Michael McNamara - Chief Executive Officer Paul Read - Chief Financial Officer Warren Ligan - Senior Vice President of Investor Relations

Louis Miscioscia - Cowen Kevin Kessel - JPMorgan Amit Daryanani - RBC Capital Markets Jim Suva - Citigroup Ron Heath – Baker Avenue Asset Management Brian White - Collins Stewart Alexander Blanton - Ingalls & Snyder Matt Sharon – Thomas Weisel Partners Steven Fox with Merrill. Lynch Sherry Scribner with Osa Bank William Stein - Credit Suisse

Good afternoon and welcome to the Flextronics International second quarter fiscal year 2009 earnings conference call. (Operator Instructions) At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Warren Ligan, Flextronic’s Senior Vice President, Investor Relations and Treasury. Please go ahead.

Thank you, operator and good afternoon, everyone. Welcome to Flextronic’s conference call to discuss the results of our fiscal second quarter ended September 26, 2008. On the call today is our Chief Executive Officer, Mike McNamara, and our Chief Financial Officer, Paul Read. The presentation that corresponds to our comments today is posted on the Investor’s section of our website called Calls and Presentations. We will refer to each slide number so you can click to the appropriate slide. In today’s call, Paul will review our financial results and discuss our current liquidity position. Mike will then give his view on the quarter and current business climate as well as provide guidance for the upcoming quarter. Following Mike’s comments, we’ll open up the call for your questions. Please turn to slide 2. Please note that this presentation contains forward-looking statements within the meaning U.S. securities law, including statements related to revenue and earnings guidance, future cash flows, ROIC, SG&A, and expense levels. Our expectations regarding our business in the current economic environment, the expected benefits from our geographically diversified businesses, and our broad based products, services, and component technologies offerings, expected improvements and inventory management, and our expectations regarding tax benefits, after tax intangible amortization, stock base compensation, and our ability to generate expected free cash flow. These forward-looking statements involve risk and uncertainties that could cause the actual results to differ materially from those anticipated by these statements. Information about these risks is noted in the earnings press release on slide 21 of this presentation and in the Risk Factors and MD&A sections of our latest annual report as amended filed with the SEC, as well as in our other SEC filings. These forward-looking statements are based on our current expectation and we assume no obligation to update these forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements. Throughout this conference call, we will reference both GAAP and non-GAAP financial measures. Please refer to the schedule to the earnings press release, slide 10 of the presentation, and the GAAP versus non-GAAP reconciliation in the Investor’s section of our website, which contain the reconciliation to the most directly comparable GAAP measures. At this time, I would like to turn the call over to Paul for his comments. Paul?

Thanks, Warren, and good afternoon everyone. Please turn to slide 3 in the presentation. Our second quarter revenue increased 59% from the year ago quarter to a record second quarter high of $8.9 billion, which represents an increase of $3.3 billion over the year ago quarter. Adjusted operating and profit increased 72% from the year ago quarter to a second quarter record high of $295 million. Please turn to slide 4. Quarterly revenue for all the market segments increased on a year-over-year basis. Revenue from the infrastructure segment comprised 32% of total September quarterly revenue and $2.8 billion, represents an increase of 88% over the year ago quarter. We continue to view this segment of our business as being stable and established the prime objection of increasing it at faster velocity. Revenue from the computing segment comprised 16% of total September quarterly revenue and increased 175% from the year ago quarter. We continue to be very excited about the new program in this segment. Consumer digital segment comprised 17% and 19% of revenue for the quarter respectively, an increase 12% over the year ago quarter. The mobile segment comprised 21% of revenue for the September quarter, which is an increase of 18% compared to the year ago quarter. Together these segments represent 38% of our total revenue compared to 53% of our total quarterly revenue a year ago. Finally, the Industrial, automotive, medical, and other segments comprised 14% of total revenue, an increased 105% over the year ago quarter. These segments now represent approximately $1.3 billion in quarterly revenue. We continue to believe these businesses will have consistent growth as we continue to expand into new product categories within these segments. Please turn to slide 5. Our segmented business approach has resulted in more balance and market diversification model. As a percent of total revenues, the combined consumer related segments of Consumer Digital and Mobile ahs decreased significantly, compared to the one year ago, while infrastructure has increased nicely. We are very pleased with the progress of our portfolio in this area, as we believe the diversification positions us better to our end market customer or product downturn. Please turn to slide 6. Here we show the trend of declining concentration among our ten largest customers of the past nine quarters, which reflects our continued efforts to diversify our customer base and expand our product categories. Our top ten customers now only account for approximately 53% of revenues in the September quarter, and Sony Ericsson was the only customer that exceeded 10%. Please turn to slide 7. Adjusted gross profit of $516 million and adjusted operating profit of $295 million established record second quarter highs, increasing 64% and 72% respectively from the year ago quarter. On a margin basis, both adjusted gross margin and adjusted operating margin improved year over year by 10 basis points and 20 basis points respectively. During the past quarter we experienced increased cost as we ran several large scale programs both in Eastern Europe and Latin America. Officially during the quarter, we were continually challenged with increased of freight, energy, and labor costs. Please turn to slide 8. Selling general administrative expenses as a percentage of revenue declined to 2.5% in the September quarter as we worked hard to offset operating cost increases and SG&A efficiency. We continue to believe that our management in control of SG&A expenses is a competitive advantage. Please turn to slide 9. Adjusted net income was $230 million, which represents a 57% increase over the year ago. This resulted in a second quarter adjusted earnings per diluted share of $0.28, which is a 17% increase over the year ago quarter and the tenth straight quarter of positive year-over-year growth. Please turn to slide 10 for our quarterly GAAP reconciliation. As a result of the current macro economic environment and associated credit market conditions, both liquidity and access to capital have become heightened concerns and clearly impact in numerous companies globally. We have taken an increasingly conservative approach to managing our exposure with our customers and we assessing the financial condition of many of our customers and suppliers who anticipate problems and minimize risks and exposure for Flextronics. We have identified situations where customers are filing for bankruptcy or otherwise experience severe cash and credit crisis. As a result, we have recognized approximately $125 million dollars in charges for provisions of accounts receivable, inventory, and recognition of related obligations to these customers. It is important to recognize the considerable amount of judgment acquired to assess the ultimate realization of these assets and we will continue to monitor and reevaluate these situations. Also during the September 2008 quarter, the company recognized after-tax intangible amortization and stock-based compensation of approximately $43 million and $19 million respectively, compared to $15 million and $11 million respectively in the year ago quarter. The significant increase in both is primarily due to the acquisition of Solectron, which we closed in October 2007. I’d like to highlight the June and September 2008 quarter, the company completed its evaluation of the identifiable intangible assets acquired from this acquisition and as a result occurred an incremental $17 million dollars after tax catch-up adjustment. For the December quarter, we expect after tax intangible amortizations to be in the range of $25 to $30 million dollars and stock base compensation of approximately $19 million dollars. After reflecting these items, GAAP net income was $38 million compared to $121 million the year ago quarter. GAAP earnings per diluted share were $0.05. Please turn to slide 11. During the quarter ended September 2008, we repurchased approximately 30 million shares at an average price of $8.73 per share, totaling $260 million dollars. The purchases made under our previously authorized share repurchase program had a neutral impact for the company’s diluted earnings per share for the quarter ended September 2008. At a recent meeting on September 30, 2008, shareholders reauthorized to repurchase about 10% of outstanding shares. As of the quarter ended September 26, 2008, we had approximately 809 shares outstanding. Please turn to slide 12. We have been consistently building on our operational success and that has been reflected in our steady improvement in return on invested capital. This quarter, return on invested capital include 10 basis points to 11.3% from 11.2% one year ago. Please turn to slide 13. Our cash conversion cycle improved significantly to 21 days from 26 days last quarter. Our inventory terms improved to 7.4 in the September quarter compared to 7.3 in the June quarter. Inventory management continues to be a significant area of opportunity for us to further expand and enhance our work in capital metrics. We have placed a greater emphasis on inventory manager for the next six months as we see significant opportunity to increase our inventory terms by driving significant reductions in our inventory balances. Please turn to slide 14. Over the last ten quarters, our cash conversion cycle significantly increased mainly as a result of the Selechron acquisition in the December 2007 quarter. In June 2008, it peaked at 26 days and has decline to 21 days this quarter. We are aggressively managing this aspect of our business and starting to improve this metric and our liquidity as a result. Please turn to slide 15. Our cash flow from operating activities generated $756 million dollars during the quarter, which includes the use of approximately $114 million of spend associated with our restructuring and integrated related activities. Our capital expenditures were $146 million while depreciation and amortization totaled $142 million for the quarter. As a result, we generated approximately $611 million in free cash flow, which we used to repurchase $260 million of our ordinary shares outstanding as well as reduce our bank borrowings by $284 million dollars. The remainder fiscal 2009, as demands softens and we intend to fire our efforts to reduce work in capital, capital expenditures, acquisitions, and other discretionary spend with targets to generated significant positive free cash flow. We continue to target generating approximately $800 million dollars in free cash flow for the fiscal 2009; however, this does have a significant range around it given the lack of visibility at this time. Beyond fiscal 2009, as demands remain soft, our business can generate significant positive free cash flows since the need to invest cash and work in capital, capital expenditures, acquisitions, and other discretionary spend, will significantly diminish. Please turn to slid 16. We ended the quarter with $1.7 billion in cash. This represents a $695 million increase to one year ago. Net debt, which is total debt is $1.7 billion at quarter end. Including the availability of the revolving credit facility, our total liquidity was approximately $3.2 billion and a total debt capital ratio improved the 30% from 31% in the June quarter. Please turn to slide 17. Here we show our debt profile at the end of the quarter on September 26, 2008. Our $2 billion credit facility with only $200 million drawn as of the end of September expires in May 2012 and is provided by a syndicate of over 25 banks. We have worked closely with our revolver banks to ensure that our revolver remains strong and available during this challenging time. We do not foresee a deterioration of our revolver lenders’ ability to fund advances, in particularly given the recent favorable legislations support in the banking industry. The result of financial covenants impracticed the two most restricted covenants of being a debt philosopher of EBITDA and the six charge coverage ratio. The first is applicable to both revolver and the term loan, while the second is applicable only to the revolver. Under the debt, EBITDA covenant, we have a maximum debt for the last 12 months EBIDTA of 4.0 to 1.0. Our most recent estimate is that our maximum debt capacity is approximately $4.9 billion while our current outstanding debt balance of approximately $3.4 billion. We have $1.5 billion additional debt capacity. Under the six charge coverage ratio covenant, we are required for maximum coverage of 1.5 to 1.0. Our most recent estimate is that EBITDA could deteriorate by as much s 54% before this covenant would become an issue. Our conclusion is that we believe we are comfortably within the limits of our most restricted financial covenant. For your convenience, we have posted on our website a brief summary of our liquidity and debt structure, which can be found on the Investor Relation section. Please turn to slide 18. The graph on this slide provides a quick vision on the debt maturities listed on slide 17. We have a limited near term maturities which only have $195 million dollars of our total debt due in the next year. After that, the next maturity includes $500 million due in calendar 2010 and then no additional debt due until calendar 2012. We’re extremely comfortable that the company with its existing cash balances together with the anticipated cash flows from operations and the additional liquidity available in revolving credit facility as more sufficient liquidity to meet its needs. We remain confident yet conservative in the management of our liquidity and consider it a differentiating strength during these uncertain times. Lastly, on the cap accounting standards, we are required to evaluate goodwill for impairment at least annually, including carrying value of the company’s greater than its market capitalization. To date, we have not recognized any impairment of our goodwill, but we are monitoring the situation in the event we need to perform an interim task for potential impairment. We determined that we need to perform an interim task and test results in goodwill impairment and we would record a charge during September 2008 quarter. In that event, we could be required to record an impairment of goodwill. The long cash charge may have a significant on our reported GAAP results, but would not likely have any effect on the company’s liquidity and financial covenance. Thank you, ladies and gentlemen. As you turn to slide 19, I will now turn the call over to our CEO, Mike McNamara.

Thanks Paul. Let me start first by discussing our September quarter performance. Our achievement of the September quarter revenue $8.9 billion and our adjusted EPS of $0.28 were both within the range of guidance. As we mentioned in the beginning of the year and consistently since then, our organic pipeline continues to offset some of the sluggishness we have seen in orders from existing customers. This past quarter, we offset softness in certain market segments with new business wins. For 15 years, we’ve been building our company to have scale geographic diversification and product diversification. We continue to believe that our diversified model will deliver more predictable results over the coming quarters and years and will gain competitive advantage as a result in this down market. We cannot control the macro economy; however, we are intensely focused on managing all areas we can influence internally. In the September quarter, we improved our SG&A expenses by 20 basis points to 2.5 to 2.7% last quarter. Our cash cycle improved to 21 days. We reduced our outstanding shares by approximately 4% by repurchasing shares. We continue to maintain a healthy, financial condition with over $3 billion in liquidity and debt capital ratio to 30% from 31% sequentially. We are very focused on driving inventory balances, improving liquidity, and generating cash. We expect these metrics to be our main drivers for the foreseeable future. On our earnings call last quarter, we indicated that the market was becoming more challenging. We’ve been working hard to mitigate a confluence of trends that have resulted in some headwinds now and for the foreseeable future. Demand has slowed in many of the industries we serve. The cost of doing business has increased in certain areas, particularly energy, labor, and freight costs and we anticipate some of these costs will continue to impact for future operations. We’ve been working to charge these cross back to the customer. We are also focused on recovering capital costs on those customers that consumer excess capital dollars and we do expect some cost benefit in 2009 from freight reductions, currency changes, and commodity cost reductions. As the world demand becomes more distributed, our strategic rebalance geographic operations will have a distinct advantage. We are growing in Europe and experiencing very significant growth in Mexico and Brazil. For years we have talked about the value of geographic diversification and that it would increase in value over time as the world consumption becomes more distributed. This will be a growing competitive advantage for our company. Our Medical business is extremely well positioned and has a robust pipeline. Our industrial business continues to make strong progress by winning new and non-traditional types of business. Automotive and demand is down, relative to our earlier expectations, and we expect continued softness, yet revenue is still anticipated to remain flat for the year with the strong calendar 2009 pipeline. Our mobile business has grown its revenue over 10% year-to-date and we expect it to exhibit growth for the year, which is being primarily driven by customer diversification and the expansion of our portfolio of products enabling us to participate more broadly in the available marketing. In light of a softening base of business, our consumer business is showing positive growth for the year, which I expect comes as a surprise to many. This growth is due to new customer ramps and new product categories for the company. While this is impressive, in a weak consumer market, it is also challenging from a profit standpoint as we ramp down old business and start up new business simultaneously; however, as we look to next year, this bodes will for the customer diversification within those markets as both the type of products and the quality of the customer reflect a higher quality business portfolio. Our infrastructure business is firmly positioned and we are very proud of the ability to strategically compete a win in this market. We expect to see moderate revenue reduction of segment as we shared our exposure to underperforming businesses. The objective for infrastructure segment is to prioritize asset velocity, which reflects a consistent strategy that we first discussed a year ago at our fiscal 2008 analyst day presentation. And finally, we expect our computing business to continue to grow and be a significant growth driver for us next calendar year. As Paul indicated, we established a provision for distressed customer accounts, which includes account receivable and related costs on those accounts. This put in step had a disappointing impact on this quarters GAAP results; however, we believe represents the reality of the deteriorating macro economic trends and difficult credit environments. With both liquidity and access to capital have become heightened concerns and clearly impacting numerous companies globally. We are constantly reevaluating the credit we extend to our customers and working aggressively to mitigate our exposures and recover from those distressed customers. Additionally, we are actively working with our suppliers to try to anticipate inevitable problems that could potentially disrupt our supply chain. For those that remember the impact of the internet bubble in the 2001-2003 recession in the EMS industry that followed, it bears mentioning that the industry does not face the same risks today. The conditions that characterize that period are different from those that exist now. For example, during the bubble period, there were seemingly unending demand, which caused tremendous capacity expansion in companies’ regularly double ordered components. EMS companies were predominantly in the business of datacom and telecom with typically less diversified product portfolios. Excessive capacity existed in high cost regions and when one became obsolete, it created enormous restructuring and impairment charges. These conditions do not exist today. Customers have been more disciplined with demand for years in excess capacity and high cost regions are minimal. The EMS companies have matured and are much more diversified, especially Flextronics. While we expect to see continued softness from today’s demand environment, we simply do not believe that the likelihood of a massive adjustment period that we had back then exists now. From a Flextronic’s perspective, we’re exceptionally positioned from a geographic standpoint, from a capability standpoint, and a product diversification standpoint, having established a strong ability to provide complex product solutions for our customers globally. Going forward, distractions from restructuring activities will be minimal; thereby affording us the ability to focus on the needs of our customers, provide them with our exceptional service, and optimize Flextronic’s internal operations. In fact, we have closed many factories in the last 12 months, which required significant management time and effort that has virtually come to a close. As a management team, we are optimistic about what we can do as we focus that same effort on internal efficiency, inventory turns, cash generation, operational execution, and a way from these restructuring and integration activities. As we have described very consistently over the past years, it is our vision to build a company that is broadly diversified to weather downturns and provide predictability in all environments. As a result of the steady work we have done to achieve these goals, we expect our efforts to deliver real results as we move into a more difficult environment. We’ve added product categories, such as TV’s Notebooks, power chargers and power systems, Smart phones, disposable non-electronic medical devices, and numerous new industrial product categories. It is our objective that these new incremental business works will expand our available market and offset demand reductions from the current customer and product base during recession times. We expect significant reductions in capital expenditures over the next several quarters and should spend significantly less than depreciation levels. We offer expect inventory terms to improve over the next several quarters with a significant reduction in absolute dollars and inventory starting with the December quarter. As demonstrated in the past in a slowing environment, we believe we will generate solid cash flow. This coupled with our available liquidity, should provide us with significant flexibility and competitive advantages. As Paul mentioned, we spent $260 million dollars of our cash to repurchase approximately 30 million shares. During our previous earnings call, we committed our board authorization to repurchase up to 10% of our then outstanding shares. At our recent annual meeting, approved a plan which authorized to purchase up to 10% of our current upstanding share amount. Going forward, we will look at all of the capital deployment options available to us and consider what best maximizes returns for our shareholders. Next, I would like to share our guidance for the December quarter. We expect December quarter revenue to be between $8 billion and $9 billion dollars and adjusted EPS in the range of $0.21 to $0.27 per share. Given the volatility of the credit in the financial markets, uncertainty of the demand environment, we believe a lighter range for revenue and adjusted EPS guidance is warranted for the December quarter. December quarter revenue has historically been sequentially higher due primarily to the holiday season for the consumer segment and annual budget completion for the infrastructure segment; however, we anticipate that softening of demand that we saw in late September will continue. A new business pipeline while easily offsetting softness in the September quarter is not expected to fully offset what we view to be a muted December quarter. Alternatively, we do not expect a big seasonal adjustment following the December quarter going into the March quarter. So basically after this time, we are adjusting our operations to a very slow December going into a mild sequential adjustment in March. The wider adjusted EPS range reflects the same uncertainty of the end markets. Forecasting in this environment is very challenging. While we have seen some regions and segments display strength, we continue to see overall softness and believe it is prudent to take a very conservative view. Our adjusted EPS range reflects the cost pressures we discussed earlier, the expenses of strategically transitioning into new business, and simultaneously making adjustments resulting from demand reductions in the base business. Quarterly GAAP earnings per diluted are expected to be lower than guidance provided herein by approximately $0.06 for the intangible amortization expense and stock based compensation expense. In closing, while the current market is particularly challenging, we are well prepared to execute in this economic environment as a result of what we have completed over the last several years. As mentioned throughout this call, we have all the tools both financially and operationally to live through a difficult time and we look at this as an opportunity to further improve our competitive position, improve liquidity, and create shareholder guidance. We have repeatedly said that scale geographic diversification and product diversification was necessary for long-term competitiveness and that diversification and continuous expansion of the available market to us would buffer us in a down recessionary environment. Like many of our competitors, we have aggressively invested in the business over the last several years while the economy was healthy and we will expect those investments to pay off in the coming quarters. We are pleased with our leadership and believe that our effective management of our worldwide system has a distinct competitive advantage and we are extremely confident in how we manage the controllable aspects of the business. We are comfortable with our liquidity and financial condition and your Europe position competitive advantage. Finally, we want to remind everybody that we will be hosting a fiscal year 2009 analyst day in New York City on November 19, 2008. We hope you can make it and look forward to seeing you then. I will now turn the conference call over to the operator for questions. We ask that you please limit yourself to one question and one follow-up.

(Operator instructions) Our first question today comes from the line of Louis Miscioscia - Cowen. Louis Miscioscia - Cowen: Mike, when you look at the $0.21 to $0.27 cents in guidance, when you compare it to a year ago, what’s the big difference in that we’re $0.03 below a year ago when you compare the high end of both?

There’s an element of conservativeness in our models as we mentioned just because of the uncertainty. We continue to be nervous about what the future brings us. We’d be silly to think there’s more negativity not coming. So there’s a number of things that drive the margin target. Part of it just the flow through of the material coming across some very, very freight expense in the September quarter. So even the Euro been down for quite some time, coming down. We still need to reset those contracts and get those parts bought into our inventory and actually shipped before we can recognize the benefit of those things. We’re up a little bit in R&D expenses for a number of reasons, but we continue to invest going into the future. We continue to have a very difficult increase in China where the cost of labor has gone up substantially and we’re actually in more transition than you think, even if you look at the September quarter with $8.8 billion in revenue. While the pipeline is strong and new business coming in, there’s a general sluggishness and slowness to the rest of the base business. What we’re doing is simultaneously bringing in new business to offset continually softening business in places running very nicely. Best example, mobile phones will grow the business this year, we’re ramping down reasonably significantly in the cell phone operation in Malaysia and ramping up very significantly cell phone operation in Mexico. So while it looks from your standpoint that the revenue is roughly the same, alternatively that transition creates quite a stress on us. We actually think that the combination of those factors end up putting some pressure on. Louis Miscioscia - Cowen: How do you feel about obviously the way that the dollar is strengthening. Does that represent an additional risk that maybe you might have already hedged for if it gets manageable.

The strength of the dollar for us, outside of our hedging programs, certainly represents an opportunity and some margin increasing for us. In Europe, with the Euro at 1.28 yesterday, assure our local costs achieve in dollars. We suffered when the Euro was closer at 1.55 on the way up. So we hope to benefit on the way down. Just as an example.

Our next question comes from Kevin Kessel – S. P&C. Kevin Kessel – S. P&C: Mike, you were mentioned earlier that the new ones were helpful in the quarter in terms of offsetting some of the base business sluggishness that I assume you said was becoming more apparent in the month of September. Is there any way at this point to look at the new wins that you guys have and what you expect to come into the fold next year and give us a qualitative sense on that.

What I first need to say is boy it’s hard to get visibility just because of the unknown that’s out there, but even if we look into our March quarter, we literally have six out of our seven segments that are anticipating to be growing revenue over last year’s March quarter. So even right now we’re expecting pretty good strength. That’s one reason I made the comment that we should be only down mildly in the March quarter. You know, that being said, there’s a tremendous amount of uncertainty out there. It’s really kind of a broad base pipeline. Some of the more significant ones that have been mentioned are going with the TV business, which will continue to expand significantly next year. We talked about going into the computing business and being a huge growth driver for us next year. We continue to believe that we have the potential to add well over a billion or even $2 billion dollars of business in that area, but really across the board, even our automotive business we expect to grow pretty significantly. Our medical business has an extraordinarily large pipeline and even beyond the pipeline. When we look out, we actually see a pretty broad based pipeline, not even a pipeline, I mean a one business that we think is going to offset a lot of the deterioration that we see next year. The challenge we’ll have is what might look good on the revenue line, it kind of depends on where it is an if you’re doing the simultaneous to ramp down and ramp up, then that’s going to be a challenge. There’s just a lot of positive headwinds for us, because freight costs are going to help us. Their continuous reduction in commodity costs are going to help us. The currency we’re real positive on. We have some places where it’s hedged so it won’t make as much of a difference, but a substantial portion of the business we think is going to be effected positively by currency. So there’s just a lot of pluses out there now. The challenge is how much negative macro economic downturn we see, but certainly believe we have many billions of dollars already booked to offset what’s coming at us from a macro economic downside. Kevin Kessel – S. P&C: Paul, on the slide that you have, what you mentioned called $756 million in operations and I think you said $611 or so in free cash flow. You said that included the cash cost of the final restructuring for Selachron?

That’s correct. It includes $111 billion dollars of restructuring in the quarter for the Selachron acquisition, not just Selachron but predominantly Selachron. Kevin Kessel – S. P&C: At this point, going forward, there are no more cash charges to be recognized for Selachron?

No, like we said last quarter, this will probably last about 12 months and we have approximately $200-$250 million dollars left for outlay. Kevin Kessel – S. P&C: With the goodwill in the books, obviously bringing in market cap as part of the criteria that’s used, you said you don’t think it’s going to affect liquidity? Is that certainty?

We don’t believe that there would be any trigger on the covenance. We’re still in the early stages of doing evaluation of an impairment, but our early indications tell that there is no effect on liquidity.

Our next question comes from Amit Daryanani - RBC Capital Markets. Amit Daryanani - RBC Capital Markets: Just a question on the $129 million of inventory in AIL unit. Can you talk about how much of that was for inventory versus AR. Do you have any inventory on your books right now for those customers at ARs?

Approximately $70-$90 million of inventory if I remember rightly and so that’s predominantly what it is, which is inventory on hand as well as inventory on order and some non-cancel or non-returnable parts that we have within that mix and the balance being accounts receivable. Amit Daryanani - RBC Capital Markets: This should hopefully be the final one for that set of customers. Would that be reasonable.

We hope it to be final for sure. We’ve done pretty extensive to our top customers and that’s what we’ve come up with. Been very prudent and conservatively obviously, but these are issues that have only just come up over the past few weeks. These are not things that have been out there for many, many months. Literally, end of quarter and just a couple of weeks after the quarters, some customers filing bankruptcy, etcetera. The inventory piece of that is only inventory specifically associated to those customers as opposed to any kind of general inventory. Amit Daryanani - RBC Capital Markets: Could you remind us what your expectation of cash flow from operations for fiscal 09 and given the fact that we’re getting into softer market environment, would you expect to curtail the $450 million plus CapEx.

In the script, just a moment ago, I made a point that our target of $800 million for the year free cash flow is still our target. There is a significant range around that of course, because visibility of the December to March quarters is limited; however, we are enacting a number of measures to reduce particularly inventory balances that will generate the significant cash for us. Amit Daryanani - RBC Capital Markets: Paul, on CapEx, any plans to keep it down from the $145-$150 million?

I want to address that. Predictably what you should see from our company is that the June and September quarters are going to have a little bit higher CapEx than the December and the March quarters. The customers release their products and manage around peak times and year end and back to school and Christmas. So that’s like a typical flow of what you’re going to see. For the year, I’ve always said we’d be between $400 and $450 million total, which is just about I think our depreciation level is about $400. This year we’ll for sure be at the low end of that range and would certainly expect the next two quarters for that to be substantially below $100 million dollars, both for the next two quarters. At this point in time, even with the soft economy, we would expect to beat depreciation pretty significantly.

Our next question comes from Jim Suva - Citigroup. Jim Suva - Citigroup: Can you give a little more detail on how you talked about the $129 million. In the back of the press release, it talks about a write down and an investment of one of your customers. Did you buy some stock in the customer or some type of minority interest? How should we think about that and on these AR inventories, am I correct to say it’s multiple customers as opposed to one customer and if it all happened in the past few weeks, it seems like even in the past few days things have gotten worse. What has really changed?

The one you put that in the footnote is indeed a very old investment in ours in a company that was both an investment on a cost basis and also later on a customer (?) and that situation has recently in the quarter gone upside down for that customer and the market is deteriorating for that customer and therefore is obviously a lead for us to further provision for not only the investment portion, but the work in capital associated with that customer. So that’s the first one. Yes, there is more than one customer of course in the mix. There’s a number of customers. We have over a thousand customers, but 90% of our receivables is with our top 75 customers. So approximately 100 of our top customers and we’re looking for signs of weakness in what would appear initially is profitable customers with pipeline of products and orders; however, initial issue given the current credit environment of being able to continue in business. Some of them toward the end of the quarter were filing bankruptcy and some of them in the first two weeks of this quarter were filing bankruptcy and so there were a number of triggers in the quarter that forced us into obviously increasing the reserve for these customers in the work in capital associated with these customers.

The other part was inventory. While we do have provisions with customers that they’re responsible for inventory to the extent that we don’t buy the…the agreements. When a customer goes bankrupt, that inventory becomes stranded and while we’re contractually covered or not, it doesn’t matter if the company literally doesn’t have money to give us for that inventory. So that being said, we will work to litigate the risk. We’ll work to litigate the inventory balances. Obviously we’ve got a lot of channels to go work on, but just to be clear, we started seeing some softness literally just in the last couple weeks with a couple customers. So we proactively went out and said let’s go through every possible weakness. We identified them and we put them into this pool. So we did what we thought was an inevitable possibility given the difficultly of the credit markets. We identified these customers. We put them into the pool and now we need to go back and work it. It doesn’t mean we won’t get the cover out of bankruptcy. It doesn’t mean we can’t tie up inventory. It doesn’t mean some of these customers might be okay. It just means in this environment, we said we’d be very, very conservative and as long as we saw the warning signs of a few starting to happen, we did what we thought was a real good cleanup. Jim Suva - Citigroup: Can you talk the interest in other (?) from $36 million last quarter to $48 million this quarter. Was there something in there like foreign exchange and what should we expect going forward?

When preparing sequentially, in Q1 we had in the other category, not interest, in the other category, we had some one-time investment gains to the tune of roughly $10 million dollars and which has not repeated itself of course in the second quarter. Interest has increased. The amount of volume mid quarter, last quarter, increased just through the timing of certain events, share repurchase, etcetera. So that actually did go up as well for the balance of that difference, from $3 to $5 million.

So 48 is a good run rate.

Approximately 45 is a good run rate.

In housekeeping, $129 million right off is an eye-popping $0.16 per share, if I do that right. Can you break it down into the four buckets? Inventory, accounts receivable, contractual obligation, yield investment.

Certainly. Yield investment is approximately $10 million dollars. The inventory is approximately $70 million dollars, and then the balance is accounts receivable.

Our next question is from Ron Heath – Baker Avenue Asset Management. Ron Heath – Baker Avenue Asset Management: In talking with some of the customers in the EMS space, like Cisco and some other people that have been out there really doing their homework both in the EMS space and one level down in the supply chain, looking at balance sheets and risk factors and stuff. From what I’m hearing, it seems like some of the benefit of that is going to….stronger, balance sheets in some of your larger competitors. Are you seeing any actual movement of product or conversation with maybe customers moving their products from one EMS supplier to another EMS supplier?

I think that’s a pretty good observation. I think without question there’s two things that are happening in this time. One is people are trying to understand what is the strength in the balance sheet. Not only the strength in the balance sheet, but also additionally they’re going out and try to understand if they’re going to survive the downturn. Those are advantageous for us, because we have the money to fund inventory and growth and a lot of the growth for our customers and at the same time I think with pretty much certainty we’ve been able to prove that the market consolidates or some companies don’t really make it through the downturn here. There are some companies that are going to come out much stronger and I think Flextronics is going to be one of them, but he prudent thing is for your comment, I think the customers are recognizing that now. I was a little bullish about our pipeline earlier and it’s more than a pipeline, it’s the business that we anticipate hitting next year, and I think a lot of that is the redistribution of work as a result of understanding (?) Don’t think it’s just credit, but I think that’s one major factor. The other thing is people understand that coming out of a downturn, the weak get weaker and the strong get stronger and our position is good and I think we are seeing the customers will recognize that. Ron Heath – Baker Avenue Asset Management: You mentioned possibly a redistribution. Terry G. from High Precision made some public statements a couple of weeks ago about the acceleration of a large award coming out of one of the Asian OEMs, maybe mobile space. He indicated that in excess of $2 billion and that Flextronic expected to get half of that. I was very surprised by your comments about, as I read, the lack of the normal downturn in March, what you called a mild March adjustment. Does that imply that there’s new business factored into your March to accommodate for your normal seasonal downturn?

Well we do have a lot of March business going on. We have a lot of mobile business going in. Right now what we actually did last December or last March quarter, last year in the mobile business we did $1.4 billion. We’re actually modeling about $2 billion right now and that does not include any revenue associated with the accounts you’re talking about. We have other business as well. We talked about the Notebook business growing pretty rapidly. The first Notebook win starts shipping in December. We have a second Notebook win shipping in February and then we have about four or five Notebook wins shipping in April. And just the general pipeline. Whether it’s industrial. Our component business is expected to grow about 40% next year. So there’s just a lot of pieces that are growing nicely. …what is the potential of a big Asian OEM doing a broad based program and if that in fact comes to bear, we would hope to participate in that, but I think that’s premature to comment on who that is and whether or not that’s booked.

Your next question comes from Brian White - Collins Stewart. Brian White - Collins Stewart: Looking at your guidance on revenue at the mid point. It looks like sales will be down sequentially and going back historically, I can’t ever remember a time when sales would actually decline in the December quarter. Is there any market that could actually potentially rise sequentially?

The industrial, medical, and automotives we expect to rise. The mobile business currently is expected to rise. The infrastructure will be a little bit soft. The industrial business will be higher. The consumer digital business will be relatively flat. Computing business will be flat, probably a little bit down, for a number of reasons, and our automotive business will probably be a little bit up. So part of a mixed bag, but I think we ought to think about December, because we had a pretty significant adjustment with one of our major customers and without that very, very significant and major adjustment in the December quarter relative to September, we’d probably have a significant growth year going in December. So it’s really not a broad based softening, believe it or not. It tends to be driven by two events. One of our very large customers that’s struggling a little bit in the market place and it’s driven a lot by… We talked for the last year that this would be reduced significantly. Because we’re about 90% of their business, we were uncomfortable with that, very uncomfortable with us being 90%, Selachron acquisition …(?). So without those two events and even during and the negative impacts that we’re having, we had a pretty substantial growth year this year. So it’s really not as broad based as you think even though we’re trying to take our numbers down, because our, you know, we’re just getting a lot of other sales that are offsetting the slowness in the economy, because it is a pretty balanced pipeline of growth. Brian White - Collins Stewart: Since we acquired Selachron about a year ago, how much business, you know, you told everyone when you acquired a company some business is going to roll off. Right? Like the Nortel business. How much business has gone out the door, do you think?

A nice round number is probably a billion and about 80% Nortel. Our planned, I mean even look at the September quarter and get a good feeling. I mean September quarter completes one full year into it. We ended up doing $8.8 billion. Selechron last September quarter probably did $3 billion or so. Flex did about $4 or $4.5, but we actually had a growth year in September, even without taking that billion dollars business out of Selachron. So our pipeline continues very, very strong, as you can see by the $8.8 billion in September. So we always anticipated that Nortel would be a little bit of a casualty. It’s a little bit of mutual interest, because we’re too big for them and they were too big for us and we actually pleased we’re probably more around 3 or 4% of our revenue and that’s very, very comfortable levels to work with. It’s surprising the adjustment in the December quarter is mostly a large customer coming off some very significant revenues last year. Brian White - Collins Stewart: One of your EOMs is out there trying to divest assets, is that interesting to Flextronics?

Not so far. We have a very, very significant and robust footprint, the operations that we have in these low cost regions are pretty significant scale. The business that would be coming across is pretty high revenue generating business with not too much value add. So when we look at putting that into our portfolio and look at the stock that we already have big worldwide operations, we can’t quite get it to the…so to get interest in.

Our next question comes from Alexander Blanton - Ingalls & Snyder. Alexander Blanton - Ingalls & Snyder: Stock price, describe the situation you’re in….dollar a share this year, which is virtually flat from last year. Despite horrendous problems in the worldwide economy for the second half of that year and you told us why and you told us about the new business, four or five, and Notebook contacts, on top of another one in December, and another one in February, and that’s six or seven new wins, and Notebook is a brand new area for you and lots of potential, and your stock grows at $3.74. I mean how do you feel about that? Why do you think that is?

We obviously feel bad about it, but there’s a lot of stocks that are down, so we have a lot of misery there. Looking at free cash flow of $3.74….we’re probably close to 25%. One of the things we said we’re going to do, we’re going to continue to work to expand the available market and that as a result of expanding the available market, we were going to be able to continually grow and drive more business into the company and continue to diversify. You seen the customer charts that show more and more diversification. You see more and more diversification across industry. The investments we made last year were specifically and purposely done in order to continue to be able to grow and expand the company even in down markets. So if you think about some of the investments last year, we went heavy after power systems and power chargers. We expect our business to grow 80% next year. You know, there’s so much uncertainty that maybe it’s not 80%, maybe it’s 50%. We went after disposable non-electronic medical products. The integration of that company has been outstanding and we are going to overachieve the expectations in terms of cost synergy as well as revenue growth. We expanded into the Notebook market, which we said we’d expand by roughly 30%. New product categories, in a consumer electronics business, we’re actually able to grow in a down consumer electronics, which we are. Largely because we’re picking up new product categories. There’s a whole host of investments we’ve made in the industrial space, whether it’s solar or you mentioned a lift last time, Alex, about mechanical lifts that we were building, and there’s just a tremendous amount of those opportunities that we’re bringing into the company. All these things are offsetting the expected economy that led up to September quarter being 8.8 and if we didn’t have a really slowing, we probably would have done more. So the base of business is difficult, but it has been our strategy and our objectives to bring in a new product categories to offset the downside and the downside from a profit standpoint, you kind of have to wrap up those new things in light of things ramping down. But alternatively, we expect this to kind of carry us over for the downturn and we’ll see if it happens, but we’re pretty pleased about that fruition. One of the benefits of doing all those investments last year is we don’t have to do them this year. So we’re actually and we said in the last call, our product portfolio is in great shape. We don’t have any gaps. We don’t have any real component technology gaps. So we said we’re going to lock and load and what I mean by lock and load is we’re going to hunker down and now generate cash, because our investment profile is over and we take advantage of our market position. We started that with the share repurchase last quarter. We’re obviously disappointed we bought shares at $2.70, but alternatively this was a downturn program and the fact that the shares are up $3.74, you know, it’s an opportunity for us. So the way we look at it is we’ll…real strong and a lot of our managers will run through the last recession and we are 100% engaged in all loan techniques to manage through the recession. We’re being conservative. We’re identifying which accounts may be bad accounts and getting them on the table right away. We did a lot of work last year on the integration of (?) more than 20 factories. Expedition is in great shape and a great position to go compete, because that work is pretty much out of our system. So there’s just a lot of positives that are available to us. The market competitive position is in great shape. The negative is we just don’t know how bad the economy can get. However it is, we expect to go less deep into the ditch than others and we expect to come out of that ditch a little bit faster than others and be stronger as a result. Alexander Blanton - Ingalls & Snyder: One clarification on your analyst day coming up. I believe you said November 19, but isn’t it November 18?

November 18. Sorry about that.

Your next question comes from Matt Sharon – Thomas Weisel Partners. Matt Sharon – Thomas Weisel Partners: Mike, you talked about the opportunities for new business in the March quarter particularly in mobile and computing. Just trying to get a feel for the leverage there, particularly as you ramp those new programs, you talked about some margin pressure there. So should we assume in that gross margin we’ll be relatively depressed for a couple quarters as you ramp those? And then, on the SG&A side, is there much to take out in terms of cost there and will we see leverage in SG&A as revenue continues to grow through 2010?

From the SG&A side, we do think there’s more leverage there. We think we’re going to start seeing some of that, I’m sorry, on the SG&A we expect to see some of that leverage mostly come in the March timeframe. So we are just non-stop after those SG&A dollars and we do know one more and we think it can deliver another two tenths of a point. So we’ll be on our way to try to hit that 2.3% number next year in the September quarter. But pretty efficient and gets harder and harder to dig it out, but I think we’ve got another two tenths of a point next year and that’s where we’re driving our company to. On the margin standpoint on these other businesses, any kind of startup cost that puts a little bit of pressure and additionally if we do too much, too many mobile phones, too many computer products, that has the potential of pushing down margins a little bit. We’ve been targeting to get the 3.5 to 4% range and the macro economy is going to be (?) for some time probably, maybe not. That’s still our target. We run the risk of actually having so much success in other parts of the business that it’s tipping our scale again and we’re going to be real careful about how many of those programs we take on that have low margins, because the opportunity for our cash right now is awesome. As you know, cash is king anyway in this bucket environment. Some of our bombs are trading in the 70’s. We like to keep working on our debt equity position and keep taking a tenth of a point out of that on a continuous basis and of course their stock. So we just have so many opportunities in what to do with their money that we’re going to be real careful about not chasing business just to chase revenue and have it inappropriately burden our cash. So I’d say yeah there’s programs, any new programs, and especially on those volume programs will put that margin down a little bit, but we’re going to be particularly sensitive about using our cash given the alternatives.

Our next question comes from Steven Fox with Merrill. Lynch. Steven Fox with Merrill. Lynch: Real quickly on the gross margins. So last quarter you had some inflation headwinds and this quarter looks like gross margins is nedged down a little bit on higher volumes. Can you just talk about if you made any progress and then as you look after this December quarter given more currencies and materials are, what do you see as the benefit from if these things stay around these levels?

Well, those headwinds and tailwinds, you know, the headwinds are the cost in China and some other economies have gone up and are going to stay up. We don’t view these things as something that’s going work well with change. Minimum wages have changed and it’s just a more costly pace to do business and while we don’t have the largest explosion in China…and we’ve had some very significant headwinds all year. In some cases, commodity costs. Most of us think they’ve changed. So they’ve switched. The freight cost down and the commodity improvement. So as soon as all those effects roll through our inventory dials, which we think roll through our inventory this quarter, we think there’s a potential positive there. Some of the things have to work through our inventory system, as you know, and ship, but we’re encouraged by the costs that are coming out and one other thing I will add is interest expense has gone up, leadware has gone up over the last little bit, but even that mitigate. We rack our labor rates at the beginning of the quarter, so there’s labor rates with us this quarter, but again, going into the March quarter, we would expect to see some improvement there. So I’d say overall the headwinds are costing China and labor escalations around the world in the macro economy, but the tailwinds are also turning significantly more favorable.

Our next question comes from Sherry Scribner with Osa Bank.

I just wanted to get what you think your capacity utilization is right now. You’ve mentioned that you’ve done a lot of restructurings and that you don’t anticipate having more restructuring going forward, but I’m trying to get a sense of if the economy does continue to be a drag and things get worse than most people are expecting, how much excess capacity do you have and is there a possibility that we would see another restructuring?

Well there’s, you know, the due course we will always tweak capacities here and there. Right now, we actually don’t have a whole lot of capacity anywhere to tell you the truth. We came off a record September quarter, which means first of all if we didn’t need the capacity we already took it out as part of the Selechron integration was structuring, but came off September quarter real high and we have what it looks like to be a pretty strong pipeline going into the coming quarters. We actually are not hopefully planning on restructuring right now. So we just don’t see it yet and it’s more than what we anticipate. We keep looking across our base of factories and things, which we’ve been through this before and we were thoughtful about what we left after the Selechron integration activities and we thought we left what was good enough to go through and we just think we’re in pretty good shape, but right now we’re mostly utilized. That will change a little bit, because once you get past the November period, there’s some consumer products that drop off pretty significantly, but they do every single year, even in a great economy. If you don’t ship them by Thanksgiving, you know, once you get to Thanksgiving it goes pretty soft in some of the factories So that’s going to happen in the most robust of economies. So we’re actually pretty well utilized.

So going along with that, trying to think about worse case scenario for you. Have you broken out what you think your break even revenue might be or how we should think about the fixed cost in your cogs line.

It would be hard to see break even, to be honest with you, but our variable cost, materials are 80%. That’s 100% variable. Direct labor might be 5% and that’s variable within 90 days. I mean you go through all the costs and you’re probably looking at a fixed cost line of 6 or 7% or something. It’s very, very low. So it’s really you can adjust down to the right level. I believe reasonably quickly. Again, we’re pretty highly utilized already, but the variable cost of this business is very significant.

Your last question comes from William Stein - Credit Suisse. William Stein - Credit Suisse: Regarding the write down. Can you give us an idea how many customers related to what end markets they participate in?

We’re not going to disclose any details around this provision that we’ve taken. It’s across multiple market and it is single digit number of customers. That’s probably all I can say. William Stein - Credit Suisse: Does it include only customer that have actually filed or does it include some that…?

The majority is having filed and very few in terms of going to file. William Stein - Credit Suisse: Just real quickly on the number of Notebook programs that you mentioned before, were those programs or customers?

Those are programs, predominantly across three or four customers. William Stein - Credit Suisse: I guess that does it for me. Thank you very much.

Thanks everybody for attending and we appreciate. We’ll talk to you next quarter. Thanks.