Ladies and gentlemen, thank you for standing by. And welcome the Tyco Electronics reports strong First Quarter Results Conference Call. At this time, all lines are in a listen-only mode. Later, there will be a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to the Vice President of Investor Relations, Mr. John Roselli. Please go ahead, sir.

Thanks, Ken. Good morning and thank you for joining our conference call to discuss Tyco Electronics' first quarter results for fiscal year 2008, and the press release issued earlier this morning. With me today is our Chief Executive Officer, Tom Lynch; and our Chief Financial Officer, Terrence Curtin. During the course of this call, we will be providing certain forward-looking information. We ask you to look at today's press release and read through the forward-looking cautionary statement that we have included there. In addition, we will use certain non-GAAP measures in our discussions this morning and we ask you to read through the sections of our press release that address the use of these items. The press release and all the related tables can be found on the Investor Relations portion of our website at tycoelectronics.com. Now, let me turn the call over to Tom for some opening comments and a review or our performance by end-market. Tom?

Thanks John and good morning everyone. I am very happy with the start we got in the first quarter of our fiscal year. Overall, I think we had a very good performance this quarter. And this performance really reflects very much the strength of the diverse markets we serve, the leadership position we have in most of those markets. And very importantly, our strong international base, which right now is about two-thirds of our revenue and that’s more than offset our weakness in the U.S. that we've been seeing for the last year and we'll talk more about that as I get into the details. Let me now share a little bit about our business segment performance and our performance within key markets in those segments and then I’ll turn it over to Terrence who will take us through our P&L and cash flow in more detail. Our total sales grew 19% to $3.7 billion in quarter, with organic sales growth of 12%. This organic growth was driven by over 300% growth in our Undersea business which continued to be very hot, along with double digit growth in Network Solutions segment. Our largest segment, Electronic Components grew 5% organically in the quarter, due to continued strength in out international markets where our sales grew 7%. This more than offset a 2% decline in the U.S. and as I said earlier that’s the situation we've been seeing for about the last three or four quarters. Our adjusted operating margin of 13.6% increased 50 basis points over the prior year. This increase was driven by higher margins in our Network Solutions and Undersea segment As you know, this is one of our key goals to get our margins over 15% over the next three years, and we made some good progress in…

Thanks, Tom and good morning everyone. Since Tom covered all revenue trends, I’ll go through the P&L, cash flow, and a few other items. Starting with the P&L, our operating margin on a GAAP basis was 13% which includes $21 million of restructuring costs. On an adjusted basis we were pleased to see our operating margin improve by 50 basis points to 13.6% in the quarter. We saw good operating leverage on higher sales levels in the Network Solutions and Undersea Telecommunications segments. This was partially offset by a slight margin decline in the Electronic Component segment, reflecting a continuation of the low productivity levels we have been experiencing in our U.S. automotive operations. As you are aware, we were doing a plant consolidation in the U.S. and we worked through the final stages of that in the quarter, and we expect improved performance in our U.S. automotive operations going forward. Next, out net interest expense was $40 million in the quarter, a slight decrease versus last year, reflecting lower debt levels and a higher cash balance. Depending on the level of cash generation coupled with the timing of our share repurchase program, our net interest expense should be in the range of $40 million to $50 million per quarter. Our other income was $592 million on a GAAP basis and $20 million on an adjusted basis during the quarter. Both of these figures relate to our tax sharing agreement with Tyco International and Covidien and we were impacted by the adoption of a new accounting standard which I will discuss in a minute. Income tax expense in the quarter was $157 million resulting in a GAAP effective tax rate of 15%. This slow rate reflects the non-taxable nature of the tax sharing income included in other income. Our tax…

Thanks Terrence. I am now going to talk about our outlook for the balance of the year in the second quarter. In Q1, we had strong order rates with growth of 17% for the total Company and 9% excluding our Undersea Telecom and Wireless segment. The strength in the orders was broad based, with the exception of our U.S. components business which I mentioned earlier where orders were relatively flat compared to the prior year. Since the end of the quarter, our order rates have continued to be solid, reflecting a similar pattern for the first quarter whilst it’s clear that these are uncertain economic time other than the weaknesses we have been experiencing in the U.S. for about a year now. The balance of our business continues to be solid. Based on these factors, we are raising our full year outlook for adjusted earnings per share to a range of $2.45 to $2.55, an increase of 12% to 17% over last year. This compares to our previous guidance of $2.40 per share to $2.50 per share. The increased results from our strong first quarter results and the continued momentum of our Undersea Telecom business which is offsetting a $0.05 per share impact from the adoption of FIN 48 that Terrence discussed. Our outlook for other businesses in aggregate is really essentially unchanged from our prior guidance and our estimate of restructuring cost is still approximately $130 million or $0.17 per share for the full year. We expect full year sales growth of 11% to 13% and we now expect full year organic sales growth of 7% to 9% compared to our previous yield of 6% to 8%. And just as a reminder, our guidance does not take into account any divestiture activity and assumes that raw material prices and…

Certainly, it will be my pleasure. [Operator Instructions]. And we do show a question from the line of Steven Fox with Merrill Lynch. Please go ahead.

Hi, good morning. Couple of questions. First of all, can you talk about the growth in the wireless business, a little bit more on the handset side? Where are you? What kind of products are you having most success with and in what type of customers by region?

Thanks Steve. Our wireless business really has… are you talking about the wireless business in our components segment?

Yes, I’m sorry in the electronics components segment.

Yes. Sure. Well, I think as you know, historically, we’ve not been a real big player in that segment and about three or four years ago put a big push on for obvious reasons, given the strength of that segment to become a significant player. And I think the team has done a real good job of steadily improving our position and broadening our connective product line and just really dedicating more engineering resources to the big customers. We can’t get into customer-by-customer detail, but we’re now in all the big customers. One of those big three, we’re still not a major player, but we are in the door. But in the top five, we have a strong position. So, a lot of products are now ending up in mobile phones in every region of the world. And we really feel good about the progress. And I would say the most important key there again as we increased the engineering resources dedicated to that. It’s a project-by-project basis and so far we’ve been executing well.

Okay. Great. And then, secondly, on the Undersea Telecom business. You mentioned that you built more backlog and more projects. Can you sort of help us out on what the implication for full year revenues are now for that business? And what it means for margins off of the margins you just put up?

Yes, Steve, it’s Terence. When you look at the year, certainly, we had about $300 million revenue in the first quarter. We did have the big Trans-Pacific project that we will be wrapping up where we see… Undersea I think the best way to think about it is in the second quarter around $250 million of revenue. And right now, in the out years, probably about $150 million, out quarters $150 million per quarter in the out. So, that is adding to the increase to our topline growth, increase our topline growth on guidance. You did see… we did see operating income pickup in that segment this quarter. I think with these levels, I would still expect them to be in the low double digits for the year.

Great. Thank you.

Thank you.

Thanks. And our next question then comes from the line of Will Stein of Credit Suisse. Please go ahead.

Thank you. I would just like to make sure I understand your comments with regard to the weak U.S. economy. It sounds like you have been seeing weakness in this region for some quarters. Not just in the current quarter. And I am wondering if you can comment as to how you expect the U.S. economy to factor in going forward. And how it is incorporating your current guidance?

Thanks Will. Yes, a couple of comments, first of all the weakness is really in the components business, the network business and our other infrastructure business is wireless are pretty robust right now or solid I should say in the U.S. In components, where we’ve being seeing it for the last year is our U.S. automotive business. So, we’ve been doing very well in Europe and Asia and that’s where our strength is, and that’s where about 80% of our business is. But U.S. automotive is actually for us being down in revenue, almost eight quarters I think straight now. So, it’s been soft for a while. We don’t expect that to improve in ‘08. We don’t expect that to get significantly worse either. I mean it’s been down quite a bit. And the other piece that’s been down for about a year now is the appliance or the wasted space which is really directly correlated to the housing market. So, those are the two big markets that have overall kept us in the negative growth mode in the U.S. In industrial, we’ve been…. solid double digit, which is primarily U.S. and Europe. And in aerospace, which is primarily U.S., we’ve been strong.

So, it sounds like you’re not contemplating erosion in areas outside of automotive or like this [ph] in your guidance, is that right? And I’m--?

I think that’s fair to say, because when you look at the dynamics which we are driving. Wireless public safety, for example, strong, strong order in the… strong order book in the first quarter that’s primarily U.S. business. So, we expect that to get a little stronger in the second half and then we continue to expect industry to hold up and aerospace and defense I mean, we’re sold out to capacity.

Okay. Great. Just one other. I am wondering if you can update us on capacity rationalization that happened in the quarter. I think you said earlier we’re at 120 sites and maybe a quarter or two ago I thought we were at 130. Can you just bring me up to speed as to what’s happened in the last quarter? And what the current plan is, when you currently expect the capacity rationalization to be essentially completed?

Will, it’s Terrence. I will take that. First off as we laid out, this is a long-term plan and we have it going out to 2010, what we communicated so, there is still, I think as Tom’s comments said, still lot of work to be done. We do have as Tom mentioned 20 individual actions that are in progress currently. We ended last year, ’07 with a 121 manufacturing sites. So, we did make some progress. We have touched already about 14 facilities that are either closed or are in the process of being closed from when we started the program and that’s split pretty evenly between the US and Europe and Middle East and Africa. So, we're still early into it, I would say this quarter was really a continuation of what we started last quarter and the year before and in that regard, there was no new one action done in this quarter. We just said its continuation of what we have been working on.

Okay. Thanks so much.

Thank you.

Thank you and we do have a question then from the line of Carter Shoop with Deutsche Bank. Please go ahead.

Thanks guys and congratulations on a pretty good quarter there. One area that you guys have focused on in regards to gaining market share has been in the handset market and that is pretty evident this quarter and that end market that you talked about trying to reinvigorate has been consumer electronics market, not as much success there. Could we talk a little bit about what needs to be done to drive sales there and how important that is for Tyco Electronics in the components division?

I would say consumer electronics is clearly an important focus area for us. I think if I had a rating in priority I would rate mobile phones a higher priority but doesn’t mean that we are not paying as much attention to consumer electronics. I think as we discussed before I think within consumer electronics there is a mix of attractive products to go after and not so attractive. We have been selective. Where we have been successful is in gaming, is in big screen TVs, digital cameras. I would say our performance has been bumpy as those markets of ebbs and flows, we’ve ebbed and flowed with them and as we are still relatively small so our revenue can move around quite a bit because of that. When I take a couple of year view of it and look over the past couple of years, we believe we are growing slightly ahead of market rates. So we are making progress and it is an important market for us.

Great. That’s helpful. As a follow-up two questions on the cash flow. Could you provide us with the targeted range for free cash flow for fiscal year ’08? And also could we talk about the longer term trend in cash taxes. I know you are looking for a 200 to 300 basis point reduction in the GAAP tax rate by 2010. Will not be decreasing at all for the cash tax rate?

Carter, it’s Terrence. I’ll take that. First off, what we've said is over the long-term, I would except that our free cash flow will approximate net income. So, when you look at it over a very long-term cycle that past guidance where I think your hedge should look at. In regards to cash tax rate versus GAAP tax rate, I would not assume that the GAAP tax rate coming down will continue. You get the same on the cash tax rate due to us or NOL position that we are utilizing. So, where I think we will be is sub 20%. You saw a 17% in the first quarter, but we’ll be in that for quite some time with our NOL position in the tax planning we are doing.

Great. Thank you.

Thanks. And we have a question then from the line of Matt Sheerin with Thomas Weisel. Please go ahead.

Yes. Thanks. Good morning. I'm hoping you to talk specifically about demand trends you’re seeing in Europe besides from the automotive business. We’re starting to hear from some of your distributors, which tend to focus on industrial markets that Europe is off to a little bit of a softer start in the March quarter which is normally up sequentially pretty strong. So, can you tell us what you are seeing there?

Yes. Europe’s been strong for us for the past year and with another solid quarter in Q1 and particularly automotive was very strong in Europe. We expect that to slowdown a little bit over the balance of the year. I mean we don’t expect it to falloff at the end of the year. But our outlook does have baked into it a little bit of slowdown in most of the markets there.

Okay. And then with the buyback I know you have made some good progress there. If you were to complete that in the next few months given your plans for a free cash flow, would you expect to do an additional buyback?

Yes. We would.

Okay. Thanks very much.

Welcome.

Thanks. And our next question comes from the line of Yuri Krapivin with Lehman Brothers. Please go ahead.

Hi. Good morning.

Good morning Yuri.

Tom, so with all this being up 17% organically and 9% if you exclude the two volatile segments, you are guiding to organic sales growth of 5% to 7% all year. So, I think there is a little bit of a disconnect here. Are you guys are being conservative?

Yes, Yuri. I would think about it this way. Coming off a good quarter, good order growth, that’s going to carry us through in the second quarter and we feel confident about that. And we do feel our outlook is balanced for the year. Admittedly, there just a lot less visibility, of course, for the last six months of the year compared to Q2. So, there are some signs out there for things to get softer, but it's not yet reflected in our order rate. So, if you were to peal back and look by our segments and kind of really that I think bad weather indicator of the economy for us is EC, we see growth slightly down in EC second half versus first half. So, we do see that coming off a bit and a part of that is because automotive has been really very strong in the first quarter, and we expect that to come down a little bit. So, that’s our view. It's a pretty balanced outlook of the year, and we feel comfortable with it.

And Yuri, this is John. I would just add a little bit of the disconnect between the order rates in Q1 and the growth rate we're looking at in Q2 relates to some of the orders we took in, are for some of the out quarters in certain longer cycle markets like A&D, solar, oil and gas. Some of those markets we were getting orders that extend out as in the second half.

Okay. Great. And then we just back to your inventories. You mentioned that you feel good about the inventory for the balance of the year and that they were down on a year-over-year basis, but sequentially I think, your inventory position increased by about $250 million. So, could you please address this sequential increase in inventory?

Yuri, I think, you are a little bit high on your increase figure, sequentially. I think, it's a $100 million or so without FX, there is FX in there. When you look at it sequentially we always have a build in our first quarter and that build is just, we always get it down to fourth quarter at the end of the year and we do have a build going through the holiday season in quarter one. If you look at last year we had a much more significant build last year and it took us a long part of last year to burn that off. We did have an over build last year first quarter. I would not say we're in an overbuild situation. I feel very good about where we are for the rest of the year in inventories and I don’t think there’s pressure on the business to get it down. So, I do think it's in connection. My comment on year-on-year, if you look at nine days. The nine days overall being down in inventory is were we expect to be in longer term. Like I said we’ll be in the mid 70s on average over time.

Great. Thank you.

Thanks. And our next question then comes from the line of Jim Suva with Citigroup. Please go ahead.

Thank you and congratulations. Can you talk a little bit about what type of visibility you have? We all read the newspapers; we all see the news about, concerns about recessionary type things. What type of visibility do you have and maybe if you can give us the different segments. Is this a month’s visibility, is it a quarter visibility and when things slow like in past cycles. How fast does it slow and have we seen any of your customers starting to kind of temper down some of their ordering?

Thanks Jim. I would say… I’ll answer your last question first. No. We have not seen any change in the order patterns. Particularly in what I call our industrial infrastructure businesses and that… if you look at that, that’s about 40% of our business. Things like Wireless probably save the Undersea Telecom. Pretty long order cycle, you get the backlog for example we mentioned there’s a big order bookings in Undersea and in Wireless in the first quarter. That’s sort of can be for the full year’s worth of activity in some cases even more in our Network Solutions business, because it's project oriented it tends to be longer term. Components generally is the shortest without question and I think, if you look over the past years, where there’s been slowdowns it can come quicker in the Components businesses, for sure particularly in the consumer related businesses. So, we watch that very closely, but we really haven’t seen any significant change in pattern. I mean U.S. automotive continues to be lousy for us and I think for a lot of people. The Appliance business the same way. Consumer Electronics businesses has slowed down a little bit. Mobile Phones continue to be really solid and we're actually… we have some capacity constraints, in fact there, which is not so great for our customers and we're working through it. But it's a better column to have so on balance we have not seen that in… I was with a bunch of customers last week and we were all asking each other the same question. Because you look at the newspapers and hear the news and you sort of feel one thing and then you look at the order book there as well and see something else. So, I’ll tell you, we're all staying closely connected to make sure if there were a change there we pick it up quickly so we can adjust. But I haven’t seen any push cancellations or anything like that.

Okay. And just a little color as far as… if something like that were to happen, would it happen like within a couple of months time period, couple quarters, couple of weeks, how fast in the past cycles have you seen it.

It's usually about a quarter and really what's been going on I think a good example is U.S. Automotive when you see the increased amounts of plant closings or farewells and stuff like that and that repel effect for us is usually in the quarter range. Maybe a little bit less than a quarter there. In other areas we do have one indicator we have is about 15% of our business is redistribution and that’s been slow in the U.S. that’s where our biggest distribution business is, and we have a good idea within the channel and we certainly know our selling and sell-through. So, that’s another indicator we look at. It is inventories would spike there, that would be the time for us to put on the brakes. We have actually have been expecting that to bounce back a little more than it has and it’s still relatively flat for us. But we haven’t seen any material increase in our inventory in the channel. So, all the different indicators we look at, we are not getting any feedback. But I would say, typically think about a month, I mean a quarter, sorry… about a quarter would be the lead time we would have.

And then a quick clarification question. On Undersea Telecom that was $314 million revenues this quarter and if I heard correct, you are guiding to about or expecting about $250 million next quarter followed by $150 million thereafter. If that’s correct, does that also include that $750 million new program booked, and when the new program like that gets booked, what type of lifeline or a lifeline longevity does that have?

Jim, it’s Terrence, couple of things. Yes, you are right on how you thought about the quarters particularly at the quarters. That $750 million is not one order, it is multiple orders. And from that viewpoint it will based upon demand capacity that we can actually install the system and some of those orders will actually be trickle into ’09. So not all those orders were for this year, some of those orders go into next year.

And maybe typical I think of a like a three to five quarter contracts.

I think that depending upon our ability and capacity could be anywhere out four to six quarters depending upon…

That typically is the average from the time we sign a contract to you workout the logistics and you actually finish the contract, of course, depending on the size of it. For example, that big Trans-Pacific Express contract is about an 18 monther. What is happening now is… an activity is… there’s more activity than there was a year ago, so the lead time is pushing out a little bit because there is capacity limit in the industry.

Great. Thank you and congratulations.

Thanks Jim.

Thank you

Thanks and our next question comes from the line of Ajay Kejriwal with Goldman Sachs. Please go ahead.

Thank you. Just a detailed question on currency. Wondering if you have the EPS impact of currency in the quarter?

Ajay, it’s Terrence. On the… we did have as you saw on the topline that benefited us seven points above our organic growth and that was all currency, that was about… that was above our four points we expected and it did contribute to about $0.01 above our guidance. Overall, FX helped EPS by $0.03 year-over-year.

And what do you have built into your full year guidance.

In our guidance we have four points on the topline going through and that would fall through at our normal operating margin trend for the year.

Okay. So, maybe something like $0.12. I mean, is annualizing the first quarter a good way of thinking?

It would be less than that due to the Euro got stronger towards the second half of the year, so it will be less than that number.

Okay. Great. And assuming stable raw material prices. I was wondering if you have any specific number that you could share.

In org where we are right now, copper has been around 320. We have fixed most of the second quarter around the 320, 330 rate and a chunk of the third quarter at the same rate. So, copper for the year… year-on-year for the total year is pretty similar so that’s not really a headwind year-on-year, certainly between the quarters. For example, in ’07, copper went down to 270 in the second quarter and went up higher so second quarter there be a little bit of a compare issue there. The real factor, this year’s gold, gold has gone from 650 per ounce up to almost 900 and that is a headwind in our… it is included in our guidance for the year, so gold right now is probably a headwind before consideration of price of about $10 million a quarter.

So, $10 million year-on-year…

Yes. Per quarter.

Great. Shifting to Wireless, maybe if you could help us understand the progression of revenue, as you implement the New York State project. So, how should we think in terms of the ramp up by quarter later this year.

On the revenue on the state of New York it would depend upon the acceptance but that would primarily be in Q3 and Q4. It will depend on the timing when acceptance occurs so it will be later in the year in that regard, Ajay..

Thanks.

Thanks and our next question then comes from the line of Shawn Harrison with Longbow Research. Please go ahead.

Hi. A few quick questions. Just a follow-up on raw materials. On the other side of that equation what are you seeing in terms of ASPs and the electronics component business right now.

ASPs, price erosion is really running about where it was last year. Overall, average 2% to 3% range so not a big change. Having seen in that business for all of us in that business that we deal with different negotiations but generally having seen a significant change in erosion.

Okay. Second question is… getting back to the cash flow. How much stock have you repurchased so far in the quarter?

In Quarter One it was $259 million.

And through I guess, January in Quarter 2?

We would be up for about $400 million.

Okay. And then just do you have an updated full year CapEx number?

We still believe CapEx will be in the long term range that we have given out before which is into the 4% to 5% sales range for the year.

Okay. And then one final question just on operating expenses. How should we expect in the tracks for the year pretty stable on the dollar basis or maybe declining the growth in kind of restructuring as the year moves along?

I don’t think that you should assume that it would decrease in dollars. I think what you saw in the first quarter; we got a little bit of benefit leverage from SG&A rate perspective due to the strong growth in Undersea. But from a dollar perspective, our actions that we set on the footprint really does not influence SG&A. So, I think from a dollar perspective, you would assume moderate growth in that, but you won’t assume a decline.

Okay. Thank you very much.

Thanks. And our next question comes then from the line of Brian White with Jefferies. Please go ahead. Brian White - Jefferies & Co: Okay. Just looking at the automotive market within the Electronic Components business, U.S. is obviously slow and you said Europe is seeing some signs of slowing. Will growth decelerate in 2008 versus 2007 for the Auto-Electronic Components business?

I compared it to Q1 and we were at 8% 9% in Q1 so, we would expect to run 5% to 6% for the year.

That compares to about 6% last year. So, not meaningfully different. Brian White - Jefferies & Co: Okay.

And that is production is expected to be down about 200 basis points year-on-year from about a 4.7 to about a 2.5 year-on-year, Brian. Brian White - Jefferies & Co: Okay. And when we look at the March quarter, how should we think about the four different segments in terms of sequential growth? What markets… what segments will actually go up and what will go down?

Sequentially, if you look at it EC will grow and networks will decline. We typically get a little seasonality coming into the winter months in networks. Wireless will be up a little bit and Undersea Telecom will be down as I mentioned on their quarterly. So, I think when you look at the second quarter, when you take all that, second quarter P&L other than taxes should look fairly similar to Quarter 1. Brian White - Jefferies & Co: Okay. And just a question for Terrence, the inventory number that was given out for the September quarter and the one given out today for the September quarter changed a little bit. I think that was one of the reasons for confusion on the sequential inventory dollar change. What is that attributed to?

There was a re-class made out of prepaid, up in the inventory there were some re-classifications we have done for consistency. Doesn’t change the balance sheet at all, it’s just the re-class between some lines. Brian White - Jefferies & Co: Okay. Great. Thank you.

Thanks. And our next question then comes from the line of Aaron Husock with Morgan Stanley. Please go ahead.

Thanks for taking my question. I was wondering if you could talk a little bit about the restructure savings that you’re seeing on the cost line, so far in the restructuring program. And when you expect that savings to kick in a little bit more meaningfully?

From the actions we took last year, there’s a little bit of savings, but of course, we’re going to ramp up our investments this year so when you net the investment against the savings, it’s really a slight negative this year. We won’t… we really won’t start to see a net benefit of any magnitude until 2010 because we’re going to spend in 130 to 150 for the next two or three years. And as we’ve been saying all along the benefit of that is really backend loaded. With the net negative last year, it will be a smaller net negative this year. It will probably be a little bit of a wash overall between investment and savings in ’09. And then we get the pickup in 2010.

And Aaron from what we started, everything that we started last year pretty much happened in the second half. So, really in Quarter 1 there was very minimal savings before the consideration of charges.

Okay. As far… you are seeing that it will be a smaller negative in fiscal ’08. Did that mean that the actual savings could be somewhere in that, say $100 million range or will it not be that high?

It will not be that high. Where we’re going is last year we had about $100 million in charges. We’ve got it to about $130 this year. So, when we’re talking year-on-year comparing you got to take comparison not just the $130. So, no, we would not have $100 million of savings this year with what we kicked off last year. Remember we did say it was going to be about three year payback per project. So, on a $100 million, that would be about $30 million of savings when fully implemented.

Okay. Great. Thank you.

Thanks. And we do have a question then from the line of Amit Daryanani with RBC Capital Markets. Please go ahead. Amit Daryanani – RBC Capital Markets: Thanks. Just a question components margin, it looks like you were down 20 basis points sequentially in year-over-year despite having good organic trend. Could you just talk about why we aren’t seeing incremental leverage in that part of the business?

I mean that was probably without question a one blemish on our results this quarter and that is very much absolutely related to our North American automotive business. Part of that is volume, but part of it is… as you know, we started to do a fairly significant restructuring near about nine months ago. It has taken us a little longer and we have not executed it as well as we typically have in that group in our North American auto business has done a great job over the last three years of keeping our margins attractive and the business that has declined. But we got a rough quarter in Q1. We should be through that by the end of Q2, but that caused our margin decline otherwise we would have been up in components. So, that was the one rough spot for us in the quarter. Amit Daryanani – RBC Capital Markets: Okay. So, I guess if I look at the business extra slow. In North America order driven restructuring issues, would it be fair to think you probably would have had 20% 25% incremental EBIT margins in that segment?

I would say 10 basis points to 20 basis points.

I would have been 10 basis points to 20 basis points expanded versus what where we can…

That’s with 20 basis points down. Amit Daryanani – RBC Capital Markets: About a 20 basis points headwind on. And then just… I think you guys mentioned about three product line divestures, you guys said this quarter. Could you quantify the dollar impact of that?

When you look at it, it isn’t the component segment but there are small product lines annualized revenue of that is about $20 million. Amit Daryanani – RBC Capital Markets: All right. And then I just kind of going back to one of the only questions is… potential for a downturn or what you are going to see. Doesn’t look like you see any order book to show right now, but if you look at your bidding activity for new businesses is that part of a segment maybe slowing down, are you seeing less amount of bids that are going through the system over here and how that is working?

No. We are not seeing that yet. In some of our businesses, you are bidding, a year, two or three years out, take automotive for example. So, we are working on proposals for 2010/2011 and not as far as 2012. Even in something like mobile phone which the typical viewers say that’s really a short cycle business and certainly orders can change short term depending on the fluctuation in end demand but the bidding we are doing is out a year or two. From the very beginning of trying to get a product designed into the architecture to when you end up shipping it, it’s usually well over a year. So, we have not seen any material change in activity. Amit Daryanani – RBC Capital Markets: All right and just finally, can you talk about what debt to capital ratios are you guys comfortable with, comfortable with in terms of the bandwidth and I guess, I am just trying to get a sense of it? Can you sustain a $150 million buyback every six to nine months that we have done it this time around?

When you look at it, as I stated, right now with the size of our business and consideration of we do some shared liabilities, but we feel that the debt balance that we can hold is about $3.5 billion and withholding our liquidity position on around $500 million of cash. So, net debt around $3 billion with where we are now. Amit Daryanani – RBC Capital Markets: Right, thanks a lot guys.

Welcome. Thank you.

Thanks and your next question then comes from the line of Michael Allman [ph] with Neo Capital Partners. Please go ahead.

Thank you. Could you… you have indicated in the press release and on the call that you spent $259 million through repurchase stock in the quarter and yet on the cash flow statement the number that’s given for repurchase of common shares is $232 million. Could you please explain the discrepancy?

The discrepancy would be, there were trades made towards the end of the quarter that did not settle until the following quarter. So actually cash went out was $232 million but we actually bought $259 million.

Okay.

That describes just the timing item that was settled into the quarter too.

Okay. That’s helpful. And you made some comments about this new accounting standard. Do I understand properly that the $592 million of tax sharing income is going to remain non-cash forever?

The $500 million is two pieces of the tax sharing income of $572 million and also $20 million that relates to ongoing activity, so there’s two pieces.

Okay.

And when you look at it, will it be non-cash forever, it will depend upon when all the shared liabilities related to our tax sharing agreement are done. The net, net at the end while definitely FIN 48 has created confusion when you look at it and it is a complex standard. When we separate it from Tyco we thought our total exposure net of the shared amounts are going to be about $600 million to $700 million, over time as we settle out our tax audits and issues. We still believe that that is the amount and the adoption of the standard doesn’t change anything. So, while the ongoing run rate, my comments relate to the ongoing run rate, overall the tax exposure is related that we had when we separated, have not changed with FIN 48 to be in that next $600 million to $700 million that we stated before.

Okay. Thanks.

Thank you and we have a question then from the line of Brian Jacobi with Goldman Sachs. Please go ahead.

Yes. Good morning guys. Just a question on your capital structure, cash flow statement showing that you paid back some debt and on fiscal. I am curious what you repaid on, I am assuming you have repaid some of your rest of your bridge and maybe some on the revolver. If you could just tell me what the debt look like in end of the quarter?

At the end of the quarter, you are right. We still are operating on a small piece under the bridge. There is one piece of our capital structure that we still have to complete. We have about $500 million remaining under the bridge facility. So, that is still outstanding and the payment that we did make was under the bridge, if you look at our overall debt where we were around 3.2… $2.1 billion relates to the offerings we did in the fall. We had $500 million under the bridge and then we have CP for the remainder basically.

I mean, I thought you had 550 on the bridge last quarter. So, you didn’t really pay much down where--?

We paid a little bit down on the bridge, rest would have been on the commercial paper, just depending between the bridge and the hammer.

In the fiscal year ’08 or is that going to be more kind in ’09, 2010 even.

In some targeted market, we are starting to build the pipeline for sure. If we could do a couple of targeted acquisitions and one in a couple of key areas this year, we would do it. It’s really going to depend on… the properties rate fit for us and are they interested, but we are starting to rev that up.

Great. Thanks.

Thank you. Our last question this morning comes from the line of Will Stein with Credit Suisse. Please go ahead.

Thank you. Just a quick follow-up. The guidance for the full year, $245, to $255. Am I right in assuming that backs out the restructuring charges that you are going to incur in the year?

Yes.

Okay. And then just one other quick one. The $102 payment for the Power Systems division, was that received in the December quarter or is that going to be received in March?

That was received in this quarter. You can see it on the cash flow, Will.

Okay. Great. Thank you.

Thank you and at this time we have no further questions in queue.

Okay. Great. Well, thank you for joining us.

Thanks all of you.

This morning and the IR team will be around for questions and we look forward to talking to you.

Great. And thank you very much. And ladies and gentlemen, this conference will be available for replay starting today Wednesday, February 6, at 10.30 AM Eastern Time and will be available through next Wednesday February 13, at midnight, Eastern time. And you may access the AT&T Executive playback service by dialing 1800-475-6701 from within the United States or Canada or from outside the United States or Canada, please dial 320-365-3844 and then enter the access code for today’s call which is 904-795. Those numbers once again are 1800-475-6701 from within the U.S. or Canada or 320-365-3844 from outside the U.S. or Canada and again enter the access code of 904-795. And that does conclude our conference for today. Thanks for your participation and for using AT&T’s Executive Teleconference. You may now disconnect.