Kevin Kessel - Vice President of Investor Relations Paul Read - Chief Financial Officer Michael M. McNamara - Chief Executive Officer and Director

Sherri Scribner - Deutsche Bank AG, Research Division Shawn M. Harrison - Longbow Research LLC Brian G. Alexander - Raymond James & Associates, Inc., Research Division Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division Amit Daryanani - RBC Capital Markets, LLC, Research Division Chelsea Shi - UBS Investment Bank, Research Division Jim Suva - Citigroup Inc, Research Division Osten Bernardez - Cross Research LLC Ruplu Bhattacharya

Good afternoon, and welcome to the Flextronics International Third Quarter Fiscal Year 2013 Earnings Conference Call. This call is being recorded. [Operator Instructions] At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Kevin Kessel, Flextronics' Vice President of Investor Relations. Sir, you may begin.

Thanks, Gabrielle, and thanks for joining Flextronics' conference call to discuss the results of our fiscal 2013 third quarter ended December 31, 2012. We have published slides for today's discussion that can be found on the Investor section of our website. With me today on our call is our Chief Financial Officer, Paul Read; and our Chief Executive Officer, Mike McNamara. Today's call is being webcast live and recorded. This call contains forward-looking statements, which are based on current expectations and assumptions that are subject to risks and uncertainties and actual results could differ materially. Such information is subject to change and we undertake no obligation to update you of any changes to these forward-looking statements. For a discussion of the risks and uncertainties, you can review our filings with the Securities and Exchange Commission, specifically our most recent annual and quarterly reports on Form 10-K and 10-Q and our current reports on Form 8-K. This call references non-GAAP financial measures. You can find them on the Investor Relations section of our website, along with the required reconciliation to most comparable GAAP financial measures. I will now turn the call over to our Chief Financial Officer, Paul Read. Paul?

Thank you, Kevin, and good afternoon. Please turn to Slide 3. We generated $6.1 billion in revenue for our fiscal 2013 third quarter ending December 31, 2012, which was above the midpoint of our guidance range of $5.8 billion to $6.2 billion. Revenue declined $1.35 billion or 18% year-over-year, reflecting the $1.1 billion reduction in revenues from the combined actions associated with winding down our assembly business with RIM and exiting the prior year December quarter of our ODM personal computer business. Our third quarter adjusted operating income was $146 million, declining 5% year-over-year and our GAAP operating income was $35 million, declining 75% year-over-year, reflecting the impacts from $103 million restructuring charge taken during the quarter, that I will expand on shortly. Adjusted net income for the third quarter was $148 million and included a net gain on our investments of approximately $26 million net of tax or $0.04 a share benefit, which is similar to last quarter and is primarily the result of the fair value adjustment related to our work day warrant. Adjusted earnings per diluted share for the third quarter was up 22% year-over-year, at $0.22, which included the $0.04 investment gain. Our adjusted EPS guidance was $0.18 to $0.22 for the third quarter and excluded any fair value adjustments related to the investment. Our GAAP EPS for the third quarter was $0.05, which is down 67% year-over-year and, again, reflects the impacts of the restructuring actions taken, which impacted our results by $0.15. Excluding this, our GAAP EPS for the third quarter was $0.20, which is up 33% year-over-year. Our diluted weighted average shares outstanding, or WASO, for the quarter was 669 million shares. This was a reduction of 52 million shares or 7% from the 721 million shares reported a year ago, reflecting the results of our share buyback program. In September, our Board of Directors issued a new authorization permitting the repurchase of the maximum limit of 10% of our outstanding shares. During the quarter, we repurchased 12.6 million shares for $74 million, which is approximately 2% of our outstanding shares. Please turn to Slide 4. Our integrated network solutions, or INS business group, totaled 45% of our sales during the quarter. Revenue was $2.7 billion in the quarter, which was up 1% on a sequential basis. It reflected a slight decline of 2% year-over-year. This quarterly revenue performance was better than our expectations of a mid-single-digit revenue decline. The December increase was primarily driven by better-than-expected growth in our service storage businesses, which grew mid-single digits, primarily due to increased demand for products supporting the data center and cloud computing. The remainder of the business was generally flat to slightly down as we continue to see weakness in telecom and networking. Industrial & Emerging Industries, or IEI, amounted to $937 million and comprised 15% of total sales. Revenue declined 6% on a sequential basis, which was in line with our expectations of a mid-single-digit revenue outlook. Our service offering with IEI is both diverse and extensive as we provide customer solutions using a global system of over 50 locations and multiple design centers. Recall that this offering operates in a very fragmented space as evidenced by the over 300 customers we serve. Though we have some new programs ramping out our appliances segment, many of the subsegments we serve displayed flat- to mid-single-digit sequential revenue decline. Our High Reliability Solutions Group is comprised of our medical, automotive and defense & aerospace businesses, and rose 21% year-over-year and increased 9% sequentially. The group comprised 12% of our total sales with quarterly revenue totaling $714 million, which established an all-time quarterly high for this group. It also marked the 12th consecutive quarter of double-digit year-over-year revenue growth for HRS. This performance was better than our December quarter stable revenue expectations, driven by continued strength in our automotive business, which benefited from the closing of the Saturn Electronics acquisition in December. Saturn further expands our capabilities and services for our automotive customers by providing us with leading wiring and high precision engineering solenoid solutions. Year-over-year, our automotive business has grown over 20% on the strength of new programs. On High Velocity Solutions, or HVS, quarterly revenue totaled $1.7 billion and comprised 28% of our total sales. HVS declined 4% sequentially, which was slightly lower than our expectations for stable revenue -- December quarter revenues, reflecting lower-than-anticipated demand for certain consumer electronic programs we were ramping. Breaking down our performance in HVS, we saw strong high single-digit sequential increases in our consumer and high volume computing business. But our consumer electronics business benefited from some new program ramps. Offsetting these gains was the expected substantial decrease in our mobile business, driven entirely by the ramp down in RIM. The December quarter marks the last quarter where revenues reflect meaningful business with RIM. Year-over-year, HVS was down substantially, declining 44% due almost entirely to the ramp down of our assembly business with RIM, coupled with the decline in our high volume computing business as a result of our targeted ODM PC exit that occurred in the December quarter last year. Please turn to Slide 5. Adjusted gross margin was 5.7%, which declined sequentially 30 basis points from last quarter, due mainly through operating losses sustained primarily by our components businesses. Our Printed Circuit Board fabrication business impacted our gross margin by over 25 basis points driven by underutilization as a result of lower demand. Adjusted operating income decreased to $146 million in our December quarter. Our adjusted operating margin declined to 2.4%. However, it expanded on a year-over-year basis by 40 basis points. Our adjusted operating margin was lower than the 2.8% midpoint of our margin guidance range due primarily to the underperformance I noted in our PCB business. Our adjusted operating margin also continued to be pressured by incremental program ramp costs as low manufacturing volumes for certain programs in the ramp phase resulted in underabsorption of costs. Our increasing SG&A expenses, which is driven by higher research and development expenses, incremental costs due to newly acquired operations and increased investments in our sales & account management infrastructure, contributed to a 15 basis point reduction in operating margin. Lastly, underabsorption of cost of some of our facilities due to reduced demand levels impacted our operating profit and has led us to carry out a series of restructuring actions, which I'll talk about later. We continue to generate healthy EBITDA. Our adjusted EBITDA was $282 million in the third quarter and totaled over $1.1 billion over the last 12 months. Adjusted EBITDA margin decreased to 4.6%, which is a direct correlation to my previous comments on operating income. Adjusted EPS from continuing operations of $0.22 was up 22% from $0.18 we reported last year, again, reflecting the $0.04 gain of our non-core investments of approximately $26 million. Please turn to Slide 6. Net interest & other expense amounted to $17.1 million of income in the quarter. After excluding the net impact of the $26 million gain from our non-core investments, the net interest and other expense was roughly flat to last quarter at approximately $10 million. Our performance in this line was slightly better than our $15 million to $20 million quarterly guidance due to favorable foreign exchange gain. For our March quarter, our range of $15 million to $20 million for quarterly net interest & other expense remains appropriate, but this excludes any fair value adjustments related to our warrants in Workday. The adjusted tax expense for the third quarter was $15 million, reflecting an adjusted tax rate of 9.2%, which falls within the 8% to 10% tax range we had estimated for the quarter. For our March quarter, our guidance is based on maintaining an effective tax rate range of 8% to 10%. Now turning to reconciliation between our GAAP and adjusted EPS. Stock-based compensation amounted to $8.5 million in the quarter, an intangible amortization of $6.1 million in the quarter. The 2 combined items represented a $0.02 a share impact to EPS. Additionally, this quarter, we recognized $103 million of pretax restructuring-related charges, which resulted in a $0.15 reduction of our GAAP EPS. I'll be providing further insight into these charges now. Please refer to the Investor section of our website for detailed reconciliation of our GAAP to non-GAAP financial measures. Please turn to Slide 7. Our recent revenue declines have resulted in significant underabsorption of costs at some of our facilities, and while we see our business growing throughout fiscal 2014 driven by a new booking, some of our facilities will not be benefiting from this growth. We're, therefore, taking swift action to rightsize and/or reduce our manufacturing footprint in order to position us for improved operational efficiency and profitability in the future. We expect to incur a combined total of restructuring charges in the range of $200 million to $225 million during the third and fourth quarters of fiscal 2013. This will consist of approximately $110 million to $125 million of charges -- of cash charges, and $90 million to $100 million of non-cash charges. In the December quarter, we recorded charges totaling $103 million, which consisted of $21 million of cash charges related to employee severance costs and $82 million of non-cash asset impairment costs. Approximately 95% of the Q3 restructuring costs were included in cost of sales. Upon completion of the restructuring activities, we believe the potential savings through reduced employee expenses and lowered operating costs will yield annualized savings of $140 million to $160 million. We estimate that we'll be realizing a full quarterly run rate of these savings by our second quarter of fiscal 2014. These cost reductions will enable us to achieve higher operating margins at lower revenue levels and position us for margin expansion in the future. Please turn to Slide 8. Our working capital management performance really stood out in a positive way this quarter. We saw a 7% reduction in our inventory balance, declining by over $200 million from $3.1 billion last quarter. While our quarterly revenue remained essentially flat, this drove a favorable improvement in our inventory turns to 7.7x, which equates to a favorable one-day reduction in our inventory days down to 48 days. Our cash conversion cycle reduced by 3 days sequentially to 24 days, which is lower than our 25- to 30-day range we target to manage our business at its current revenue mix level. This 3-day decrease was the result of the positive one-day impact from our inventory turns expansion, coupled with a 2-day improvement in our DSO to 42 days and our ability to hold out days payable constant at 66 days. Our strong working capital management is further evidenced as seen from the net working capital chart at the top right of this slide, as our net working capital as a percentage of sales reduced by 60 basis points to 6.6% and is within our targeted range of 6% to 8%. This 9% sequential reduction in net working capital was a meaningful contributor to cash flow generation this period. Our ROIC for the quarter was a healthy 20.7% and remains well above our weighted average cost of capital. Please turn to Slide 9. This quarter, we generated $478 million in cash flow from operations, which also marked our 8th consecutive quarter of positive operating cash flow generation and propelled our operating cash flow year-to-date to over $1 billion. Our net capital expenditures amounted to $83 million for the December quarter. As a result, we generated $395 million of free cash flow for the quarter. Strong performance pushed our year-to-date free cash flow generation to $678 million and our current expectation is to generate free cash flow in the range of $750 million to $800 million for the fiscal year, well above the targeted range of $500 million for this fiscal year. During the December quarter, we paid $180 million for acquisitions, which included Saturn, reflecting our continued M&A investment approach to support our high-margin, low-volume, high-mix business. During the quarter, we also repurchased $74 million of our ordinary shares. Year-to-date, we have spent approximately $208 million repurchasing and retiring our shares. Please turn to Slide 10. We ended the quarter with over $1.7 billion in cash, which is up $145 million sequentially. Our net debt decreased to $384 million and our debt to EBITDA level is at a very healthy 1.8x. Our impressive fee cash flow generation and balance sheet strength and flexibility enables us to take advantage of the many opportunities that exist in the markets we serve. We're very well positioned to support the business growth that is ahead of us. That concludes my comments, and I will now turn the call over to our CEO, Mike McNamara. Michael M. McNamara: Thanks, Paul. We are currently in a complicated transition period. As mentioned in the last earnings call and the Raymond James conference in December when we discussed the Google-Motorola partnership, the macroeconomic environment remains very soft for electronics hardware. The semiconductor industry association, or SIA, forecast for the start of 2012 was for 7.6% growth. The semiconductor industry ended the year with a negative growth rate of about 3.2%. These numbers would have been lower if not had been for the strong growth and volume from both Samsung and Apple. Our company mirrored this backdrop and we experienced revenue deterioration this fiscal year as our monthly forecasts rolled in. We anticipate the softness will continue in the near term and our March quarter guidance reflects this view. However, we believe that our March quarter will mark a revenue trough for us and we expect our business to rebound strongly over the remainder of calendar 2013. This strong growth is not expected to result from macroeconomic recovery but rather supported by a significant amount of new business bookings we have recorded throughout this year. Maybe the macro environment will improve as the SIA forecast for 2013 indicates a 4.5% growth, but we have no visibility of that rebound existing in our base business today. So we are fortunate to have such a strong pipeline of book-to-business to layer on top of our base business. We will use this trough period as an opportunity to drive targeted activity to significantly lean out our operating structure, resulting in improved operating efficiency, to position our company for the future. We will close down or downsize several factories, which will lower the revenue level required to achieve better margins. We expect the restructuring to be completed in the current March quarter and to be achieving the full annualized savings in the September quarter. As a result, we are here to get these optimization activities completed before our revenue begins to ramp up again. This fiscal year has been undoubtedly the biggest year for new program wins in our history and we believe we're in a great position to significantly grow our business despite a weak macroenvironment. At the same time, we're experiencing a significant ramp cost as we bring these new programs to volume production beginning in the June quarter. We acknowledge that the absorption of these incremental costs and investments is difficult to do in such a low revenue and profit period, but we believe these investments are necessary to position the company for strong revenue and operating profit growth going forward. We continue to focus our M&A investments in the areas of the business, which have longer product life cycles, less variability and higher margins. We acquired Saturn Electronics in December, which substantially increases our capabilities in the automotive and industrial segments. Saturn is expected to generate revenue in excess of $300 million per year, with operating margins at the upper end of the 5% to 7% target range of the HRS segment. During the quarter, we also announced an important multibillion partnership with Google-Motorola Mobility to streamline their supply chain operations and position Flextronics as a key supply chain partner for current and future hardware products within its ecosystem. Through this partnership, we expect to strengthen our manufacturing footprint and the capabilities in China and Brazil, and take responsibility for the supply chain and manufacturing operations of all their internally designed and manufactured smartphones and tablets. We expect to spend approximately $75 million for the related fixed assets and equipment necessary to run it. We also will buy inventory upon closing the transactions to support the work-in-process. We will know the total cash required at closing sometime in the June quarter when we expect the deal to close. We anticipate these programs to meet the EPS and operating income accretive for FY '14 and achieve our 20% ROIC target after a short ramp period. Operating margin for the program is expected to be within the target range for HVS. For more information on this partnership, please see our December 2012 press release and slides. Our pipeline of outsourcing opportunities remained strong. This quarter, we closed on some meaningful opportunities that centered on customers adopting transformational supply chain solutions that can improve their cost structure, increase supply chain velocity and reduce their supply chain risk. The best way to characterize the current business development environment is that we are extremely busy as we are selling and deploying some of the most complex solutions we have ever engaged in as a company. We believe our comprehensive suite of services and assets will aid us in converting our significant pipeline of opportunities in the FY '14 growth and beyond. A huge bright spot of the quarter was our free cash flow generation of $395 million, up from the very strong $342 million we've generated last quarter. Year-to-date, our free cash flow generation has been $678 million and as we previously mentioned, this includes the impact of additional CapEx spend this year required to fund the strong bookings we've had year-to-date, which is good news for growth and outlook next year. We are now significantly exceeding our free cash flow target of $500 million for fiscal 2013. Now turning to guidance on Slide 11. For our fourth quarter, revenue is expected to be in the range of $5 billion to $5.3 billion. Our March quarter revenue guidance reflects a decline of 13% to 18% or 16% at the midpoint. At the midpoint of our guiding range, we are forecasting INS to decline in the high-single digits and IEI to decline in the mid- to high-single digits, while the HVS forecast is expected to drop over 30% sequentially. HRS is targeting mid-single-digit growth, which includes the benefit of getting a full quarter of Saturn revenue. Our adjusted earnings per share guidance is $0.11 to $0.15 per share and is based on an estimated weighted average shares outstanding of $670 million. Our adjusted EPS guidance includes any fair value adjustments related to our warrants in Workday, as well as the restructuring and realignment expenses we detailed today. Quarterly GAAP earnings per diluted share are expected to be lower than the adjusted earnings per share guidance that I just provided by approximately $0.02 for intangible amortization expense and stock-based compensation expense, another $0.15 to $0.18 for the restructuring and realignment expenses covered today. With that, I'd like to open up the call for Q&A. [Operator Instructions] So operator, if you could, please open the line?

[Operator Instructions] Our first question comes from Sherri Scribner with Deutsche Bank. Sherri Scribner - Deutsche Bank AG, Research Division: I was hoping to get a little more detail on the restructuring plans that you announced today. Does the restructuring include closing any factories, just a whole factory, is it just parts of factories? And then looking at the charts in the slide deck, it looks like Europe is a big area where you're focused on. Maybe you could give us a little more detail there.

Yes, Sherri, so we'll definitely be closing factories. We'll be definitely rightsizing some factories. But the intention here is to get to a simpler operating structure, so that we can be more efficient in terms of running our footprint and also be able to take out some of the sites that are significantly underperforming, so it will have a pretty good return and a pretty good payback in terms of operating profit. So the answer is I would call it, relatively, a significant improvement, a significant optimization of our current system. And it will include closing factories as well as just adjusting headcount. Sherri Scribner - Deutsche Bank AG, Research Division: Okay. And then just thinking about the warrants that you have for Workday, that's been a big delta over the past 2 quarters. Can you give us some sense of what you expect that to be going forward, because I think you said that those warrants are not included in your guidance.

Yes, Sherri, this is Paul. That's correct. They're fairly valued as of the quarter end and so we can't predict any movement of course. And so any guidance we give would exclude anything that comes out of that as it did last quarter and the quarter before.

Our next question comes from Shawn Harrison with Longbow Research. Shawn M. Harrison - Longbow Research LLC: I was hoping that you could dissect the March quarter guidance, in particular, within HVS and in the other markets, what significantly changed from the update last quarter? And I believe if I remember correctly, you were anticipating HVS sales to maybe be down high-single, low-double digits and it's down 3x for the March quarter? Michael M. McNamara: Yes. There's a number of different issues associated with that quarter. I think part of the issue that we have in terms of being down 5% as opposed to what we're guiding down today is we had a higher pull rate than we anticipated in the December quarter. So I think that created a little bit more of a delta. I think part of it tends to be just a lot of what I'd consider to be normal restructuring -- normal changes from a seasonality standpoint. But I think if we look at it literally, across-the-board, we just see a relatively weak macro driving those numbers down. And what's typical is if we look at the last 3 years, our numbers were down about 12% on average. We actually originally guided 5%. We may have taken that guide and made it too light based on what we've historically seen. So in hindsight, we probably should have taken that number down a little bit more. But on average, we just see a more negative macroenvironment than what we're used to seeing in this quarter. Shawn M. Harrison - Longbow Research LLC: I guess as a follow-up to that, and I have a second follow-up, were there program losses within that? I mean, the mix of customers within HVS have changed significantly over the past few years. So macro is just kind of a tough one to use that to pinpoint the weakness. Michael M. McNamara: Yes. Well, the only thing that's significant in there is the delta between -- our RIM program is done. So that will be more than normal seasonality. I guess it won't be a seasonality issue. But in the December quarter, we went from roughly $100 million in RIM business to roughly 0 in Q4. That's the only significant change that we can see if we look across, I'm actually looking at a list of the changes. We see weakness in semi cap. We weakness in net working. We see weakness in appliance. So it's a pretty broad-based downside. And once again, once you take out some of the excess revenue that we see as a delta in December quarter, you take out the $100 million of RIM, it actually centers in and around the historical seasonal adjustment of about 12%. So maybe our 5% guide was a little bit too high. Shawn M. Harrison - Longbow Research LLC: Okay. And then just to the comment that the PCB business loss, if my math is right, you'd said 25 basis points would be about $15 million. How should we think about that business going forward given that the hope was to get it to breakeven and then make some money by the end of the year? How much of the restructuring is targeted towards that business? Do you reconsider keeping that business going forward? Michael M. McNamara: Yes, so without a doubt, that business has underperformed based on our expectations and what we think how the market performed. The PCB market itself was negative last year, but, nonetheless, we underperformed. Obviously, we're pretty disappointed in that. A significant amount of the restructuring that you see here is actually targeted at that business. So without doubt, we're going after it significantly more aggressively. We were disappointed in some of the new programs that we felt were coming on last year and didn't come on. So we're taking pretty significant and pretty aggressive actions to go rightsize that business. So once again, I think we misexecuted. And without doubt, we're going to fix it, and a lot of this restructuring charge, or a significant chunk of this restructuring charge is built around that. And as far as what we're going do with the business long-term, right now, we're focused at continuing to go fix it and like any business that we have, we'll always look at any kind of strategic options open to us. But for right now, we're just very, very focused at getting the business rightsized to what it needs in order to be able to execute. And also make the appropriate changes from a management standpoint to be able to get the execution up.

Our next question comes from Brian Alexander with Raymond James. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: Just a follow-up on Shawn's question. Could you just tell us what you're expecting Multek to achieve as far as operating losses in the March quarter? What's embedded in your outlook? I'm just trying to understand when we look at the operating margins for March, I think you're implying about 2.1% for your guidance and you had been at 3% for the last few quarters up until this quarter. How much of that 90-basis-point decline is coming from just the overall volume/macro weakness that you're talking about? And how much is due to incremental losses in the entire components portfolio, which I realize is really Multek and power? Michael M. McNamara: Yes. So March is a seasonally down quarter from a revenue standpoint from the PCB industry. So I think you should assume that it's more similar to the same as the December quarter. But I actually don't want to -- and we have a lot of charges that will be going into the December quarter to go work on that. I don't want to forecast what the operating margin is going to be or when the turnaround is because we've missed too many times. So I think what we need to do is get our execution, our house in order. We need to get it rightsized. We need to get the right team in place. And then I think we're going to come back and give you some operating margin targets. But to be specific about Q4, I think you have to assume another 25 basis points is going to be impacted in the Q4 time frame. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: And where is the power business at this point, Mike? Michael M. McNamara: Yes. The power business is in real good shape. We did, if you remember, we did a number of different restructuring activities between like March and September and that business has turnaround extremely well. In fact, we're investing pretty -- we're actually investing more in it from a design standpoint. You'll see some of the SG&A going up over the next couple of quarters and part of that is actually investment in the design capability there. We achieved record profitability in the December quarter, and we achieved record revenue so really that business seems to be very, very robust at this point. Very, very strong management team that we consider to be the exact perfect footprint. And so we've kind of crossed that off our list of the turnarounds we need. And I think right now we just need to focus on Multek now that, that business is -- we anticipate a run over to -- over our corporate average margins. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: And just a final one. So assuming that you achieved $150 million of annual savings, that's going to add about 60 or 70 basis points to margins. And so given that you're guiding the March quarter to 2.1%, adjusted for your restructuring actions, you would still be below 3%. And so I guess the question is, how should we think about your operating margin goals longer-term? And I realize when you close on the deal with Motorola, that's going to change things. So let's exclude that from the conversation for now and just give us a sense for how confident you are you can get the rest of the business back to 3% within a reasonable time frame? Michael M. McNamara: Yes, I think real confident. It's just not going to happen in the March quarter. If you look at our guidance like 5.1 to 5.2 in revenue and with that lower revenue, it's going to be a super headwind, because we're not -- it's not restructure down to $5.1 billion. I mean we're going to restructure to what we need in the go-forward business, not just the next 10 weeks here. So I think March is going be still a transitional period, if you will. This is when we expect to complete all the activities associated with the restructuring. And then we should be coming out with June and you'll start seeing those benefits and as we look at the numbers, we anticipate all those benefits to be fully implemented by the time we get to the September quarter. And so when you take that and you put it on top of some of the real strong bookings that we anticipate going forward, I mean we have a very, very strong growth story with -- on top of a very optimized cost structure. So to me, the only turnaround left is really to get Multek started. The activities we're taking are going to make a huge dent in that and outside of that, we just need to bring our revenue up. We'll have an optimized cost structure. It will better than what it is today. And as we lay our revenue on top of that going forward with some of the new program wins, we actually expect to see very strong growth in revenue and operating profit.

Our next question is from Matt Sheerin with Stifel, Nicolaus. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Could you give us a little bit more color on the pipeline of business. I know you've talked about a $2 billion number in the past. Has the pipeline changed at all because of the macro issue and because of the weak demand environment that you talk about? And at what point, what quarter during FY '14 should you expect to see some of the volumes ramp? Michael M. McNamara: Yes, so it's hard to say how much of that $2 billion is going to materialize. But it's still a very material part of what our go-forward expectations are. It's why we're investing in the business right now. Whether it's $2 billion or whether it's $1.5 billion because of macro, I don't know, but it's certainly -- I can't predict the future for our customer forecast. But for sure, we're driving towards that number. We are buying capital for that business. We're putting in expensive from an operating -- from our key operating guys to bring on some of these programs. So we anticipate to be pretty real. We expect them to start in the June quarter, and we expect almost a linear ramp as we go through the balance of the year. So we still think it's robust, and we're gearing up for it. We're spending money on it. We have our operating teams actually increasing in scale and capability. And they're sized to be able to handle what's coming. So we're real busy here. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Could remind us of what are the key sectors? I know that it's fairly broad based but, specifically, what areas do you see the biggest growth coming from the pipeline? Michael M. McNamara: Yes. We'll see, it's kind of broad-based. Obviously, the biggest one is going to be the Google-Motorola. So that's, obviously, pretty obvious. That's obvious. We'll see other HVS programs go in there. We'll IEI programs going in there. We'll see incremental for INS and probably most of what you'll see for HRS will be the full ramp of the Saturn business -- not the ramp, but the full revenue of the Saturn business as we took that on in December and that will be a full ramp. So between those -- it's actually pretty broad-based. I wish I can give you more color. We actually talked a little about it before. I wish I could give you a little bit more color on what programs those are and where they're going in and what businesses they are, but it's, we're just not at liberty to communicate in detail. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And just a quick follow on the PCB business and the Multek, where are the areas where you're seeing issues on-demand? I know you do high-end and also High Velocity in the handset side. I know you've been looking at expanding on the HDI side. So where are you seeing the issues and where are you cutting the business? Michael M. McNamara: Yes. So I think on the HDI side, I think we missed a few programs last year. And missing some of the programs is problematic because some of the programs tend to be pretty dominant in the industry and consuming a huge amount of the capacity. So I think we just didn't get on some key programs. So I'd call that an underutilization of the equipment that's significant and not necessarily macro-related. And I think the other part, the other half of our business, roughly, is on the kind of the high-end, the datacom, telecom and all that and that is absolutely a weak macro. We have a very, very strong position in those businesses, a very broad customer base, highly diversified business and we've just been disappointed with the macro on that. And you see that same characteristics reflected in our EMS business, as well on the INS. So it's just is intended to be weak all year. And the PCB business has been nothing different. So it's macro on the high-end business and it's underutilization on the HDI business.

Our next question comes from Amit Daryanani from RBC capital. Amit Daryanani - RBC Capital Markets, LLC, Research Division: Two questions for me. One, the $140 million to $160 million of restructuring savings that you guys expect, could you maybe just talk about when does it start to occur and when do you see the annualized number? And is that a gross number or is that a net number, because obviously you probably have to share some of those savings with your customers as you move their product manufacturing from one side to the other, right?

Amit, it's Paul. So this is a net number. These are our internal cost structuring savings from reducing our footprint and optimizing some of the parts of it. We expect to keep all that. And we'll see some restructuring benefit during the March quarter and then June and full benefit in the September quarter. So we'll take these charges over 2 quarters, December and March, roughly $200 million. And then we'll see the benefits through -- up until September will be a full run rate. Amit Daryanani - RBC Capital Markets, LLC, Research Division: Got it. That's helpful. And then just secondly, I think the last time around you guys talked about hopefully providing a little bit more color on the Motorola Mobility deal in terms of the revenue and margin, just the metrics on how that impacts the P&L. Are you guys in the position to give some more information around that or is that going to happen at a later date?

Yes, we really don't have an update for you. The teams are working diligently on everything to integrate and execute. We're targeting the June quarter. It's really the regulatory process that's actually one of the long poles in the tent, as it were, and we're working hard on getting that as soon as possible. But at the June quarter, we don't really have any other sizing for you at this stage, I'm sorry. Amit Daryanani - RBC Capital Markets, LLC, Research Division: Fair enough. And just finally, on the power side, I know Mike you're talking about how the business is doing fairly well from that -- from the power component side. If I'm not mistaken, I think you have a lot of mobility-centric exposure in that segment and that's supposed to be down severely in the March quarter, down 20%, 25% I think. Does that impact the margin profile of the Power segment in the March quarter? And is that having an impact on the margin declines as well? Michael M. McNamara: Yes. So we do have a lot of mobility business. And without doubt, the revenue will be down quite a bit, but very consistent with traditional -- with typical mobility downside that you see in the March quarter. So it'll be down. It will definitely pressure margins. So we will have lower margins. So I think that's a characteristics of that business like whatever. So I think we're just going to see lower margins and I think they rebound pretty nicely once you start getting into the December quarter and actually think that's a profile that we're going to see in a consistent basis. So we'll always see lower revenue and we'll always see lower margins in the March quarter.

Our next question comes from Amitabh Passi with UBS. Chelsea Shi - UBS Investment Bank, Research Division: This is Chelsea Shi on behalf of Amitabh. So just a question about the integrated network solutions. Obviously, December quarter came in slightly better and you said it's mostly the strength of storage and servers. So just curious getting into the March quarter, do you see the trends continue or there's some subtle changes about the subsegment trends? And what is the B2B to date if we can get a sense about that?

Yes, we see a fairly broad-based decline in the March quarter. And we said it would decline in the high single-digits. And that's generally, when we look back at the trend over the past 3 years, it's generally a little higher as a decline that is normal. But I think that it's reflecting kind of the subsegments that we're in, with net working being down. We do expect service storage, which was a bright spot for us in December, to actually be down significantly in the March quarter, and communications as well down. So no, I don't think there are any subsegments that are going to be trending up for us sequentially in March. There are certainly some customers that are unique, that are trending up, but most of the subsegments in the customers are trending down in the March quarter. Chelsea Shi - UBS Investment Bank, Research Division: All right, got you. And a follow-up on the capital allocation, given the Motorola deal, will be closed in the fiscal '14. So going forward, do you see that the repurchase will continue or there'll be more, like say, focus on the closing of the Motorola deal and maybe other M&As. So just trying to get a sense about any significant change of the strategy of allocating cash going forward?

Yes. That's a good question. Our strong free cash flow that you've seen here, which will be roughly $750 million to $800 million for the full fiscal year, is kind of the best free cash flow we've ever had, really. And next year, as well, will be significant for us. What that's doing for us is given us all this financial flexibility to address the opportunities that are out there that we see. We've had a tremendous year for bookings, and we'll see that come on next year, irrespective of any macro trends. There'll be some strong growth for us. Always our first priority for the cash is to support that kind of growth, the organic growth that we have and the bookings that we put in. So we will, as a first priority, invest in the working capital and the fixed assets needed to support this growth. And Motorola falls into that category, but so do a number of other programs and we've won with fairly significant fall into that category. Outside of that, we continue to target the M&A space for the low-volume, high-mix specialty niche opportunities of the day, like the Saturn Electronics, for example. We would anticipate doing some more of that next year. And then as you've seen us, we've been in the market with a share repurchase at these prices and we've enjoyed the accretion. I think we've taken out about 23% of the float over the last few years and it's really helped EPS growth. And we'll continue to focus on that as well. But that's the priorities we look at. We've always said that's the priorities. Motorola is not really significant enough in terms of relative size to the size of our free cash flow and excess cash that we have to derail that, but we're looking to make investments in other areas outside of all the other programs that we have as well. So we look forward to a very strong year and use of cash next year.

Our next question comes from Jim Suva with Citi. Jim Suva - Citigroup Inc, Research Division: Paul and Mike, you guys have been in this business a very long time, a lot of experience and history there, Flextronics in the industry, is there anything different about this cycle different than prior cycles? For example, normally in a downturn or a low situation, you expect some customers to restructure and outsource some of their businesses. Are you seeing anything different this cycle? We've heard some of your competitors talk about some in sourcing trends that are a little bit unsettling and also some share shifts and some more aggressive pricing. So if you can just let us know, anything different about this cycle versus prior cycles? And if so, what those are? Michael M. McNamara: Yes. I think about a couple of different pieces that are really, really important. One is if you look at the mobility, the entire mobility business, it's being dominated really by a duopoly, which is called Apple and Samsung. And I think that ends up changing the dynamics of the remaining available market. And it's your ability to have consistent earnings or consistent predictable revenue stream from that non-duopoly kind of business. So it's kind of like you're either in or you're out. And I think that changes in the dynamics of the High Velocity business pretty significantly and it's obviously carried all the way across into notebooks, in terms of the notebook volume, and even desktop volumes, if think about the ecosystem shift that you had in terms of going into the iPads and that. So I think that's one major change. I think the other major change is if you look at the more of the high-end of the business, call it, the INS kind of business, the datacom, the telecom, it's a difficult market environment. If you look at those companies, they have -- they might be having some sales growth. But if they're having sales growth, it's usually built around services and software. So the hardware growth within that whole segment has been challenging. So it ends up challenging the EMS players to be able to participate in it and grow with the business. So I think those are very significant shifts and very significant changes that we have to go navigate through. Our focus on being able to deal with that is to try to think about how we create transformational deals with customers, how do we really be able to take advantage of the fact that the demand is becoming more distributed, that companies are going to want to move their demand into places that might be closer to the marketplaces, to take advantage of the fast product lifecycles and really be able to use our kind of worldwide assets to then go compete rather than just trying to pick up some EMS business. But I think those are the real big ecosystem shifts that are -- will challenge our business. And our response to it is you don't need to be there to try to figure out how to create more value on the entire supply chain rather than focusing on the EMS business. And as it relates to your question about in sourcing, if a customer has internal capacity and it's low and it's not being utilized for whatever reason, their first inclination is to go insource it. And their second inclination is to get rid of it later. But without a doubt, the first inclination of a customer is to go insource. So if we're doing business with customers that have internal capacity, very often it's going to be a challenge when their revenue goes down. But almost always that creates a painful situation for the customer when the revenue goes down and almost always, they come back and look for opportunities to outsource everything because they want to not get burned again and they want to move to a variable manufacturing model. So in short-term, it's negative for us and long-term, it's positive.

And our next question comes from Osten Bernardez with Cross Research. Osten Bernardez - Cross Research LLC: To begin, to what extent, when I think of the Multek performance and the prior investments you made especially in your every layer -- your ELIC, PCBs and now you're saying that you need to sort of rethink how you address that business, to what extent can you turn that business around so that you are more in favor with your targeted customers? Michael M. McNamara: Yes, so first of all, that business is growing rapidly. So the ELIC business is a function of smartphones and tablets. Think about that in the simplest terms. Even some of the more sophisticated laptops are actually going to be using -- are using ELIC. So it's actually a significantly growing market. So that capacity will be used. We would like to see it get used last year. We'll actually see it gets used this coming year, we anticipate. But it's going to be built on the strength of smartphones continuing to have more and more market share in the mobile business and more and more iPads being developed and more and more notebooks that actually use that technology. So it's kind of a timing issue for us more than it is whether or not we're going to use that capacity. So we're actually optimistic about where the industry is going. And so we think the -- so that part of it is going to be we're not going to have a problem filling it up. Osten Bernardez - Cross Research LLC: So in what areas of your PCB business and what end markets -- what were the end markets in which you did not win this business? Michael M. McNamara: Well, that market, in terms of last year, we needed to go bring on and ramp-up, we've got other programs that we've won that we'll bringing up in the current year. So that was challenge #1. Challenge #2 is you just have general weakness, general macro weakness, across the whole telecom, datacom industry in terms of total hardware sales. And they have a very, very broad cross-section in that marketplace and just -- it was weak. And that created some challenges for us on the revenue side. Osten Bernardez - Cross Research LLC: Okay. So it seems like what you're seeing, I'm just trying to understand the timing around the restructuring, because others in the supply chain was sort of -- I have seen some signs of stability in recent trends and the economic pressures that you've noted have been around for a few quarters, if not a little longer. When you consider -- when you look back at the restructuring that you've already taken and plan to take, are these moves that you should've perhaps made earlier you think, looking back? Michael M. McNamara: Yes. In hindsight, we'd rather have done it 6 months ago. So you're exactly correct. These trends are not new. The telecom business was weak. I talked a little bit about the semiconductor industry. When they started the year, they were at 7% growth. When we finished the actual, it was minus 3. So it was a continuous slide all year. We actually didn't anticipate that. We saw it. I think we've talked about it in this call a few times, that we just continually seem to have a little bit of a macro slide. You can see that in the semiconductor industry. We needed to be -- we will take that 3% and go separate out that negative 3% growth from the semiconductor and you separate out Samsung and Apple and you have a very significant negative growth number. So if you're not on the right programs within that duopoly, I think you have a problem. In my view we didn't execute to be able, to be on the right programs in that duopoly and as a result it created a huge challenge for us in ELIC. That being said, I talked about the industry and where you would expect it to go over the coming quarters. And we feel we'll be able to participate as there are more and more smartphones and more and more laptops and notebooks using this technology. So yes, we underperformed. So we didn't anticipate underperforming. We didn't anticipate the continuous slide in the macro and we didn't anticipate, like I said, not being on those program. So with all that, would I rather have done more restructuring last year? Absolutely.

Our next question comes from Wamsi Mohan with Bank of America.

It's actually Ruplu filling in for Wamsi today. Just wanted to start by asking you, could you give us some more color on the current operating margin of the 4 segments versus their long-term targets, where are they operating at now?

We don't really break them out. In kind of the May Analyst Day, we give you a sizing of those things, but we don't break them out on a quarterly basis. I think if I was to do some kind of under/overs compared to our targets, I would say that we're seeing margin compression in our Industrial & Emerging Industry business, which is leading to some of this restructuring. We have quite a few facilities that are under loaded then from a revenue perspective. And we don't see that coming back next year, so we're taking actions against that. That's having some margin pressure in that area below the average that we would expect to see in that business. The High Velocity business, in general, doing very well. I think we have 1 or 2 areas that are putting some pressure on that and it's bringing the overall margin down a little bit. But I think the restructuring is going to fix that pretty soon. And so I think pretty happy with that going forward. Apart from that, the High Reliability business is doing exceptionally well, particularly with the addition of the Saturn business. And the INS business is actually doing as expected in the range that we would want to see. So I think the areas for us are, apart from the components business we just talked about in terms of printed circuit board, the IEI business and some of the HVS programs.

Okay, Paul. And just given the incremental restructuring that you're doing, just looking at the long-term objective. You said 3.5% of margin requires $6.5 billion per quarter. Can we take it that you can get to that at a lower potential revenue than $6.5 billion?

Well, the overall aim of the restructuring was to improve the profitability at lower revenue levels. Ahead of all the program ramps that we've got coming next year. And I think that given the size of this and the quick payback, that we will achieve that mid-September quarter is kind of where we target the full run rate for that. The $6.6 billion, I think we actually said, 3.5%, is a feature of the mix, the 70-30 mix. So if it's not 70-30, it's 60-40, then we'll get a different margin profile just below that. If it's 80-20 then we're going to get a margin profile above that. And our focus here is to perhaps to attract business for us that has a really good return on capital on a risk-adjusted basis, high-quality customers and in markets that are growing. And so given our size, sometimes you're going to have some lumpy growth like you'll see with the Motorola business, it's quite a sizable deal. But we are particularly more interested in being in these ecosystems that are going to give us substantial growth and capabilities going forward. So that's why we make those investments. Michael M. McNamara: Just so I can just put a little bit more color on this restructuring and make sure I put it into context. We have what we consider to be a lower revenue base than we ever anticipated and we have a Multek problem. So we have 2 issues. So we talked about the about the Multek problem. We're working on it. We're restructuring significantly. We're going to use dollars to go fix that. And I think the industry is going to enable us to come out of this positively. The second problem we have is we just have a lower revenue base. If you remember, we originally were targeting a $6.6 billion run rate. It's not happening. We said at the last call, if it doesn't happen then we're going to take activity, so that we can hit our operating margin targets at lower levels. So we are doing that now and being aggressive about it, to simplify our structure and to be able to optimize our business before we have new revenue coming in. That new revenue will be able hide a lot of inefficiencies in our company and what we're going to do is we're going to take the steps now to get rid of those inefficiencies, to streamline our core base business and then allow the new business to layer on top of an efficient operating system. And that's the period we're in right now, that's why it's complicated. I know it kind of follows through this transition and we expect to have a significant outcome at the end of it. We actually expect that revenue level will be 30% to 40% higher by the end of the year, by the end of the calendar year, than it is this quarter. So that's a significant increase in activity that's coming at us. We're investing in those activities but at the same time, we're going to restructure the base operations to make sure it's as efficient as it possibly can prior to going into that new business and that new [indiscernible]. So that we can have a very, very unoptimized cost structure, a simplified operating system and really be able to then overachieve in terms of the operating margins and the operating profit dollars and the revenue.

Just a last one for me. For RIM, is that completely out after this quarter? Or are you doing some aftermarket services for them as well? Michael M. McNamara: Yes, we're still doing some work for RIM, but it's predominantly, any of the assembly business is run out as of the December quarter. So we'll still do some printed circuit boards and power and services and that sort of thing. So they still remain a customer, just the assembly business will be done by the December quarter.

Our final question comes from Shawn Harrison with Longbow Research. Shawn M. Harrison - Longbow Research LLC: I'll be very a brief. What is the SG&A expectation for the March quarter?

Yes, we expect that to rise a little bit again in the range of $205 million to $215 million and that should be the level going forward that we see anyway in future quarters. We have had some ramp up as you saw there. We guided $190 million, we came in at $200 million. We're kind of guiding midpoint, $210 million. I think this reflects a lot of the investments that we're making as well to support this growth. We're going to hire a lot of people, account management, global account management, business development people and we will also add some new sites, of course, coming onstream, which bring their own SG&A, whether it's the Saturn acquisition or the Motorola factories that have allowed to the SG&A dollar number. I will make investments in IT and HR and other places. So we're just getting ready for supporting the big growth. Shawn M. Harrison - Longbow Research LLC: In the $140 million, $160 million of saves, how is that split between COGS and SG&A, Paul?

It's really 95% COGS. One thing to note about that, you'll see how gross margins grow up over 6% in the March quarter. Even though the midpoint of the guidance on operating margin is about 2.3%, you'll see gross margins over 6%. And that's largely as a result of the 95% payback of the restructuring in cost of sales. That's where we see it really help being fast payback on the restructuring. All right. Thank you very much for joining us on our call today. If you'd like to access a replay of this call or obtain a transcript, you'll be able to do so on the Investor Relations section of our website. In addition, I just wanted to give a verbal save-the-date for our Investor and Analyst Day for this upcoming -- for this year 2013. It will happen on Thursday, May 30, in New York City at the same location we had it at last year, which was Cipriani. We will be sending out an e-mail with further details next week. This concludes our conference call.

That concludes this call. Thank you very much for your participation. You may disconnect at this time.