well is Telco is going to perform.

I mean certainly Q4 was a low point of the year, we’re expecting further declines into Q1. So, it's how fast do the new programs that Gayla alluded to earlier do those ramps in the Telco sector is really going to drive what 2016 looks like.

And then Sean, one thing that I might add to what Don indicated that make no mistake, we don't see this through rose colored glasses. This is -- we don't see a different overall macro-environment than what others see.

I truly believe that it's rough and rocky times out there across a lot of the markets we serve, if not all of them. And so the end market softness and how that impacts us, will be what it is, but what we are excited about in a positive tone you hear in our voicing and hear in our comments is that we feel probably better by than ever about what we are doing and the team and the actions we have in place to manage through this and once again we're positioned for solid growth, we have focused attack plans for each of our segments and importantly we have diversified.

So we have behind us some of the challenges that concentration or some of the technology that is not as leading edge may have in the marketplace. Those are in the rear-view mirror and that gives us a positive look going forward.

A couple of more technical modeling questions, unless I missed it, did you state a share count that you're expecting for March?

It will be modestly down for the quarter, we finished that 50.9 probably couple of hundred thousand's lower than that.

So, like a 50.5?

50.5-50.7 yes.

And in terms of the taxes, pretty material change versus my last model. It would signal that there's probably per annum 8% -- I mean I'm sorry $0.08 headwinds with this higher tax rate and I'd expect that 24-25 [ph] is the midpoint is probably your expectation for the year.

Can you comment a little bit around that and how we should be thinking about taxes and that impact?

First the rates is going to be driven by the geographic mix of where the profits are generated. You couple that with the fact that we just added Secure which is exclusively in United States, that's going to have increasing impact on the tax rate.

In light of the weakening macro some people say that slow-end markets caused OEMs to pump the brakes and back off the outsourcing and then others maybe opposite that OEMs want to actually step up the outsourcing. So, I'm wondering if you’re willing to share what you're actually experiencing when you're out there pounding the pavement.

I think again we see probably a mixture of both, I don't think it’s one size fits all. It really is based on the scenario that each OEM has and in their own environment.

So, I would say any of us in our industry would be wrong to say that we only see one or the other, but clearly what allows OEMs to take fixed costs out of their model is to outsource, and so while there may be a stepping stone where a number of OEMs may collect a certain amount of their manufacturing and bring it under one or a few operating units that exist that’s generally a stepping stone and if they have further or additional need for improvement then that’s when they consider outsourcing. So I don’t ever consider it to be a final decision but it made logical decision for some OEMs to take a step function improvement in consolidating some of their manufacturing.

No, we want to thank everyone for joining us on the call today. And look forward to speaking with any of you with follow up calls and appreciate your time.

Have a great day.