Ladies and gentlemen, thank you for standing by and welcome to the Benchmark Electronics Fourth Quarter 2012 Earnings Call. For the conference, all the participants are in a listen-only mode. There will be an opportunity for your questions. (Operator Instructions) As a reminder, today's call is being recorded. With that being said, I'll turn the conference now to Mr. Don Adam, CFO. Please go ahead, sir.

Good morning, and welcome to the Benchmark Electronics earnings conference call for the fourth quarter of 2012. This call is being recorded and will be posted for audio playback on the Benchmark website. Gayla Delly, our President and CEO, will begin this call with a few opening statements. Then I will provide a review of our financial metrics for the quarter and then Gayla will close with a summary and state of the business. After our prepared remarks we will take time for your questions in our Q&A session. We will hold this call to one hour. This morning during our conference call, we will be discussing forward-looking information that involves future events and the future financial performance of the company. We would like to caution you that those statements reflect our current expectations. Actual events or results may differ materially from projections. We also would like you to refer to Benchmark's periodic reports that are filed from time to time with the Securities and Exchange Commission, including the company's 8-K and S-4 filings, quarterly filings on Form 10-Q and our Annual Report on Form 10-K. These documents contain cautionary language and identify important risk factors which could cause 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 Gayla.

Good Monday morning to all, and thank you again for joining our call today. I hope that everyone enjoyed their Super Bowl festivities and have recovered well following that nail biter of a game. I am excited to say that our results for the fourth quarter kept up a very successful year for Benchmark. Our Q4 performance with revenue of $634 million and diluted earnings per share of $0.33, stand on its own. I am very happy with the fourth quarter results. It was an excellent quarter and I want to recognize and thank our teams for their performance and focus on supporting our customers strong demands and upsides during Q4. Now let's look at our first quarter guidance. Our guidance reflects revenues between $530 million and $560 million based on where we are today. Diluted earnings per share excluding restructuring and Thai flood related items are expected to range between $0.17 and $0.21. We estimate $1 million to $2 million in restructuring charges for Q1 and do not have an estimate of insurance recovery in Q1. Let me address the guidance we have provided for the first quarter which incorporates the impact of three important key factors. First, the strong demand in computing in Q4 contributes to a reduced revenue outlook for the first quarter of 2013. We do not interpret this as a sign of strength in Q4 or of weakness in Q1 but as an alignment of supply and delivery to meet the needs of our customer. Second, the uncertainty in the macro-environment is providing headwinds across most markets after strong Q4 performance and we see this consistently across our customer base. Generally, budgets cycles allowed Q4 demand strengths for our customers. In the sluggish market place today, this strength was unexpected in Q4. The corollary when we often witness in weaker Q1 demands is following an exceptionally strong Q4, and this is again the case this year. Third, regarding margins, strong continuation of our new program ramps are expected to contribute to revenue streams beginning in Q2 and in to the second half of 2013. Therefore, this provides margin pressures in the first quarter, however this is an important investment in our future growth. We are confident and firm in our belief that we are prudently investing in the future, supporting our new customers and new programs and we will continue to do this. In essence, we must balance our positive long-term view of the business opportunities and world economic activity with the decreased demand levels and continued uncertainty today. With that let met turn it back over to Don to go through the specifics of our performance for Q4.

Thank you, Gayla. First, I would like to make a few observations and comment on our fourth quarter revenues and earnings per share. We are pleased to conclude the fourth quarter of 2012 with revenues of $634 million, exceeding the high end of our guidance for the fourth quarter which was $580 million to $610 million. This upside was primarily associated with the strong demand that we experienced during the latter portion of the quarter. Our earnings per share was $0.33 compared to $0.17 for non-GAAP and $0.05 for GAAP EPS last year which included the impact of the Thailand flood. The revenue breakdown by industry for the fourth quarter of 2012 was as follows. Computing 33%, industrial controls 27%, telecom 25%, medical 10%, and testing and instrumentation 5%. When comparing the fourth quarter to the third quarter of this year, computing revenues were up more significantly than our other sectors as a percentage of revenue. This was primarily from strong demand from our customers products which exceeded our fourth quarter expectations. Medical sector revenues grew 10% sequentially with medical remaining constant as a percentage of our revenue. Industrial control revenue was up for the fourth quarter maintaining a consistent percentage of revenue contribution. Telecom revenues weakened in Q4 consistent with the overall marketplace and test and instrumentation remained weak. Now let me provide you with a quick update on Thailand. Including in our fourth quarter financial results, we have a net Thailand flood related recover of $2.8 million which is primarily from insurance recoveries and access of those previously recognized losses. The work with our insurance carriers on the claims and recovery process is ongoing. And a reminder, upon settlement recovery items including lost profits will be recorded as gains when received. Now I would like to discuss the…

As I noted earlier in our call, we were really pleased to conclude our fourth quarter and fiscal year 2012. Thank you, Don, for going through the detail. With solid operational performance, good momentum in the new business ramps and bookings, all occurring in a not so pleasing macro environment, our teams delivered these results. Let me again summarize and make a few observations that I believe are important are important to highlight. First speaking to our operational performance, fourth quarter was a good finish to a successful year with revenues at $634 million against our fourth quarter guidance of $580 million to $610 million. Our earnings per share was $0.33 compared to our guidance of $0.26 to $0.31. And our operating margin was 3.7%. In Q4, we believe we would have reached our exceeded our 4% operating margin target level at the revenue levels achieved the quarter. However, we experienced two margin offsets. First, due to revenue mix during the quarter we saw a decline, and second we saw in increased number of new customer and new program ramps that began during the fourth quarter. These new program ramps generally impact us with cost and under-absorption in advance of revenue relief. In Q4 it was the number and the size of programs ramping which provided stronger near-term headwinds on our operating margin. Some programs accelerated faster and moved along further than we anticipated and planned for which we are excited about, especially in the current environment. Our investments in these new programs and customers are important for our long-term growth but they do have the impact of suppressing our margins in the near-term. As we have successfully demonstrated during 2012, we will execute and continue to drive improvement in controllable areas such as our strong cost control, our effective…

(Operator Instructions) Our first question comes from Jim Suva with Citi. Please go ahead.

The conference call was a little scratchy, I just want to make sure, did I hear correctly the (inaudible) was $100 million to $120 million?

Yes, Jim, that’s correct. Operator, I am not sure if it was scratchy for Jim, if it was for everyone. Have we had any other comments?

Great. My second follow-up is, in your prepared press release, you mentioned for 2013 you're pretty optimistic and looking for a rebounding there. Can you help us what you mean by that? Because 2012, if I did my math right, looks like you're up about 9% to 10, which indeed is quite a nice rebound from 2011. So are you basically alluding to that 2013 will be up stronger even over 2012?

Let me talk a little bit about kind of some of the dynamics we are seeing in each of the market places since you bring that up Jim. I will go through telco and test and instrumentation. As I am sure you all have heard, we are beginning to see some demand levels return and there is investment discussion among some of the market leaders in those markets. And so we expect to see the benefit from that mid-year flowing through to our customers and to us. Don’t have the timing on that but it does seem that there is a commitment to increase infrastructure development and spend in those areas. In computing, we see Q1 and Q3 traditionally somewhat seasonally impacted and also see that there is also new product and new program and technology introductions in the second and the fourth quarter. In defense and aerospace we see Q1 significantly impacted, and this is a subset of our industrial controls marketplace. But we see that significantly impacted by the budget and sequestration discussions and if that results in pull back in demand. In medical, still it’s challenged by some of the tax laws and R&D activity. And so that one is probably not as clear except that we do see a great deal of excitement and investment in bringing out new products and introductions into new geographies and emerging markets. So as you can see, there are a number of opportunities in each of the markets that we serve, that we believe with the R&D investments and with the activities that we are supporting with our customers as they ramp, if there is any footing that is achieved in the underlying markets. And in fact the Q1 is the trough in general than we would believe we would see some strengths going into 2013. If 2013 is not as strong....

Can you (inaudible)?

(Inaudible) pardon me?

Thank you so much for the details. You were saying something about 2013?

So if 2013 does not have overall strength or further deterioration we believe that our new bookings and our new program ramps provide us some strong offsets to the overall deterioration. And with that we would expect lesser growth or a flat year similar to what you are seeing in other markets. So I think that if there is deterioration and continued softness in base business there is no way to counterbalance that strong enough, but I do believe that we see signs and indications that there is footing being gained.

Our next question is from Brian White with Topeka Capital. Please go ahead.

Just want to clarify. So 2013 sales we should expect to be flat or down, is that correct?

Again, we are not giving guidance for 2013 so I am not proposing to do that. We see Q1 down and see signs as the new program ramps will be additive to the underlying book of business. But we aren’t giving guidance on and have numbers around as what to expect in the base. And that of course is significant. So I would look to what's going on in the marketplace and then in addition to that would be the opportunities arising from the new program ramps and new business bookings.

Okay. And just on margins, when is maybe an inflection point on operating margins? It's in the second quarter or third quarter or fourth quarter? Because obviously first quarter's very depressed but it's seasonality and ramping. So it's two things going on there.

Right. Exactly. So, again, not trying to avoid the answer other than to say that if the book of business and if the underlying market gets some stability and we have these new programs ramp as we said, we would have expected Q4 to have achieved it if we didn’t have the strong level of ramp. We are very excited about these new program ramps and if we can gain some stability in the overall market, we would expect to see better revenue and growth as well as achieving the margins. I think the big question that remains out there is whether some of the unresolved questions and lingering concerns whether it be in defense and aerospace or medical, or if some of the investments in test and instruments and telco, if those actually start taking place then we get some growth there then absolutely. As we know we will see, our industry clearly will see deleverages if the revenue isn’t there.

And next we will go to Sherri Scribner with Deutsche Bank. Please go ahead.

I just wanted to ask a bit about the margin decline and the way to think about it as we move into the March quarter. If I just quickly do the calculations, it looks like you're suggesting operating margins are going to be in the mid 2% range, which is significantly much lower than you were last year. Is SG&A going up at all? Gross margins, can you give us some sense of that? And also maybe a little more detail on why we see such a steep decline. Thanks.

In terms of the overall operating margins I think, first on the SG&A or OpEx, we are going to continue to invest in the future. So I would expect the real dollars to remain flat with what you saw in 2012. They were pretty consistent throughout the year. In terms of the impact on the gross margins, obviously it’s a absorption issue with cost on the decline of revenues from the previous quarter. So under-absorption of cost and leveraging revenues are the key to driving those margins.

And Sherri, I guess the other point is that as we noted, we do still see the number of new programs ramping in. Don’t expect those to have revenue released out until Q2.

Okay. Just thinking about as that revenue increases, hopefully, as we move through the year with the new programs, is there a contribution margin that we should think about for that business for the company?

Clearly. I don’t have a specific number to point to but those are the activities that we would expect to drive our margin and then as we referred to earlier, it’s really what base are you adding those incremental opportunities on to. So if we have the strength that a Q2 would normally have in comparison to Q1, you would begin to get some momentum. Don’t expect all of the programs to immediately launch on April 1, but we would see it some near point in the quarter and through the course of Q2 that we would get some portion of that improvement.

Okay. And did you have any greater than 10% customers in the quarter?

One.

And was that a computing customer?

Yes.

Yes.

Our next question is from Wamsi Mohan with Bank of America Merrill Lynch. Please go ahead.

Can you talk about how broad-based the pull-in was in the fourth quarter or was it all concentrated in computing?

All of our industries seem to have some percentage of contribution to the revenue line so that would indicate it was growth in all of the markets. Where we saw the upside to our expectation was primarily in the computing sector. So we felt upside in most of the industries. We saw the upside to expectations primarily in computing.

I'm sorry if I missed this but, Gayla, did you size how much you thought the pull-in was into Q4 specifically?

No, I don’t have that other than you can see that our mid-point of guidance was 595 and we achieved 634. So in that regard that’s probably the simplest way to think of it.

Okay. Thanks. And then as you think about the snapback that you're alluding to post the first quarter, can you talk a little bit about expectations of seasonality in 2013? It sounds like the base business is obviously uncertain but you have visibility into new program ramps. And then, b, are the new program ramps tracking at the level that you had originally expected them to or are you seeing any changes in that?

I believe the new -- so in reverse order, I believe the new programs are in fact tracking to what we expect to remember that as we announced our new programs during the course of 2012 as we indicated on our calls. We tried to right size our expectations to the current environment. So rather than size those as they may have initially been broadcast and expected by overall customer expectation, we tempered those through the course of our reporting due to the current environment. So those are hitting as we expected. Speaking to the first question related to seasonality. I won't go through each of the industries as I did on Jim Suva’s question in response, but I guess I will say that traditionally Q1 and Q3 are the weaker quarters for telco and computing, two of our larger sectors. And Q2 and Q4 are generally the stronger sector. I don’t believe any of the other sectors that we support have specifics dynamics of seasonality that I can point to. Those are more impacted specifically by their new programs and new opportunities to launch technology or geographic resolutions or our solutions for their end markets.

Okay. Thanks. Last one from me. Any sense of what percent of revenues in 2013 you're going to generate from new programs?

No, I don’t have a sense of that and as we have always noted, it becomes a little bit difficult to determine how long we are going to consider something new. But I will say that I believe we are seeing a heightened percentage of opportunities coming from new programs. And clearly part of the impact is because the overall market is down. So within a recovery I would expect that to be a strong percentage but in the current marketplace it’s going to be even more pronounced.

(Operator Instructions) And we will go to Sean Hannan with Needham & Company. Please go ahead. Sean Hannan - Needham & Company: So, just to clarify, I think you've hit on this a few times, but just want to make sure to summarize the right way. The bookings environment in terms of new business appears to be very strong, positive. And ramps at present in terms of those booked many quarters ago, in some cases, are proceeding at least kind of according to plan, and perhaps in some other cases a little bit more accelerated based on what I heard from the fourth-quarter results.

And what I believe that what that really indicates is there is a greater excitement and may be after some of the, what you call it, fiscal cliff or election or whatever, the unknowns were -- it seemed to begin to show some momentum and excitement around restarting. Maybe it was just the holidays but really as we got in the last few weeks of the quarter, we saw even more momentum around an urgency to ramp the new products which I think speaks to the demand levels and the opportunities that are out there. Sean Hannan - Needham & Company: Okay. That's helpful. And then if I could ask something thematically. When you look at your computing business today, obviously there's a number of sub-categories within that. I'm sure we can all probably forecast what we suspect is driving some of that -- had driven some of that strength within the quarter and what may drive that movement forward. But I wanted to get your perspectives, Gayla, how should we think of that mix today? How does that continue to shift the themes that are driving that? And then also how that may affect to whatever degree, how new programs are launched as they come through your business. Thanks.

Well, Sean, that’s a tall order. I really don’t have the detailed level of knowledge to be able to share with you greater insight into some of the dynamics of what's going on in computing other than to say, the use of the internet and software as a service and the massive databases and computing storage requirement that that drives continues to escalate. And I think that there was a period where there was a not huge investment and maybe a dry period of investment in some of the infrastructure and an opportunity for refresh with new technology and new products as well as more powerful and likely earth-friendly computing. Not creating as much thermal heat issues. So I don’t think I can really point to one specific item of event that’s causing any growth their but I do think there was a lack of investment. Good solutions being brought forward and the requirement for the computing power and storage to increase. So it’s a very good market place. Probably not so much so just for maybe the PCs but beyond that I do see some good strength. But, again, you would have to look for actually some of the computing companies to get better insight into them. Sean Hannan - Needham & Company: Okay. And is there anything that you're seeing in terms of how your new programs are expected to ramp with your customers? Are there any changes there within that segment?

I would say that we are seeing some excitement and momentum. So that seems to be a positive change. But it’s really kind of the speed and excitement around it that I would point to.

And there are no further questions in queue, I will turn it back to presenters.

Okay. I think that will conclude today's call and we will be available for any follow up questions. Thank you.

Thank you everyone for joining us.