Good afternoon, my name is Meredith and I’ll be your conference operator. At this time I would like to welcome everyone to the Jabil Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this simply press “*” then the number “1” on your telephone keypad. If you would like to withdraw your question press the “#” key. Thank you. I would now like to conference over to Beth Walters, Vice President of Communication and Investor Relations, please go ahead mam.

Thank you. Welcome to our third quarter earnings call. Joining me today on the call are our President and Chief Executive Officer, Tim Main, and our Chief Financial Officer, Forbes Alexander. This call is being recorded and will be posted for audio playback on the Jabil website in the investor section along with today’s press release and a slide show presentation on the third quarter and fiscal year. During the course of this conference call we will make forward looking statements including notes regarding the anticipated outlook for our business, our currently expected fourth quarter and full fiscal year 2006 results, our first quarter fiscal year 2007 revenues and core operating margins, and our long-term outlook for our Company, our industry, our business sectors, and our potential realignment of our manufacturing capacity and the related cost and timing. These statements are based on current expectations, forecasts, and assumptions involving risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include but are not limited to fluctuations and operating results, the results of the review of our past stock option grants being conducted by a special committee of our board and government authorities, the accuracy of the stated dates of our historical option grants, and whether all proper corporate and other procedure were followed, the impact of any restatement of financial statements of the Company or other actions that maybe taken as required as a result of such reviews. Risks and costs inherent in litigation including that related to the Company’s stock option grants or any restatement of the financial statements of the Company, whether we will realign our capacity and any such activity will adversely affect our cost structure, our ability to service customers and labor relations, our ability to effectively address certain…

Thank you, Beth. I would ask you to please turn to slide 6. The Company’s sales cycle in the third fiscal quarter was consistent with that of the previous quarter at 19 days. Inventory turns to the quarter were 8. In absolute dollar terms inventory increased in the quarter by $240 million. Of this increase, approximately $49 million was associated with our partnering with one of communications customers and a new lean manufacturing initiative. The $50 million is associated with the acquisition of Celetronix completed during the quarter along with the pre-positioning of inventory for our continuing strength and demand in the upcoming fourth fiscal quarter. On a comparable basis for last quarter, inventory terms were consistent at 9. Day sales outstanding improved by 2 days as compared to the end of the second quarter at 40 days. Accounts payable increased by $259 million, an improvement of 2 days as compared to the end of the second quarter of 67 days. Our return on invested capital was 16% in the quarter, as compared to 18% from the same period in fiscal 2005. Please now turn to slides 7 and 8. Cash and cash equivalents were $855 million as compared to $919 million at the end of the second quarter. Cash balance is net of the $150 million of cash used to acquire the Celetronix operations during the third fiscal quarter. Cash flow from operations was approximately $120 million in the third quarter, our 22nd consecutive quarter of positive cash flow. On a year-over-year basis, we continue to maintain efficient control on capital deployed, while increasing our revenues and operating earnings. Our capital expenditures during the quarter were approximately $64 million. Fiscal year-to-date capital expenditures were approximately $184 million. Depreciation for the quarter was approximately $44 million. Amortization was $7.3 million.…

Thank you, Forbes. From an earnings perspective, our third fiscal quarter was a disappointment. We had achieved an excellent track record of meeting or exceeding our guidance for 22 consecutive quarters. Our intent now is to renew that track record beginning with fiscal fourth quarter. As discussed in our call last week and further by Forbes this afternoon, several issues emerged late in the quarter that significantly impacted earnings. We have identified the issues and are working diligently to rectify those specific issues. We expect to have them resolved over the course of the next two quarters. The issues are not associated with loss of a major customer, chronic or widespread, nor are they associated with a drought of growth opportunity. We take this very seriously and will correct the issues, but I also think some perspective is needed. We have growth, cash flow, earnings, returns above our cost of capital, and a bright long-term outlook. We intend to rationalize our footprint predominantly in certain high cost geographies, but this may appear to be reactionary to this quarter’s result; it is not. We are rationalizing to position ourselves for competitiveness in the next three to five years. In years past, customers frequently asked for the low cost production locations to be supplemented by higher cost sites, which would execute new product introduction and play the role of global air traffic control. In some cases, we have maintained high cost sites which were largely dedicated to one or very few total customers. In the past, this made sense in the customer relationship and in the overall financial performance of the business. Today, we increasingly see new product introduction, design, and global coordination being done within our low cost footprint obviating the need for supplemental high cost location support. Under this condition,…

Operator, we’re ready to begin the question and answer period.

At this time, I would like to remind everyone, if you would like to ask a question, please press “*” then the number “1” on your telephone keypad. We’ll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Steven Fox with Merrill Lynch.

Good afternoon, a couple of questions. First of all, since you’ve been subpoenaed by New York, could you just reaffirm or comment on what you said at the analyst meeting regarding stock options, do that all stand?

Steve, we can’t make any incremental comments as I said at the outset because investigation is ongoing, but you can assume that everything we said historically still stands.

Okay, and then with regard to the drags on this quarter’s earnings, I’m just trying to aggregate how much of the drag will be gone in the next quarter. It sounds like about a third of it would be gone, is that fair to say or I’m not sure if I did my math right?

Steve, it is Forbes. With regards to the coming quarter, fourth quarter, the drag remains approximately the same. Overall we got our hands around these issues with workloads, but the range of guidance pretty much assumes that the drag is the same. We will continue to work diligently through that and we’ll see how that transpires as we move through the quarter, but it’s roughly the same.

And then lastly, just regarding the charge, can you maybe make some further comments about the timing of it. Are you saying that this was planned anyway or are you taking the opportunity now to do it given everything else that’s going on in the business?

No, Steve, this is review of our overall capacity. This is not a reaction to an existing short term hiccup in terms of our operations. In terms of the timing of the charges specifically, it’s very much dependent upon the consultation process that we have to go through or that we’re undertaking with our employees and the representatives and approval of our board, but my expectation is that in terms of the actual charges and how those will fall into fiscal years, we could see anywhere between 50% and 60% of those charges in our fiscal fourth quarter on the balance falling to 2007 or 2008. We would be in a better position to give you definitive bucketing of those costs on our next call in September, but that’s my best estimate at this point in time.

Thank you.

Your next question is from Scott Craig with Banc of America.

Good afternoon. Tim or Forbes, question on the margins, if you look out beyond the next couple of quarters when you think you have the three issues resolved, is there any reason to believe that margins have been “permanently impaired at all” or can we get back to levels that we were at prior to these issues. And then secondly, Forbes, on the restructuring side of things, I know you’ve thrown out numbers for the charges and the cash charge and stuff, but what’s your expected pay back on those…or another way to look at is how much cost savings do you think you can generate from those? Thanks. Tim Main, President, CEO: Let me answer the margin part and then I’ll turn it over to Forbes for the balance of your question. I don’t think there’s any permanent impairment of our operating margins. I would expect to see operating margin recovery in fiscal first quarter of 2007, and I don’t see any reason why we can’t operate this business in an operating margin range that we’ve seen over the last couple of years and potentially even improve on that record. We’ll need to continue to leverage down operating expenses as we have in the past. We’ll be approaching 3% operating expenses, SG&A expenses, over the next few quarters. So, you’ve seen us go from 5.5% a few years ago to 4% to 3.5% and we’ll be approaching 3%, and as we’ve said our long-term objective is to get SG&A expenses down below 3%, operating in the 2.7% to 2.8% range.

Scott, with regards to the second part of your question, this realignment we’d expect to take somewhere in the region to $100 million to $125 million of cost out over the timeframe of this realignment. Obviously, we’re not going to enjoy the full benefit of that cost out. A portion of that does get passed to customers as we move these volumes into lower cost site production levels, and obviously the company’s not going to continue to grow over the next fiscal year and beyond. So, summarizing all that I would say over the next couple of years, we are probably looking at a 40 to 50 basis point improvement in the overall operating margin over the next two fiscal years.

Thanks.

Your next question is from Thomas Dinges with JP Morgan.

Hi, just a quick one to start with for Forbes. Forbes, when you look at the revenue for next quarter that comes through because of the shift of lean manufacturing, the additional that you get there, there’s some impact there on the margin because that’s not come. That’s just material passed through that’s coming through there. Can you quantify that at all if there is some impact on the gross margin side? And then I had a quick one on the segments.

As you say that is a straight material pass through. The impact on the margin, I’ve not done the math on that…10 basis points or something of that nature.

And then quickly, the instrumentation and medical was quite a bit better than you guys had expected, maybe just help a little bit if that was all related to new program ramps or if there are some other things going on there, and just a little bit more color on the consumer side that was expected to be strong and expected to be kind of flattish for next quarter, just a little bit of color there will be helpful as well.

On instrumentation and medical, we’ve been in transition over the last two or three quarters and that really continues to grow over the last two or three quarters. That’s one of the larger drivers, but we’re consenting to bring in assemblies into this instrumentation or industrial type opportunities that we’ve benefitting for over the course of the fiscal year. So again in summary, it’s a general growth in assemblies but one of the larger drivers has been this program we’ve been bringing into the company over the last two or three quarters. The second part of your question was with regards to the consumer. As we move into the fourth quarter, we do have some transition of programs going on with one of our larger customers in the quarter, product transitions, some assemblies coming off, new assemblies ramping in the quarter. You often see in the latter portions of the summer remembering that our two largest customers are European OEMs, somewhat of a slow down in the July and August timeframe as we hit the holiday season in Europe. So, nothing extraordinary there and we do expect a strong rebound as we move into fiscal first quarter in the consumer season.

Okay, thank you.

Your next question is from Lou Miscioscia with Cowen.

Okay, thank you. Tim, with the suggestion for I guess revenue and margins for first quarter of fiscal 2007, I guess when we look to the full year of 2007, does it look like the number that was the prior EPS number on first call, are you comfortable with that or it sounds a little bit like if we start to re-ramp margins back up even from a 4% level and if it’s meaningfully over 4 then probably have to be a little bit more conservative on our bottom line number for fiscal year of 2007?

Lou, I’m sorry I can’t really give you an opinion on guidance and where you should put it for 2007. We’ll start providing more specificity around the full year on the next call, but I think a return to trend line type of growth is a reasonable expectation. I don’t see any reason why fiscal 2007 can’t be on trend line for the company overall. That’s a trend line that’s 10 years old and in spite of hitting a rough patch here in third quarter and fourth quarter, we feel very good about how fiscal 2007 will turn out and that’s why we wanted to give you a little preview into fiscal first quarter.

Okay, great. The next question I guess I have is, at the analyst meeting I think a program that you’ve had maybe for about a year now is to try to really fill up these U.S. and European sites with high mix kind of work, would you say that that really hasn’t happened as quickly as you thought and that has been also part of the reason why I guess you’re taken this restructuring at year end; maybe if you can mention how many square feet it might effect? And then just one more quick one to followup.

I don’t know about square feet or that type of thing, but in terms of the Varian acquisition that we made for instance, that’s a very successful model that’s been very good for our business. I think it characterizes for me the style of manufacturing in high cost locations going forward. As I said in my prepared remarks, high cost locations have generally been a mix of NPI centers, global air traffic control centers for global customers, and in some cases fundamentally a subsidized operation from the global business unit as an accommodation to the customer. And as low cost geographies have become more competent at doing new product introduction and providing their own global support and that type of thing, it’s really obviating the need to have particularly repetitive manufacturing high volume applications coordinated or supplemented by high cost locations. It can all be done in low cost areas. So, what we’re going to see is I think a conversion of high cost capacity to the Varian type of model, and we need fewer sites to do that and they will be more specialized, and they should in the end contribute to the Company’s margins accretable. That would be an expectation.

Okay, one more quick one, maybe a little bit more on a positive note. Any life kicking in from some of the Japanese OEMs either with new programs or existing programs, moving stuff to out sourcing? Thank you.

Yeah, there has been a lot of great stuff for us going on in Japan both in the automotive and display areas as well as ongoing conversations through our Gotemba facility and our Tokyo office. We would expect to see continued growth with our Japan domiciled OEMs in 2007 and in 2008 and I’m pretty optimistic about how that will go.

And then possibly shifting some work or ramping some work with you all in China.

Yeah that will be principally low cost location production -- China, India, maybe some Eastern Europe.

Okay, thank you.

Your next question is from Kevin Kessel with Bear Stearns.

Thank you. Just a question again or more of a clarification on the tooling that you spoke about earlier, Forbes. You were mentioning that this operation was expected to be I guess break even in the fourth quarter, now it’s expected to essentially not happen until the second quarter of next fiscal year. You mentioned the technically resolvable management software issues, but what else is it here? It’s sounds like there’s less volume than expected and as a result that’s why these losses will continue.

I think at this point we should simplify the whole scenario there. The operation has taken longer to ramp than expected. So, like any activity whether it’s a tooling operation or a core EMS site. If you install significant capacity head count and there’s a significant delay in the ramp of production, you’re going to run higher operating expenses than anticipated. So that delay has caused us to experience higher operating losses than anticipated. We expected some reimbursement for customers that will not be forthcoming. So, at this point, we are ramping production in the location. We expect it to continue to ramp in fiscal fourth quarter and fiscal first quarter of 2007, and by fiscal second quarter of 2007 begin to reach volumes that will either have the operation break even or contribute significantly to the business. We still think the activity is an important activity in terms of our competitiveness, our position in the market place, and we also expect the operations fully ramped and will contribute significantly to the profitability of the company. This is not an accommodation site, it isn’t a service or an activity that is a sideline, and it’s something that we fully intend and expect to be profitable and make money in the endeavor.

Right, I mean in the end I guess the question people have then is at one point Jabil thought it might be reimbursed, now it seems that that’s not the case, is that strictly because the ramp didn’t happen according to plan and maybe it’s something that Jabil’s going to fix and work on to ramp faster?

There’s probably nothing and I don’t mean to sound glib or dismiss it, but there’s probably nothing that I could say distinctly that would make a hell of a lot of sense to you. I think you just have to take it on faith that we’re a good company, we engage in contracts and customer relationship makes sense. This is something we didn’t anticipate. It surprised us and at this point we just have to move on. We have to move on. We’re going to incur the losses in the fourth quarter. You know, if we have to go back and do this all again and we knew that this would have happened we would have fore warned you, and so we’re going to engage in some activity. It’s going to cost us $6 million or $7 million a quarter in operating income and we’re going to take our earnings down because of it, but it’s going to be great for us long term. All that’s true expect for the fact that we didn’t expect the lesson to be quite as expensive as it’s turning out to be. All that said, it should be profitable in 2007 and still an important activity for us.

Obviously the confidence is there that it’ll be profitable and I assume if at some point it wasn’t then you would have to make other adjustments relative to that operation?

Yeah we would but at this point we don’t expect that to happen. It is ramping production as we speak.

Right, and just from a big picture, I think Forbes addressed this earlier, in terms of the restructuring here in the U.S. that the cost and cash cost, the pay back is expected to happen approximately when, and if I’m not mistaken he mentioned that the impact on operating margins are 40 to 50 basis points over time, is that correct?

I said 40 to 50 basis points over the next two fiscal years. We require to go through various consultation periods with our employees and their representatives and that will have clearly a bearing on the timing of these actions.

So, then when you look at it from a macro level, operating margin model for Jabil the goal was to get it to 5%. You guys were obviously very close to that. Is that still essentially the goal, obviously the near-term goal might be a little bit lower, but Tim I think you just said it was 5%, is it still within the realm here?

I think it’s still a realistic target. Unfortunately, we’ve got a few steps to go through, a few more steps to get there than what we wanted to have. But, a realistic point of view of being back in the 4% operating margin range as early as first quarter 2007 I think is reasonable and we’ll keeping working at it.

Last thing is, you typically gave your fiscal year guidance when you reported your fiscal year end in September, is there an expected change to giving fiscal year guidance at this point?

I’m not going to promise you that we’ll provide full year guidance at this point. We’ll have to make that decision over the course of this quarter. We’ll let you know in September.

Thank you.

Your next question is from Michael Walker with Credit Suisse.

I have one quick housekeeping question for Forbes. It looks like the Attorney’s C impact was part of core EPS for the May quarter?

Yes it was. It wasn’t overtly material, Michael. As we’re looking at the fourth quarter, it becomes more material, but we will try to get our arms around that, but probably in the range of $2 million, something of that nature.

Second question for Tim, can you just talk a little bit about the demand environment right now. I know you made a point right up in the title of the press release that demand is good, but just kind of noticing a couple of changes at the market level where in the consumer business you’re going to show a lot lower second half growth than you have over the last couple years, whereas in the communications business you reported an organic telecom increase of 15% I believe in the May quarter, and then you’re saying if you back out with Cisco lean in the August quarter that part will be up 15% as well, and these are two buckets that have been pretty laggard for you in the last couple of quarters. So, my question is are you seeing at all a shift in terms of growth opportunities, demand opportunities away from the consumer area and towards a more infrastructure area?

I think it’s a great question and I’m not going to say no, there’s no movement away from consumer. I’ll think there will be less reliance on consumer to hit trend line growth rate going forward. We enjoyed a very significant ramp of our consumer business in 2005 and 2006 and networking, communications, computing and storage were kind of sleepy sectors and I think we’ve done some real good for the Company in terms of our business development efforts and our execution actually in those segments. We’ve said all along that the communications business is still something that we are very interested in pursuing and supporting and we have a lot of very strong capabilities in that segment. It isn’t that we de-emphasized anything or overemphasized anything else, but strategy of the company is to have a diversified portfolio of growth opportunities that make us less reliant in any particular segment quarter to quarter, year to year, and if we execute that properly you should see ebbs and flows in any particular segment in terms of being the hot growth this period or this quarter or this year end, and you should see other segments to pick up the slack, and I think that’s what you’ll be seeing. This is why in spite of kind of the negativity around the third quarter and fourth quarter, we really have a positive outlook. I mean to have in this environment…and the best case of a stable to slightly positive end market demand environments, to be growing the business at 35% top line growth and looking forward in the first quarter of 2007 and seeing year-over-year growth that’s outstanding, jeez, all we really have to do is get a couple of these identified issues resolved, identified, put to bed, march through this rationalization process as best we can and come out on the other side of this with a bigger better machine that’s going to continue to print cash flow at some pretty significant levels. So, we actually are very positive and optimistic about quality of our business, the direction we’re heading, and when we see things like networking and telecommunications really start to grow again that gets us even more excited, because it’s even better opportunities for ourselves there.

All right, thanks a lot.

Your next question is from Brian White with Jeffries. Brian White, Jeffries & Company: Tim, when you look at the different end markets, you look back 90 days ago, what has really surprised you the most in terms of strength and in terms of weakness in the end markets?

For the last year really consumer has surprised me a little bit how strong it is. I think consistently we have exceeded our initial guidance in the consumer segment, and flat screen TVs and handsets and even set top boxes have been very, very significant growth pools for us. So, historically that’s been the case. Over the last quarter, I really don’t see any surprises from an end market standpoint. Brian White, Jeffries & Company: Even in networking and telecom?

Well, telecommunications has been showing signs of life and you’re seeing that show up with the other guys too, but that’s really more about market share, customer penetration, new customers. End markets were growing at 3% to 4%, now they’re growing at 20%. No, it isn’t a significant end market change. Brian White, Jeffries & Company: Okay, and just when you look at the inventory increase, Forbes, ex the lean and the Celetronix acquisition, the $140 million increase, is that tied to the consumer market or is there a specific market it’s tied too?

It’s not tied to any specific market. We’ve given a range of guidance with growth as we move into fiscal fourth quarter without that additional material passed through. Some of it is associated with that obviously as we’ve talked about, but I can’t say it’s specifically consumer or anything else. We got a number of ramping programs across the Company in instrumentation and medical and also within consumer, I talked about that a little bit earlier where we do have some program shift going on in that area, where typically when you do that you tend to have slightly higher levels of inventory as you start to ramp these programs in the quarter, but not specifically tied to any one sector. Brian White, Jeffries & Company: Just finally on enclosures tooling, at the analyst day you indicated you were thinking about opening an enclosure operation. It sounded like it was going to be small in India. Is that still the case and would that also include tooling?

I think what we detailed was a campus capability that will provide the electromechanical infrastructure for products that we’re building in India. It’s particularly important in India because the electromechanical supply base is relatively underdeveloped and service logistics are difficult. So, it makes a heck of a lot of sense for us to have a campus located electromechanical capability. In the case where we cannot obtain supplier support, we may choose to invest in that activity directly because we must ensure that we have onsite electromechanical capability within a very brief distance, and that’s really what we were talking about. We weren’t talking about launching a large scale new activity doing our enclosures. Brian White, Jeffries & Company: Would tooling be part of it?

Theoretically, tooling in some cases would be part of it, although that would not be an early investment. That would be potentially a little later down the road. We would certainly specifically identify any ramp associated with that tooling capability and incorporate that into our views on the market. Brian White, Jeffries & Company: Okay, thank you.

Your next question is from Matt Sheerin with Thomas Weisel Partners.

Yes, thanks. Tim, I have a bigger picture question for you. Given all the issues you’re dealing with, the three operational problems in the quarter, the option controversy and now the big restructuring, are you concerned about management being distracted from running the core business and continuing to grow the Company over the next few quarters, are there any operational changes that you’re putting in place to help manage this?

Yeah, it would seem that the number of issues that we deal with all have happened with a four- to five-month period. The chances of that would be at a million to 1. So, we’re dealing with a lot of things at the same time. I have been enthralled and captivated and motivated by the looks I see in the eyes of the management team and their commitment to ensure that we get the Jabil train back on the rails moving the direction we want it to move. The level of commitment is so high and so dedicated that it’s very heartening to see. Again, we’re not dealing with a business that’s shrinking. We’re dealing with a business that’s growing very rapidly and of all the challenges that we have business — and every business has its challenges — chief among them is accommodating 35% top line growth in a global footprint. We talk a lot inside our company about let’s stay focussed on the core business and everything else will take care of itself. What’s happened with the options and investigations, I’ve said everything I can say on that. You can go back and look at press releases and what we said at the analyst day; that’s done with. We need to put that in the past. That will take its own time, its own course, and management has no control over that whatsoever. All we control is the business, and fundamentally the business is in good shape because the operational issues are not chronic, they’re not widespread, they’re resolvable, and we have customer satisfaction, a reasonably good shape and a great global footprint and a great reputation, and we’re going out and capitalize on that and make fiscal year 2007 a great year.

Okay great, and then could you tell us how many management changes you’ve made as a result of some of these issues you’re dealing with?

There are plant level management changes and there have been three to five management changes at an execution level.

Okay, thanks very much.

Your next question is from Alexander Blanton with Ingalls & Snyder. Alexander Blanton, Ingalls & Snyder: Good afternoon. Tim, one more question on the restructuring. The plant has been the problem, you said strong demand there, is that going to be part of it?

Again, out of respect for people, their families, and statutory requirements, and the need to consult with counsels, we are not going to identify or even imply any operations that might be affected. I’m not trying to dismiss your question. That’s just all we can say at this point. Alexander Blanton, Ingalls & Snyder: Okay let me put it just another way. Resizing the U.S. where high cost areas implies that you don’t have enough demand to fill the plants up, but this particular plant where there was an execution problem, what is the capacity of utilization there? I mean it sounded as if that particular plant was full and why would it be so unbalanced in the U.S., for example, to have one plant really full and the other one is being restructured?

You can have significant ramp up of new businesses that you underestimated the complexity. You’ve had four material procurement practices, you didn’t file the Jabil cook book in terms of the recipe of launching new programs. It could be mispriced, misquoted. There’s a whole range of potential execution pitfalls that confront a fully loaded operation as much as it can confront a poorly loaded operation, and again this rationalization process, Alex, is really two different things. One is not a result of the other. I think to some extent we’re taking an opportunity here given the environment we’re in to be a little proactive, but I think the role and responsibility of our high cost locations has been changing, will continue to change, and we need to position the company in the right way to compete in the next five years, and the role of a high cost location when you go through all of our sites and what they’re really doing, I think we need to be more affirmative and having them be…again I use this word ‘vary and ask’ in their approach versus doing favors for high volume customers that are principally produced in low cost locations that no longer need new product introduction and air traffic control in the global context. We just don’t do those high cost locations any more. So, we need fewer sites. Alexander Blanton, Ingalls & Snyder: Okay, I think you’ve done a pretty good job explaining that. I’d like to shift briefly to the lean program at Cisco. You mentioned a figure and I didn’t get it, the amount of additional material passthrough in the quarter was $100 million to $150 million, was that it?

Alex, it was $150 million to $200 million ended fiscal fourth quarter. Alexander Blanton, Ingalls & Snyder: A $150 million to $200 million, and those are items that previously were on consignment?

That is correct, yes. Alexander Blanton, Ingalls & Snyder: So, now they’re going to turnkey and that’s responsible for most of the increase. That’s a very large amount. Your total revenue with Cisco then as a percent of your sales is going to go up a lot I would guess based on this?

Well, on an annualized basis, yes the revenue stream would increase anywhere between $600 million to $800 million depending on demand labels. Alexander Blanton, Ingalls & Snyder: Right okay, and you’re not making very much margin on that, someone mentioned that before, right?

Yeah, that’s dilutive to margins. It’s one of the pressures that we have in terms of getting back on this track to 5%, truthfully we have a lot more material content in our revenue stream. It’s not indicative of anything other than that. Alexander Blanton, Ingalls & Snyder: And finally, it has been said that the Cisco lean program will involve pushing inventory back to the EMS companies, how much of the inventory increase that you expect or have had will result from that, and won’t that eventually go away because isn’t Cisco’s intention to install a pull system in which everybody has lower inventory, isn’t that the idea here?

Forbes wants to answer that question, but first I want to make it very clear to everybody on the call that we’re not talking about Cisco. We’re talking about a customer that’s going through a process with us.

So associated with our process, we brought about $50 million on to our balance sheet at the end of the quarter we just reported. As we move through the fourth fiscal quarter, I’d expect somewhere in the range of $50 million to $100 million of inventory to be added. I would also state that there will be an appropriate and equal offset at payable, so there won’t be any actual expansion in working capital, but you will see an expansion in absolute dollars in inventory. To your point, Alex, about this process and moving to your pool type basis, yes, that is the ultimate intention. I think it will take a quarter or two which I outlined on last quarter’s call for that process really to bed itself down. We’ve got inventory that we’re bringing on and that has been in place that will be consumed. We will take control of the supply chain and manage that process from here on out, and you will see efficiencies in that but it will take somewhere between one and two quarters to work our way through that. Alexander Blanton, Ingalls & Snyder: So eventually this bulge here will disappear, that’s what you’re saying?

That’s correct, yes. Alexander Blanton, Ingalls & Snyder: And that’s the idea?

Yeah, we’re efficiently right through the supply chain. Alexander Blanton, Ingalls & Snyder: Okay thank you.

Operator, we have time for one more question please.

Yes mam, your last question is from Shawn Severson with Raymond James.

Thank you and good afternoon. Tim, could you just talk a little bit about kind of what will happen on a controls basis. I mean a lot has happened late in the quarter and obviously we’re surprised, and I understand some of it is sort of the eleventh hour activity but was there something that was missing in terms of the constant feedback throughout the quarter or are these things that are nearly impossible to figure out until things are rolled up in the final numbers? Tim Main, President, CEO: I don’t think we have significant or material weaknesses in our controls. I mean clearly we were surprised by it and therefore by definition I would have to admit we’ve should have known about it earlier, and we are working on our business planning process internally. We’re getting back to good kind of dashboard type of discipline to make sure that we’re aware of what’s going on through all of our operations and what the financial impact would be. So, we are taking this as a bit of a wake up call to get back to basics but in terms of being out of control on a chronic widespread way, absolutely not, absolutely not.

So, maybe it’s more of a human input error, is that what we’re talking about in terms of what people were feeding into the machine, I guess, do you want to look at it that way? Tim Main, President, CEO: There was an error somewhere…

These issues are operational, inefficiencies through operational processes, be that through yields or just poor planning of material, expediting material into plants and such like in terms of freight cost, and some of those are pretty difficult to get one’s arms around. You’re in a fire fight if you will in terms of an operational scenario, so it’s certainly not a widespread epidemic control failure by any means. We’re very much in three isolated instances. We’ve got our arms around them and our management attention is focused there, and we will prove these to bed in the next couple of quarters and move forward.

Can you just explain to me how a typical repair and warranty contract is structure; I mean, how does it work and the length of term and re-negotiation, ability, and all of that? Thank you. Tim Main, President, CEO: Yeah, that’s changed over time and I don’t really think I can get into all the nuances of the contracts and that type of thing. It’s not really a contract issue, it’s more of an execution issue and a model change and a new program, and that kind of speaks to the late notice that the something had arrived, something that ramped during the quarter and got worse as the quarter moved along, and I’ll just leave it at. Again, these are issues that we’ll be working through in the fourth quarter and the first quarter looking forward into a very robust, strong first quarter from a growth standpoint and a nice recovery in operating margins as well. So, I think the overall manner of the management group is very optimistic about our outlook in ’07 and we’ll work through these specific issues as diligently and rapidly as we can.

Thank you.

Thank you everyone for joining us today. Again, playback will be available on Jabil website along with the slide show presentation and press release. Thank you for joining us today.

Thank you. This concludes today’s conference call. You may now disconnect.