Warren Ligan – SVP of IR and Treasury Paul Read – CFO Michael McNamara – CEO

Brian White – Collins Stewart Jim Suva – Citigroup William Stein – Credit Suisse Amit Daryanani – RBC Capital Markets Alex Blanton – Ingalls & Snyder Matt Sharon – Thomas Weisel Partners Stephen Fox [ph] – Bank of America Shawn Harrison – Longbow Research Sundar Varadarajan – Deutsche Bank

Good afternoon, and welcome to the Flextronics International third quarter fiscal year 2009 earnings conference call. Today’s call is being recorded, and our lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. At this time, I would like to turn the call over to Mr. Warren Ligan, Flextronics' Senior Vice President, Investor Relations and Treasury. Sir, you may begin.

Thank you, operator. Good afternoon, everyone, and welcome to Flextronics conference call to discuss the results of our fiscal third quarter-ended December 31st, 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 Investors section of our Web site under Calls and Presentations. We will refer to each slide number so you can click to the appropriate slide. During the call today, Paul will review our financial results, which include, working capital matrix, cash flow, and return on invested capital. Paul will also discuss the impact of the goodwill impairment charge and Nortel’s bankruptcy on our financials. Next, Mike will review the quarter and business outlook and provide guidance for the fourth quarter ending March 31st, 2009. After Mike’s comments, we’ll take your questions. Please turn to slide two. This presentation contains forward-looking statements within the meaning of the US Securities Law, including statements related to revenue and earnings guidance, our expectation about our future cash flows and return on invested capital, the expected impact of Nortel’s bankruptcy on our future operating results, and our expectations regarding our business in the current economic environment. These forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from those anticipated by these statements, are based on our current expectations, and we assume no obligation to update them. Information about these risks is noted in the earnings press release on slide 22 of this presentation and in the Risk Factors and MD&A sections of our latest annual report as amended and filed with the SEC as well as in our other SEC filings. 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 18 of this presentation, and the GAAP versus non-GAAP reconciliation in the Investors Section of our Web site, which contain the reconciliation most directly comparable GAAP results. Now, I will turn the call over to Paul.

Thanks, Warren, and good afternoon, everyone. Please turn to slide three in the presentation. Our third quarter revenue was $8.2 billion, compared to $9.1 billion from the year ago quarter, representing a decrease of 10% reflected in the softness in market demand as you might expect from the current macroeconomic environment. Adjusted operating profit was $186 million, compared $300 million last year, which was a decrease of 38 %. Adjusted net income for the third quarter was $127 million, compared to $250 million a year ago. And adjusted earnings per diluted share was $0.16, compared to $0.30 last year. Please turn to slide four. Here we show each market segment’s quarterly revenue in percent of total quarterly revenue for the past five quarters. Revenues in the infrastructure segment was $2.6 billion, which comprised 32% of total revenue and decreased 19% over the year ago quarter. Slightly more than one-third of the year-over-year revenue decrease in dollars was attributed to Nortel reflecting our prime reduction in business levels with Nortel. Revenues associated with Nortel decreased from greater than 10% of consolidated revenues at one time to below 5% this quarter. In addition, we have been actively reducing low ROIC programs from our infrastructure segment as we continue our focus on ROIC and asset velocity in this segment. Revenue from the computing segment was $1.3 billion, which comprised 16% of total December quarterly revenue, and only decreased 5% over the year ago quarter. We continue to be very excited about the new program wins in this segment. Revenue from the mobile segment was $1.5 billion, which comprised 18% of total revenue and decreased 25% over the year ago quarter. While our revenue’s being negatively impacted by weakened market demand for some of our larger customers, the end product wins with new customers, primarily on smart phones, has helped to offset the eroding global mobile demand. We note that this quarter, Sony Ericsson did not comprise greater than 10% of our quarterly revenues as they have in the past. Finally, our industrial, medical, automotive segments, and other categories comprised 14% of our third quarter revenues, and grew 6% over the year ago quarter. In light of the significantly deteriorating conditions in the automotive markets, I’d like to highlight that our automotive segment represents a small percentage of our total revenues at approximately 2%. We’ve made good progress in building this business over the past two years. But the majority of our automotive business focused on the European Premium Allianz, which limits our exposure to the North American auto industry. In the December quarter, particularly later in the quarter, we experienced decreased demand across our entire business as all of our market segments were impacted by the softening end market demand being driven by this difficult macroeconomic environment. The current uncertainty in the global economic conditions is making it particularly difficult to predict demand, and visibility remains limited for the near term. We believe our end market diversification model is a strategic advantage, and while it does not completely insulate against – insulate us against from – insulate us from the global broad based economic downturn that we are experiencing now, we strongly believe that our diversified business model positions us to capture market growth opportunities when the macroeconomic environment improves. Please turn to slide five. It will show the trend of declining concentration among our ten largest customers over 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 48% of revenue in the December quarter, and we have no customers accounting for more than 10% of revenues during the quarter. We consider our continued customer diversification and lack of significant dependence on any one customer to be a strategic advantage going forward. Please turn to slide six. Adjusted gross margin of 4.9% and adjusted operating margin of 2.3% decreased 17% and 30%, respectively, from the year ago quarter. On a margin basis, both adjusted gross margin and adjusted operating margin decreased year-over-year by 1%. Our operations were dramatically impacted by cash utilization issues across most of our organizations reflected – resulting in significant under-absorbed overhead costs. Please turn to slide seven. Adjusted selling, general, and administrative expenses, which include research and development cost as a percentage of the revenue reflected 2.6%, compared to last year on significantly lower revenue. Adjusted estimate dollars totaled $212 million in the third quarter ended December 31st, 2008, compared to $231 million a year ago. Discretionary spending remains the focal point of management. And as we have demonstrated in the past, we will continue to take necessary actions to properly align our cost structures with respect to business levels, which will improve operating margins going forward as the macroeconomic environment improves. Please turn to slide eight. Our cash conversion cycle improved to 18 days in the December 2008 quarter from 21 days in the September 2008 quarter. We successfully reduced inventory by more than $900 million, which excludes the $98 million write down associated with Nortel. And improved inventory turns the 7.7 turns in the December quarter, compared to the 7.4 turns in the September quarter. As previously discussed, inventory management continues to be a significant area of opportunity for us to further expand and enhance our working capital metrics and cash generation. We believe that a cash cycle of approximately 20 days going forward is a reasonable target in this environment. Day sales outstanding improved by two days sequentially to 35 days, while payables expanding, decreased by one day sequentially 64 days. We continue to critically march our receivables in light of the current economic conditions, and we are pleased that our aging has not increased maturely, and that our day sales outstanding has continued to improve. We believe that our tight credit and (inaudible) processes are functioning very well. We remain intently focused on generating cash in this market downturn by further reducing the working capital required to run this business. Please turn to slide nine. As we’ve been highlighting, we remain intently focused on improving the liquidity by driving further improvements in our working capital management. As seen from the chart, we have successfully reduced inventory by approximately $771 million over a year-over-year basis. And even more impressive was our ability to reduce inventory by approximately $900 million, excluding the $98 million effect of Nortel payment on a sequential basis from September. If inventory management resulted in an improvement in our inventory turns over the past four quarters, which is not at 7.7 turns, quite rapidly decreasing revenues. Our organization has been diligent and disciplined in our inventory management strategy and execution of the supply chain making changes both from the inbound and outbound end, Driving further SMI and JIP [ph] activities are being more diligent in our MR team management. We can continue to believe that there is further opportunity to expand and enhance these important metric, and continue to see further material reduction opportunities. Please turn to slide ten. This quarter marked the first period since December 2007 cap where CapEx was below depreciation, (inaudible) drive in operating cash flow leverage. In previous quarters, we continue to make the necessary investments in our business to support new capabilities and expanding programs. However, in the December quarter, we took decisive action to reduce capital spending to align with our anticipated near term demand. We would continue to expect that this restriction in capital spending will continue in the upcoming periods, thereby providing further opportunities to generate cash flows and improve liquidity for the company. Please turn to slide eleven. Our cash flow from operating activities generated $283 million in the quarter as we successfully reduced our net working capital resulting from significantly lower inventory balances, strong reductions and accounts – spending accounts receivable despite realizing a reduced benefit from these receivable sales in excess of $450 million and lower restructuring related payments. This brings our cash flow from operations for the first nine months of our fiscal year to over $1 billion. Cash payments for Legacy restructure and integrated related activity amounted to $84 million in the December quarter. This significantly reduced net capital expenditures in the quarter, down sequentially 50% to $73 million, while total depreciation and amortization for the quarter was $133 million. So as a result of generating cash from operations and our reduced capital spending during the quarter, we generated approximately $210 million in free cash flow, which we used to help retire $260 million of our 1% converts at a $28 million net gain. Year-to-date, we have generated $658 million of free cash flow. We remain comfortable with our target of generating approximately $800 million in free cash flow for fiscal 2009. But this still has a range around it given the continued lack of visibility. We will continue to concentrate our efforts on reducing working capital and reducing capital spending, also lowering other discretionary spending in order to generate further liquidity. Please turn to slide twelve. As previously mentioned, the key benefit of our ability to generate cash in this market is the opportunity to strategically strengthen our balance sheet. In the December quarter, we optimistically reduced debt through a successful tender offer of repurchase $260 million of our outstanding 1% convertible sub notes at a meaningful discount to par. We remain focused on building liquidity and strengthening our balance sheet, and believe there is significant potential for us to further enhance our capital structure through a variety of means. Please turn to slide thirteen. At the end of December quarter, we had $1.8 billion in cash, compared to $1.7 billion at the end of the September quarter. As a result of $260 million debt reduction from the tender offer, total debt was $3.2 billion at quarter-end, compared to $3.4 billion in the September quarter. Net debt, which is total debt less total cash, was $1.4 billion at quarter-end, down from $1.7 billion at September quarter-end. The $5.9 billion goodwill impairment charge that we took in the results for the quarter, we will discuss in greater detail in the couple of slides. And the effect of decreasing shareholders equity to $2.1 billion, as a result of leveraged ratio, which is calculated as total debt divided by total debt plus equity, increased to 61% in the December quarter, compared to the 30% in the September quarter. Excluding the impact of goodwill charge on equity, the adjusted leverage ratio would have been 28%. Including the availability under a resulting credit facility, our total liquidity improved to $3.6 billion in the December quarter, compared to $3.2 billion in the September quarter. We believe this level of liquidity is more than sufficient to support our business. Please turn to slide fourteen. This graph shows our available in liquidity plus debt maturities by year. Our close maturity is due in July of this year, which is our $195 million privately placed convertible junior subordinated notes. The next maturity is due in calendar 2010, which is the remaining $240 million of 1% convertible subordinated notes. After that, no additional significant balances of debt are due until calendar 2012. We remain extremely comfortable that the company, with its existing cash balances together with some anticipated cash flows from operations and the additional liquidity available under its revolving credit facility, has more than sufficient liquidity to meet its needs. We remain confident and yet conservative in the management of our liquidity. And we continue to believe we are operating our business well within the limits of our financial covenants. Please turn to slide 15. As previously discussed, the challenging economy, the overall deterioration in equity values, and the resulting sustained decline in our share price resulted in an indication of a potential goodwill impairment. At our analyst and investor day on November 18, 2008, we announced that we had commenced our goodwill impairment testing. As a result of our recently completed assessment, we recorded a non-cash goodwill impairment charge in the amount of $5.9 billion in the third quarter results ending December 31st, 2008. The write down represents the entire amount of the company’s booked goodwill. It’s important to note that this impairment charge does not impact our cash flow, liquidity position, availability under our credit facilities or financial covenants. Please turn to slide 16. We do ROIC as one of the key metrics to managing our business and is a good indication of the level of success we are having in deploying and managing our capital. It’s also an indication of the varying levels of margin and asset velocity considered when establishing expected returns on existing and new customer business. Our ROIC for the December quarter was 11.5%, calculated using our normal methodology when we divide the tax affected pro forma operating profit of the quarter by the average of the net invested capital of the current and prior quarter-end. The average net invested capital base includes the impact of December quarter write down of goodwill. Also shown in this chart is the ROIC trended calculated excluding goodwill in the net invested capital base on a historical basis for comparison. Under this methodology, ROIC for December quarter would have been 22.2% and in the mid 20% range in the previous four quarters. Please turn to slide 17. As a result of the Solectron acquisition in October 2007, the company identified to have significant concentration of business with Nortel and have since been actively working to reduce the level of business. As seen from the chart, our December 2008 quarterly revenue amounted to $387 million, reflecting the 37% or $226 million reduction in quarterly revenues from $613 million in the year ago quarter. On January 14th, Nortel announced bankruptcy protection filing. While Nortel works their way through the restructuring process, we remain supportive and engaged with them as a strategic supplier. We recently amended our relationship agreement with them to address our status as a strategic supplier as well as to establish certain contractual refinements. The amendments resulted in our contractual agreement to receive $120 million for certain inventory over the following six months, of which we have already received $75 million. Additionally, in support of our continued efforts as a strategic supplier, we have secured five day payment terms on all post bankruptcy petitioned sales of product. It’s also important to note that Flextronics has been selected to serve as a member and chairperson of the official committee of unsecured creditors of Nortel in it’s US Chapter 11 case. In connection with Nortel’s bankruptcy filing, we have recognized a distressed customer charge of approximately $145 million, which is comprised of $47 million of provisions for pre-bankruptcy petitioned accounts receivable and $98 million for the write down of inventory. In developing these provisions, we considered various mitigating factors, such as existing Nortel related provisions, offsetting obligations from Nortel, and amounts subject to administrative priority claims. It’s important to recognize the considerable amount of judgment required to assess these exposures as we are in the early stages of bankruptcy claims process. We have used our best judgment in determining the appropriate reserve levels based on the information currently available. Management will continue to monitor and refine its estimates if and when better information presents itself. We continue to proactively and regularly monitor the financial stability of our customer base, and we have reduced credit limits and payment terms with select customers. We do not believe there are any other distressed customer exposures as this time, but we cannot fully predict how the economic slowdown will impact our customers in the future. Please turn to slide 18. The December quarter GAAP results reflected our goodwill impairment charge of $5.9 billion, the impact of the $145 million distressed customer charge associated with Nortel, and a $28 million gain on the extinguishment of the $260 million of our 1% convertible sub notes as a result of our tender offer. Also during the 2008 quarter, the company recognized after tax intangible amortization and stock based compensation of approximately $30 million and $19 million, respectively, compared to $21 million and $16 million, respectively, in the year ago quarter. After reflecting these items, the GAAP loss was $6 billion, compared to $774 million in the year ago quarter. GAAP loss per share was $7.43. Thank you, ladies and gentlemen. As you turn to slide 19 and 20, I will now turn the call over to our CEO, Mike McNamara.

Thanks, Paul. The continued slowing of the global economy dramatically reduced demand across virtually every product category in every geographic region we operate in creating one of the most difficult economic environments in our history. While December quarter revenue of $8.2 billion and adjusted earnings per share of $0.16 were within the updated guidance range we presented at our analyst day on November 18th, 2008, this was our first December quarter since 1996 where revenue declined sequentially. As we progress through the quarter, reduced customer spending, limited access to credit, and all the other effects of the macroeconomic environment weighed heavily on demand. During November, we experienced an accelerated impact of these deteriorating demand trends, which are continuing as we enter the March quarter. The overall realities in this market are certainly sobering as new business winds have not outpaced the decline in revenue. We continue to build our organic pipeline as well as focus on emerging markets. We will also continue to execute on our diversification strategy, which we believe lessens the impact of a challenging end market demand, and in particular, our customer exposure. As evidence of our ability to further execute on our diversification strategy, our consumer exposure over the last two years has gone from 59% to 38% this quarter. Our scale and breadth of service offering has greatly expanded our available markets and customer opportunities ,and has aided our ability to further develop our infrastructure, industrial, medical, and computing businesses , which has helped to mitigate the overall eroding demand environment. Our top priorities in this environment are to control costs, improve internal efficiencies, reduce inventory levels, aggressively manage working capital, generate strong cash flow, and improve our capital structure. These times are unprecedented. And our ability to execute on these controllable aspects of the business is paramount as a market leader. This quarter will even be more challenging as the economic environment will remain uncertain. We will be additionally affected by normal March quarter seasonalities. In this market, our objective is to skillfully leverage our strengths to control what we can so we are in a stronger competitive position as we emerge from this downturn. Our key strengths include an experienced management team that knows how to deal with the dynamics of a weak end market. We understand that disciplined execution is vital. We have many long standing customer relationships, which provide a strong foundation for our business. And our significant worldwide scope and scale provides them with competitive advantages. For example, our low cost industrial parks converted and integrated solutions to help us to efficiently manufacture a wide variety of products. To minimize the impact of market fluctuations, we have aggressively invested in our diversification strategy across customers, end markets, and geographies. In addition, we have a strong balance sheet and the ability to generate cash flow. To strategically and effectively navigate through this period, we have implemented numerous actions that include improving the ROIC performance of underperforming projects and accounts, intensely and focusing on driving inventory balances down, significantly reducing headcount, implementing factory shutdowns, shorter work weeks and selective site closures, enforcing strict cost controls across the entire business, managing the controllable aspects of employee compensation, limiting capital spending to around 50% of the current depreciation levels, and substantially reducing R&D spending. As we entered the December quarter, we averaged close to 25% overtime and a 30% temporary workforce worldwide. This planned flexibility is proving to be invaluable as we ramp down our system. We closed December quarter at approximately 12% overtime and have reduced temporary headcount significantly. We have substantial progress with our execution focus in the December quarter. Our adjusted SG&A spending went from $222 million in the September quarter to $212 million in the December quarter as we continue to reduce discretionary expense level. Inventory reduction was superb as we reduced the balance by more than $1 billion and achieved increasing inventory turns in a deteriorating revenue quarter. We reduced AR sales by over $450 million in the quarter, paid off $260 million in debt, and still managed to increase cash balances by $95 million. Our cash cycle improved again as a result of these many activities. While the Nortel bankruptcy is disappointing, we are having some success working the best of a difficult situation. We agreed on $120 million payment for inventory, and we have already received $75 million in cash to date. We are fully supportive of continuing to build Nortel products and have agreed to receivable terms of approximately five days. The Nortel supply chain continues to function almost as it did pre-bankruptcy and without disruption. We are hopeful that Nortel will be successful in its turnaround efforts, and we are assisting in every way we can without compromising our company’s financial position. I will now comment on each of our end marks to provide you with a little more color on how we see the business evolving in this very difficult environment. Our infrastructure business remains extremely competitively positioned. And we have a well diversified portfolio and strategically aligned with key customers on their major programs, and have significant traction on the next generation products. While revenue has decreased as a result of reducing our exposure to non-performing accounts as well as a reduction in Nortel revenue, we are very confident of our market position within this segment. We anticipate that this segment will perform better than most other categories over the course of next year and be less susceptible to the market downturn. Additionally, we expect to increase market share as a result of the high level of confidence we have in this segment. We are experiencing some mild contraction in the medical segment, but I remain confident in the business as we have a very, very strong pipeline. We are exceptionally positioned with our broad service offering within this segment. And expect to capitalize on increased outsourcing opportunities developing within this space. While our core computer business is slowing, our notebook business continues to win new programs that will provide solid revenue growth as these programs ramp in the back half of the year. We continue to be optimistic regarding the potential in this segment as we continue to make positive progress with customers. Industrial segment is comprised of capital equipment, meters control, test equipments, solar products, appliances, and other miscellaneous products. These product markets are all contracting, but new opportunities will continue to open up in this segment as outsourcing becomes more strategic for these manufacturers. While their term demand will be down, we strongly believe we win more than our fair share of these new business opportunities as a result of the strength of our scale and breath of services in this segment. Clearly, the impact from the US and global consumer spending is having a significant detrimental impact on the consumer market. All sectors of the consumer market, from LCD TVs to gaming to printed copy, are off substantially. We do not see a significant rebound in this market in the near turn. We would expect a significant decline in business as a percentage of the total FLEX revenue over the next few quarters. While we are generally disappointed in this segment, we are pleased that more stable segments will become more representative of FLEX diversified revenue model. The opportunities in the mobile segment have contracted. Several traditional customers have reduced demand significantly and the overall market is slowing. Smart phones and phones are the dominant things for business growth in the future. We are growing nicely with the major smart phone manufacturer and timely producing on multiple continents, which is offsetting much of our mid-ranged phone demand reductions. There is significant turn in our business model due to simultaneous start-up costs and shutdown costs. We are focusing on selling printed circuit boards, camera modules, and chargers into all of the mobile product categories. The automotive segment demonstrated encouraging growth over the less several years, but represents only about 2% of our revenues and is primarily focused on ODM products for the European customers. Visibility is limited due to extended shutdowns at the Tier1 car companies over the holidays. But we, like our model and our pipeline of sales opportunities remain strong as the electronic content in the cars is expected to continue its increase. While each of these markets will present different challenges for us in the near term, they were also creating abundant opportunities. Next, I will like to share our guidance for the March quarter. Please turn to slide 21. We expect March quarter revenues to be between $5.5 billion and $6.5 billion and adjusted earnings per share to be in the range of $0.02 to $0.07 per share. The wider range is the result of continued uncertainty in the end markets, product mixed, and the deteriorating demand environment, which makes forecasting difficult at best. Even in a normal business environment, the March quarter is challenging to forecast. This is specially the case now given the unusually low levels of visibility that many of our customers have in the current environment. Many of our customers had extended shutdowns over the holidays. We anticipate that the current demand picture thus reflected in our current forecasts will be further refined in the coming weeks. All of these issues make the March quarter a most difficult quarter to anticipate and as a result, we have to give in another wide range for guidance. Quarterly GAAP earnings per year diluted share is expected to be lower than the guidance provided herein by approximately $0.05 for intangible amortization expense and stock based compensation expense. In closing, as we all know we are in the midst of one of the worst macroeconomic environments. There is not one industry or one customer that is immune to this global demand slowdown and the financial impact that’s attributable to it. This deteriorating demand environment does pose significant challenges, but we are pragmatic about the challenges we are facing and we are confident in our seasoned leadership to appropriately react, execute, and deliver in this environment. We strongly believe that our competitive strengths include our low cost industrial bar concept, critically integrated indents solutions, significant scale, customer and end market diversification, and long standing customer relationships, which will enhance our competitive position in these uncertain times. We believe our product and service offerings create value that increases our customers’ competitiveness, which is extremely important in this current economic state. We remained focused in our efforts to strengthen the balance sheet and build liquidity. We believe that our existing cash balances together with the anticipated cash flows from operations and our availability on their revolving credit facility are more than sufficient to fund our operations and support our business opportunities. We are confident that we will emerge from this downturn as an even stronger company. 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.

Thank you. (Operator instructions) This first question comes from Brian White from Collins Stewart. Your line is open. Brian White – Collins Stewart: Yes. Good afternoon. When we look at the inventory decline was pretty phenomenal in the quarter. Maybe you can talk through what you did to drive this decrease. Are we going to see further decline at the March quarter?

Yes. We’re really, really pleased with the results and all the hard work that went into that. A lot of it was that we actually just pulled out a recessionary playback from 2001. We learned a lot back then about how to drive the inventory out. And I think back in 2001, it took us about four quarters to go figure it out, but there were a lot techniques that we implemented to go make that happen in terms of how we manage our MRP, collaboratively working with the customers to understand what their demand patterns are. And it’s kind of a funny thing, but we actually worked with our customer last quarter to push demand down, which sounds kind of crazy. But we actually continuously challenge what our customers were going to load because I think we were perhaps a little bit more negative than our customers were. And that they don’t want to be left holding with too high inventory level. So anyways, between working with the customers and actually implementing a lot of the things that we learned over a one year period in 2001 about how to plant safety stocks, how to manage lead times, how to load the MRP system, which just created a very, very good results for us. And do we expect it this quarter? We do. So we’re doing the same thing. We’re pushing it down and I would expect to see continued improvement in terms. Brian White – Collins Stewart: And when we look at capacity innovation in the December quarter, maybe what you’re looking for in the March quarter. Just also if you had – was there downsizing in the December quarter of headcount and maybe what you expect in the March quarter?

Yes. So there was a yes significant downsizing. I think I’ve mentioned it. When we put a pretty flexible base in and we did this, years and years ago and so our ability to thrust down pretty rapidly is high. So there were a very, very significant amount of reductions in the hours worked reflects. So already last quarter we put in PTO, forced PTO, we shutdown factories, we put people on short of work weeks. We had a significant amount of lay offs, which included a lot of temporaries. As mentioned, we reduced the overtime hours very, very substantially. But between all that is we were able to react pretty aggressively. So I would say that all those different items were significant, were very active, were put in really across the board and really in just about any geography. Brian White – Collins Stewart: And do you have–

Well, say this quarter, so we’re rapidly responding to those that the marketplace is presenting to us. Brian White – Collins Stewart: And then what type of percentage decline did we see in the workforce and also could be the utilization rate, which you’re looking for?

Yes. The factory dealer utilization rate comes up a lot. There’s three different kinds of kind of utilizations. There’s really the factor utilization, there’s the equipment utilization, and then there’s the people utilization. And the fact that utilization be in the least important, the physical phase that is. It runs well below 1% of sales and that’s real hard to flex obviously. The equipment runs between 1% and 2% of our total place and that also is difficult to rationalize in a very, very short ordeal. Alternatively, these are typically on in for five to seven year depreciation cycle so about 20% burns off the year. And then third thing’s people, which makes up the big amount and our objective is to directly respond to the market place orders with reduction in hours and those could be like I’ve said shorter work week, they could be PTOs, they could be outright lay offs and they could be overtime. So it’s really a combination of those things, but it’ll be our objective to flex that directly to the revenue in hand. But again, it takes a quarter really to have that flow through and there’s a cost for that. Brian White – Collins Stewart: But Mike, do we have a percentage kind of maybe on equipment that we’re looking at here?

Well I think the way to think about it is that we came up the September quarter doing 8.8%, so we have enough – or $8.9 billion. So we have enough equipment to do $8.9 billion of sales. So if you think that – you take the misquoted guidance at $6 billion that it directly translates. Brian White – Collins Stewart: Okay. Thank you.

The next question comes from Jim Suva, Citigroup. Your line is open. Jim Suva – Citigroup: Thanks, Mike. Have you seen any changes to your OEM customers as far as pricing? What they’re asking for? Some in-sourcing? Are they asking for better terms now that there’s a lot of excess capacity out there and there’s some competitors who don’t have quite the financial position that you do to maybe strive a little bit more for business?

Well those are a lot of things in that one comment. But the answer is we’re seeing some of everything. Certainly, in terms of aggression that’s in the market place or maybe of lower terms from the OEM. William’s always asked us for better and better terms and lower and lower prices. Is it more difficult than it was in the past? Maybe not, I do find that the overall environment is becoming more competitive. I think that the competitiveness is actually more challenging in the consumer mobile space probably than it is in other product categories. But we’re starting to see an increased amount of competitiveness. I don’t know if it’s driven as much by the OEMs as driven by some of the excess capacity of the contract manufacturers. So I think that’s part of it. I think without question people and I are looking for terms, but at the same time we’re kind of asking to improve those terms kind of simultaneously as we look at credit we extend through AR. We’re actually working to reduce that risk and tangle in the other direction. So I think while people might ask, I think people also understand the difficult credit market. And I actually don’t expect to see much movement at all as it relates to concessions to the OEM in that space. Jim Suva – Citigroup: Okay. And a quick follow up for Paul. Paul, there’s kind of been no restructuring charges now for this quarter, but with your run rate of sales at this release what it is for the March quarter. Do you have to institute another restructuring program given your size relative to where the demand is?

Mike. Sorry. We actually considered to react to the demand signals that we have and align our cost base. I mean, that goes on daily here, day in day out. So we continue to do that. In terms of cost, there was an insignificant amount spent in the December quarter and there’s an insignificant amount planned in the March quarter. However, we’re still waiting for demand signals to settle down to understand the new levels of run rate for revenue. And should that mean that we have to take – do something more saleable then we’ll inform you. But we have nothing of that magnitude in mind of this stage. Jim Suva – Citigroup: Great. Have you ever think to think about GGM as –

Think about they’re running a close to 25% to 30% overtime level and we’re running a 25% to 30% temporary workforce worldwide and you think of that base and flexibility on top of 200,000 people. I mean, that is an enormous amount of flexibility we’re getting at very, very low cost. And that’s basically what we did. We reacted very, very significantly last quarter. The numbers were extremely high, but the cost of it is that we’re also putting in that flexibility is not so high. Now as we get into more and more challenges gone forward if that base continues to erode, the cost of that flexibility gets higher and higher. And we’ll have to reevaluate what our position. But so far we’ve been able to react pretty effectively without doing anything major. Jim Suva – Citigroup: Okay. And housekeeping. Why is stock comp going up year-over-year?

That’s a good question. Sorry I don’t have the answer at hand, but I’ll certainly follow up with you later on my call. Jim Suva – Citigroup: Okay. Thank you. Thanks, gentlemen.

Yes. Thanks. Next question?

Next question comes from William Stein from Credit Suisse. Your line is open. William Stein – Credit Suisse: Thanks. I think a lot of investors have been interested in the financial covenant. If I understand there are two maintenance covenant that have been concerning people. I’m wondering last time you guys talked about our EBITDA rather was down about 50%, you’d still be okay. Can you talk about how you view that today? And also what you have to see in terms of both potential write downs for this and the decline in EBITDA in order to have any trouble on some?

Yes. We ended the quarter well in compliance with our covenants and feel very comfortable with that especially having taken out some more debt as we noted. Going forward, it’s all a matter of earning levels and we’re not partake to talk about that at this stage. However, we’ve modeled certain scenarios out and we still remain under compliance and we’re not concerned about it. So I think you understand the detail of the calculation, but it’s something that of course we pay close attention to. And the good thing is the business is generating significant cash and the downturn that helping us with our liquidity and our net debt and our ability to be opportunistic in the capital market. So that’s the kind of way we’re out at that. William Stein – Credit Suisse: Perhaps I could try in a different way. If you saw the current quarter come within your guidance range or maybe at the low end and then no meaningful rebound over the next few quarter and profitability is kind of the same levels as well. Do you think there’s a chance you’re tripping one of the two covenants?

No there isn’t. And that’s certainly something we model and pay close attention to. William Stein – Credit Suisse: Great. Thank you.

Next question comes from Amit Daryanani from RBC Capital Markets. Your line is open. Amit Daryanani – RBC Capital Markets: Thanks. You guys it’s a question on Nortel Law pot. The thing is when you guys bought all the Nortel assets several years ago ten or five of some of the manufacturing sites, you might have fold one or two of those. But can you just talk about the remaining sites that are left. Is that some Nortel centered business? And are you planning to shut them down in the near term?

Yes. We actually have one. The original base – we have one factory left in Calgary. There’s quite of bit of other work in there at the moment. And we’ve been downsizing that factory probably for like three years. So I would call it on a planned phase down and a – So we have very little left of that. We don’t own the factory. We have several hundred people and it has a very planned phase out. Anything else we bought from Nortel has already been closed. Amit Daryanani – RBC Capital Markets: All right. And then I’m not use to just cruising it. The reality for FLEX at this point given the macro environment become $24 billion to $25 billion kind of annual revenue company, do you think that you guys have the core structure to sustain 3% to 3.5% EBITDA margin on that kind of run rate and it’s not – Can you start with what the reconstruction you would have to do to get there?

Yes. So it again depends on mix and exactly what is that business made of. But it would certainly be – I mean how we look at the business is that it’s going to be 6 million at this quarter or there about. This downturn can last a long time. We don’t know what it’s going to be like in the future, but we certainly have to anticipate that there’s going to be an extended downturn of business just so say the new base is 6 billion and we feel that we just need to adjust to that base and start working it back up to our 3% level because that is the new level. We think we can get there, but again it depends on mix and it depends on how fast we can get there. But it is certainly our intention to reset our company to the new lower level, and then start grinding it back to three points. Do we think we can get there? It is likely yes. We have to be able to get there. Amit Daryanani – RBC Capital Markets: Mike, what I am trying to get and think about is, can we get there just on an organic basis or would we have to take some outside restructuring chart to achieve that at some point?

And it kind of depends on what kind of – what the mix is, but if we were going to stay flat at $25 million, we might accelerate it getting to the 3% or 3.5% level by taking some charges. I think that is a possibility, but we really have to see what the mix is and really decide on what the overall level is going to be. But the answer is, again, you get there faster by doing restructuring. But then again, we want to be thoughtful and careful about what we restructure and what we don’t. Like I said, I outlined a huge ability to respond down on the highest cost element, which is our labor. So I think it just depends. But what I can assure you of, for sure we think there is a new level, for sure we need to go adjust down to it, and for sure we have to go run our business to get back up to 3% to 3.5%. And we’ll find a way to go do that. Amit Daryanani – RBC Capital Markets: Fair enough. And just finally for me, on the SG&A line, $212 million from this quarter. Could you just talk about how much of that is variable versus fixed? And I am trying to get a sense really on next quarter, would sales be down 25%, what SG&A run rate do we think about?

Well the variable run rate essentially is the R&D spent out of that number, which typically runs around 20%, and the rest of it is pretty fixed. Amit Daryanani – RBC Capital Markets: Perfect. Thanks a lot guys.

The next question comes from Alex Blanton from Ingalls & Snyder. Your line is open. Alex Blanton – Ingalls & Snyder: Thank you. I am going to continue on the income statement here. If you take the mid-range of your EPS guidance and work back up using interest cost of $54 million and 4% tax rate, it is about 1.5% operating EBIT margin on $6 billion mid-range sales and that is $92 million. And if you assume $200 million in SG&A down $12 million, you get $292 million for gross profit, which is virtually the same gross margin, 4.88%, as you had in the third quarter despite the fact that your sales might be down 22% sequentially. How do you do that? And does it have anything to do with the fact that you must have had a big impact on absorption from reducing inventory by a billion dollars because, well, at $900 million, let us say, adjusting for Nortel? A if you adjust, let us say, that the impact is 10% of that would mean that before inventory liquidation costs like that and absorption, you would actually would have maintained the – you’d have about a 5.9% gross margin in the third quarter. So is it the absence of the huge inventory reduction that allows you to hold a gross margin like that on a big volume decline or is it the mix or what?

Hey, Alex. So maybe I will take those one at a time. Alex Blanton – Ingalls & Snyder: I got one more question after this, but it is a short one.

That is great. So the first question of gross margin coming up December going on to March. You are right. If you model it out, it roughly stays flat on the gross margins percentage basis. That is reflective of our accelerated activity that is taking out cost that has enabled us to maintain gross margins at those levels. We have been, as Mike said, been very proactive at taking down the labor cost (inaudible), which is the highest cost driver of the variable cost component. So we continue to do that through a much lower revenue base in the March quarter. That was the first part of it. The second part of it, I did not quite understand because taking out inventory hasn’t necessarily reduced – hasn’t had an effect on absorption. Alex Blanton – Ingalls & Snyder: But it means that you produce less than you sell, which obviously affects your absorption if you are absorbing costs in the inventory at all. The amount that it affects depends on what percentage of your fixed cost you absorb in the inventory. But if you do not absorb any into the inventory, then there is no effect.

That is true. And it goes back to the first point of how we absorb the overhead costs, which has a lower revenue base and maintain the 4.8% to 4.9% gross margin. And the largest driver of that is the labor cost, which at this day absorbs n inventory is typically how you do it. And so having reduced the labor cost substantially, it enables us to maintain that margin percentage level. Alex Blanton – Ingalls & Snyder: Okay. All right. The second question, which is shorter, is at your November 18 meeting, you pointed out there was a provision in your 6.5% bond that would be triggered by the impairment charge and that would prohibit you under that provision from repurchasing stock. And so that you were not able to repurchase stock even at the depressed level that it was and got to after that meeting and still is. But you thought that there could be workaround for this or re-negotiation of it or whatever. So how do you stand now regarding possible repurchase of shares under that provision? |Can you do it or not?

Right now Alex, we cannot. What it is, as you have already pointed out on the 6.5%, it is the actual restricted basket issue. And therefore, until that basket becomes positive or the issue is resolved, there would not be any allowance for repurchase of our shares. Alex Blanton – Ingalls & Snyder: But is it under negotiation to change it?

It is certainly within our thoughts and plans to address this issue but– Alex Blanton – Ingalls & Snyder: You could buy a lot of stock at the current price.

Absolutely. Alex Blanton – Ingalls & Snyder: So it is a real shame that you cannot do it.

You got to tell the rest of the guys in this call, Alex. Alex Blanton – Ingalls & Snyder: All right.

Oh sorry.

Go ahead, I did not mean that.

No you are right, Alex. You know it is all part of our ability to manage the capital structure and we have been focusing on the debt repurchase, as you know. But we will want to make sure we have a balanced approach going forward. And any restrictions that we have, we will either decide to live with them or decide to remove them. So that is in our daily planning for sure. Alex Blanton – Ingalls & Snyder: Okay. Thank you.

The next question comes from Matt Sharon from Thomas Weisel Partners. Your line is open. Matt Sharon – Thomas Weisel Partners: Yes, thanks. I just want to go back to the outlook commentary in your guidance, which is a wider range, and we certainly appreciate that given the lack of visibility. But is this going to be – need to be a very backend loaded quarter in order to get even to the midpoint of your guidance. And just as you started the quarter, you had Celestica earlier. For instance, just say that they saw a big order drop off in the month of January, is that how your quarter started out and will have to be more backend loaded?

No. I do not think so anyway. It is hard to say because we cannot predict the future, but our quarters typically are not very backend loaded. And I think the behavior that we saw in early January was not much different than we anticipated in December, to tell you the truth. So I actually do not think there is a meaningful change. In fact, there was such little change in our order book in January that maybe we were just already discounting what ended up coming in January, which is a possibility. Because like I had mentioned earlier, we were aggressive with our customers and pushing those forecasts down just because we did not believe in the future and we did not want to get stuck with the inventory. So I think there is – the other key thing that I think that we are missing some demand date on is we actually are two cycles out of the real demand sell through. So in other words, we sell to Sony, we sell to Wal-Mart. So really, we have to get Wal-Mart say to go to Sony, they then go to us, and then for us to load our schedules. The same thing when we sell to Cisco, we really need to wait for Verizon to give us the orders from Cisco perhaps. And to me, there were so many people on extended shutdowns over the holidays that I actually question how much good data really came out at the end of January. So I think there is still more data to come out that we need to absorb and understand, but I do not think the first two weeks in January, and we did hear from that from last this call, but I do not think the first two weeks was any different than where we anticipated. And perhaps it was just because we already were judging our forecast down. Matt Sharon – Thomas Weisel Partners: Okay. Thanks. That's helpful. And then just on the inventory. Good job obviously in December with the big revenue drop off in March, can you keep at that turns level or should we expect inventory days to go up a bit in March?

Yes. We'll for sure expect going to go up. Every March quarter we have a pretty good cliff up and inventory days. It's hard to react. Just the way we do the inventory calculation, somebody else's, it's pretty much impossible to react down 25%. So what we'll do is we'll give a good hard rod at driving as much inventory as we can out in March. And then I think the balance will write itself in June, and I think by then I actually hope to be at a stable base granted it's probably a lot lower than we had last June. A new base revenue, that is. And I would expect it to be a little stable. But during this adjustment period, we are going to see the inventory turn phase go up. Matt Sharon – Thomas Weisel Partners: Okay.

And we'll every March even in the good environment. Matt Sharon – Thomas Weisel Partners: Sure. Okay. Thank you.

Are you ready for the next question?

Yes.

Next question is from Stephen Fox [ph] from Bank of America. Your line is open. Stephen Fox – Bank of America: Hi, I will be quick. I just was curious how you would gauge the chances of recovering some of the $145 million charge with Nortel in the future?

Well, since we've actually taken a provision or distressed customer provision, we obviously think the chances are pretty small, and that's why we took the reserves. And we will get new information, I'm sure, as we go through – particularly, it has been on the credit committee, but that will take a long time. But I think for now we have to assume that that's a low probability if that happened. Stephen Fox – Bank of America: And then the chances of other charges are zero based on the agreement you've reached now at Nortel.

It was never a zero course, a significant amount of judgment that goes into establishing our reserve elsewhere and hoping that Nortel comes through this process. There are other possibilities. And that could end up being negative for all parties related in this. But we're not planning for that. We're planning for them coming through it, and we think the reserve that we took would be adequate. Stephen Fox – Bank of America: Okay. Thank you.

Next question comes from Shawn Harrison from Longbow Research. Your line is open. Shawn Harrison – Longbow Research: Hi, good evening. I was just hoping maybe if you look out, say with the next 12 months and now, there's extremely limited visibility. But if you could maybe quantify by each end market that you serve the run rate of revenues and what you're expecting in terms of decline. And then on top of that, are you also pruning out additional low margin business over the next few quarters?

Yes, we are. And we have been doing that for I think when we first went to discuss with you guys, either it was back in June or July timeframe, where we said that it would be our objective now to generate cash and because there's a lot of opportunities of what to do with our cash. And we believe that those out of our company was pretty complete. So we've been on that mode for a little while. We’re seeing some of those reductions, and for sure we've seen a lot of those reductions already. And we're continuing to work it in this environment. Our cash is very, very important to us, and we're making sure that we earn on it. Otherwise, we shouldn't be spending it. So we're pretty tough on our team and work on that very, very hard. So it's not just a low margin either. But really the ones that are consuming a lot of net working capital, which is just as much a focus of the low margin accounts. That's right though. At the end of the day, it's return of the investment capital. Shawn Harrison – Longbow Research: Okay. And then the earlier part of my question. Just in terms of trying to size maybe the declines potentially over the next 12 months in terms of a run rate by end market.

Yes. That one's really a tough one. And as you know, we don't know. We’re not close enough to our customers in demand to be predictive about that. I think for us and what we see in terms of the markets, we are very bullish about medical that we think more and more outsourcing opportunities are coming out of this environment. And it is an industry that is very reasonably new in terms of outsourcing. We think that is a big upside. And in general, we think the infrastructure business will be down, but we also think relative to the other businesses, we think that is going to be a strong point or stronger. So maybe we will go down less is maybe the way they described it. But, yes. We really don’t know what the end is going to look like. Shawn Harrison – Longbow Research: Okay. And then may be just another question kind of in the general scheme of things. What are you looking for right now to indicate, you are seeing the bottom in demand, is it to stop negative order revision? Is there something else in that sense?

I would not say we have seen the bottom. Like I said, I actually think we need some more data to see whether there is another click down or if it has stabilized. I do actually kind of hope that this quarter, we will know what the bottom looks like, but I am not sure if that is true. And like I said, I think there are lot people on vacation and a lot of new data that needs yet to come out. So I am actually not bullish that we have seen the bottom, but we do not know. But I think we just have to be very, very reactive to anything else that comes at us. But hopefully, we will see the end of the down cycle this quarter. It would be nice to see. Shawn Harrison – Longbow Research: Okay. Thank you.

The next question comes from Sundar Varadarajan from Deutsche Bank. Your line is open. Sundar Varadarajan – Deutsche Bank: :

Yes. It is a difficult question, and you are right. We could easily see a decrease in the amount of higher volume lower margin programs. But simultaneously, we’re also happy to adjust our profit where our cost structure simultaneously with the new revenue level. So you have got a lot of effects going on somewhat simultaneously. And so it is really difficult to sort through at this point. We also have a lot of ramp ups. You know one of the problems that we talked about last call is well our mold [ph] business looks kind of reasonably flat year-on-year. Alternatively, there is a lot of ramp downs in one region on one type of phone, and lot of ramp ups in another region with another type of phone. And while the revenue looks reasonably stable, it also comes with the cost. So I think between all those effects and the uncertain economy, we are not really – I do not think we can actually forecast what exactly what our margins look like, only to say that we just have to respond as rapidly as possible and it is our objective to start working this thing up to three points. Sundar Varadarajan – Deutsche Bank: Thanks. A couple of questions on the cash flow front, how should we think of CapEx for the next few quarters? And how much cash restructuring payments do you have from some of your older restructuring kind of initiatives?

So from a CapEx perspective, I can tell you what our internal targets and that as we ratchet the spending down, it will approximately be roughly 50% of depreciation, so approximately $50 million a quarter. Sundar Varadarajan – Deutsche Bank: Okay.

From a restructuring cash perspective, we have approximately $177 million left and about $71 million of that comes out in March. And then, it is about $30 million in June. And after that, it is roughly $10 million a quarter for a few quarters until it runs out. Sundar Varadarajan – Deutsche Bank: And just one more question on your AR securitization, could you just give us what the outstanding – I think you have three different AR facilities, what was the net balance, net of retained receivable, and net over retained interest at the end of the December quarter?

Yes. It is roughly $800 million. Sundar Varadarajan – Deutsche Bank: All right. Great, thanks.

Okay. So I think that’s it.

Yes, we’d like to thank everybody for participating in the call, and we look forward to talking to you in the next quarter.

Thanks very much.

Thank you for your participation in this conference call. You may disconnect.