Donald W. Duda - Director, President & CEO Douglas A. Koman - VP of Corporate Finance & CFO

Steven Dyer - Craig-Hallum Capital Group LLC Joe Vruwink - Robert W. Baird & Co. Jimmy Baker - B. Riley & Co. David Kalis - Calamos

Welcome to the Methode Electronics Fiscal 2014 Third Quarter Earnings Conference Call. At this time, all participants are in a listen only-mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded. This conference call does contain certain forward-looking statements, which reflect Management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are subject to the Safe Harbor protection provided under the securities laws. Methode undertakes no duty to update any forward-looking statements to conform the statements to actual results or changes in Methode’s expectations on a quarterly basis or otherwise. The forward-looking statements in this conference call involve a number of risks and uncertainties. The factors that could cause these actual results to differ materially from our expectations are detailed in Methode’s Securities and Exchange Commission, such as our annual and quarterly reports. Such factors may include, without limitations, the following: dependence on a small number of large customers, including two large automotive customers; dependence on the automotive, appliance, computer and communications industries; customary risks related to conducting global operations; timing, quality and cost of new program launches; ability to avoid design or manufacturing defects; ability to compete effectively; dependence on the availability and price of raw materials; dependence on our supply chain; downturns in the automotive industry or the bankruptcy of certain automotive customers; ability to keep pace with rapid technological changes; ability to protect our intellectual property; ability to withstand price pressure; location of a significant amount of cash outside of the U.S.; the recognition of goodwill impairment and long-lived asset charges; currency fluctuations; ability to successfully benefit from acquisitions and divestitures; ability to withstand business interruptions; income tax rate fluctuations; a breach of our information technology systems; and the cost of implementation of SEC disclosure and reporting requirements regarding conflict materials. It is now my pleasure to introduce your host, Don Duda, President and Chief Executive Officer for Methode Electronics. Donald W. Duda: Thank you, Stacy, and good morning, everyone. Thank you for joining us today for our fiscal 2014 third quarter financial results conference call. I'm joined today by Doug Koman, Chief Financial Officer; and Ron Tsoumas, Controller. Both Doug and I have comments, and afterwards, we will be pleased to take your questions. We were very pleased this morning to report that third quarter sales grew 54% to nearly $190 million, and nine months sales grew 48% to approximately $548 million over last year. Sales in both periods were driven by the General Motors center console program as well as new product launches in our European Automotive and North American Power Products operations, as well as strong appliance sales. Also of note, consolidated SG&A as a percentage of revenues decreased to 11.6% from 12.9% in last year’s third quarter and for the nine months dropped to 11.1% from 13% in fiscal 2013. We were pleased with the considerable leverage realized given the substantial rise in sales. Third quarter net income grew over fourfold to $14.6 million or $0.38 per share. As a reminder, in the second quarter of last year we recorded a $20 million litigation settlement which substantially benefited our profitability. Excluding the impact of that settlement and its effect on income tax expense, nine months net income also grew greater than fourfold to $48 million or $1.26 per share. While higher sales were the largest contributor to year-over-year improvement in both periods, increased manufacturing efficiencies due to the vertical integration of the paint and laser etch process, and favorable raw material pricing and a favorable product mix in the Power Products segment also contributed to the growth in earnings. Third quarter and nine months net income was negatively impacted by increased bonus, legal, travel and product development expenses. The nine month period was also affected by the absence of a customer bankruptcy accrual reversal in the year-ago second quarter. Additionally, we incurred increased compensation expense of $1.6 million or $0.04 per share during the third quarter and $4.6 million in the first nine months related to our long-term incentive program. The long-term incentive awards, which are based on the Company's performance in fiscal 2015 will become payable if performance under the plan meets or exceeds targeted performance. This adjustment reflects the Company's estimates of fiscal 2015 performance. Third quarter consolidated gross margins improved to 20.3% compared to 16.3% last year. For the nine months consolidated gross margins improved to 20.8% from 17.2% in the same period of fiscal 2013. Again, the largest contributor to improvement in margins was increased sales, but margins were also positively impacted by the vertical integration, operational improvements in the Power Products segment, as well as lower scrap on the Ford center console and General Motors K2 programs. I’d like to spend a minute now discussing our results in the third quarter in comparison to the second quarter. While third quarter sales were only about $1 million lower than in the second quarter profitability was $0.13 lower in the third quarter. As we’ve discussed in the past, our third quarter typically includes about one week without sales due to the holidays. However, we still incur operational and overhead expenses during that week which reduces our margins and impacts profitability. In other words, the second quarter consists of 13 weeks and the third quarter was 14 weeks in length, that extra week having no sales due to the holidays. On a consolidated basis, one week of expenses without sales represents about 0.7% of gross margin. Adding that back to the third quarter reported margins, the consolidated gross margin would have been 21% in the third quarter on par with our second quarter gross margins. The holiday shutdown also impact SG&A increasing that measure as a percentage of sales. Combined, the holiday shutdown affected EPS on a sequential basis approximately $0.05 per share. Additionally, the Interconnect and Power Products segments experienced both lower sales of $3.7 million combined as well as an unfavorable product mix. That together costs about $0.05 per share in EPS in the third quarter. Based on current projections we anticipate that fourth quarter revenues and margins in the segments will be similar to the third quarter, down sequentially from the second quarter basically flat with the third quarter. The balance of the difference in earnings between second and third quarters is the higher legal and professional services expense of about $0.03 per share. Moving to guidance as we announced this morning, we’ve reiterated fiscal 2014 sales guidance in the range of $720 million to $750 million and earnings per share guidance in the range of a $1.70 to $1.90. As we’ve said in the past, the low end of the guidance reflects our concern regarding stabilization of the European economy as well as softening in our Interconnect and Power Products segments and possible production delays of new products. The high-end of the range anticipates stabilization in Europe and higher domestic automotive revenues. Based on this guidance range, our fiscal 2014 operating margin target is in the range of 9.5% to 10.5% which would be a substantial improvement over the 3.7% achieved in fiscal 2013, excluding the litigation settlement. Now turning to a review of our individual segments. Compared to last year, Automotive segment net sales increased nearly 74% in the third quarter and 59% in the nine month period, due mainly to production of the General Motors K2 program. Additionally, new program launches in Europe and higher sales in Asia also contributed to the revenue growth. Third quarter Automotive gross margins improved to 19.3% from 12.5% last year and nine months gross margins increased to 19% from 13.6% year-over-year. In both periods, increased manufacturing efficiencies driven by higher sales as well as the benefit of the vertical integration produced improved margins. Selling, administrative costs as a percent of sales dropped year-over-year to 5.4% from 8.1% in the third quarter and in the nine months dropped to 5.6% from 8.1%. I’m pleased to report that we began production on the GM K2 SUV center console in late January. Initial production has gone well and feedback from the automaker is very positive. This unit was somewhat more of a challenge as it involves a moveable touchscreen. This is accomplished by a new articulation mechanism which once activated provides a customer with a hidden lockable storage unit, which includes USB port for charging a phone or other electronic devices. I’m also very pleased to announce that Methode was awarded production of a battery pack bus bar for Tesla Motors, of their Model S vehicle. Production has begun and we anticipate annual revenue in fiscal 2015 in the $4 million range and a program life of approximately four years. Additionally, we were awarded a sensor as part of an active roll stabilization system to be implemented on certain BMW automobiles. The system utilizes Methode’s patented magnetoelastic technology and is essentially an active roll bar with an integrated sensor and electric drive mechanism. Methode is Tier 2 to [Shuffler] [ph] or SAG in Germany. This electromechanical system is more responsive and energy efficient than the current hydraulic systems on the market. While revenues are approximately $2 million per year, SAG plans to introduce the system to additional OEMs and it is anticipated this system will find its way into mid class vehicle platforms which typically carry higher volumes as well as SUVs which are generally more susceptible to roll. The first system will launch in our fiscal 2016. Finally, in Automotive we were awarded additional hidden switch programs in our European operations for average annual revenue of $8 million beginning in our fiscal 2015. Moving to Interconnect, sales increased over 28% in the third quarter and over 32% in the first nine months compared to last year, attributable mainly to improved appliance sales from our two largest customers. Additionally, Radio Remote Control sales were higher in both the third quarter and nine months year-over-year. Compared to last year, Interconnect's gross margins fell to 24.1% from 25% in the third quarter and 25.5% from 26.6% in the nine month period due to manufacturing efficiencies from sales mix. Increased laundry sales, which have a higher material content than other products in the segment had the biggest impact on the reduced margins. For margins to improve in the segment, we would need improved sales in Hetronic's European industrial business, which we’re diligently working towards. We did, however, substantially leverage selling and administrative costs, which contributed to nearly a 38% increase in Interconnect's income from operations in the third quarter and a 53% improvement in the first nine months. Moving to Power Products. Year-over-year sales improved nearly 41% in the third quarter and 44% in the first nine months. The launch of a significant program for datacom customer in the U.S., along with bus bars for the Nissan Leaf battery pack and a high-current bypass switch, both in Europe, drove the growth over last year. Year-over-year Power Products gross margins increased in the third quarter to 18.9% from 16.4% last year and in the first nine months to 22.1% from 15%. This improvement was driven by higher sales, a favorable product mix, as well as lower raw material and lower new product development costs in both periods. Sequentially, however, third quarter gross margins fell compared to the second quarter. This was mainly due to lower sales to our big data customer, which carries a higher gross margin and also increased sales of lower margin products in the quarter. Now, I’ll turn the call over to Doug, who will give further details on our financial results. Douglas A. Koman: Thanks, Don. Good morning, everyone. As Don mentioned, in the third quarter we had an expense for the tandem cash award of our portion of our long-term incentive program about $1.6 million. And again this is a variable accounting treatment that we get and that was the result of the increase in our stock from -- at the end of the third quarter compared to the end of the second quarter. So, that needs to be recognized going forward as a variable expense and will have an impact on our quarterly results. In the nine month period, we spent $23.5 million for capital expenditures. This include the additional capital needed to launch the SUV portion of K2. For the full-year, we still expect capital spending to be between $25 million and $30 million. Depreciation and amortization expense in the nine month period was $17.3 million. For the fiscal year, we expect that to be in the $23 million to $25 million range as we began to depreciate the SUV capital assets that are now placed in service. The full-year effective tax rate is 7.9%. This is in line with our previous projections and reflects the benefit of the net operating loss carryforward in the U.S investment tax credit utilization in Malta and a 25% tax rate on China income. The tax rate does not include any adjustments to valuation allowances, which may result from changes in tax and circumstances. Lastly, through nine months free cash flow was about $41.7 million and for the full-year we still expect free cash flow to be between $65 million and $75 million through nine months, EBITDA was $69.8 million and for the full-year we expect EBITDA to be between $93 million and $103 million. And again, I think we just want to mention that the Board did increase the quarterly dividend that will be payable on May 2nd, record date is April 18th. The increase was from $0.07 to $0.09, that’s about a 29% increase. Don, that’s my comments. Donald W. Duda: Thank you. Stacy, we’re ready for questions.

Thank you. We will be now conducting a question-and-answer session. (Operator Instructions) Our first question comes from Steve Dyer with Craig-Hallum. Please proceed. Steven Dyer - Craig-Hallum Capital Group LLC: Good morning, gentlemen. Donald W. Duda: Good morning, Steve. Steven Dyer - Craig-Hallum Capital Group LLC: I guess I will start with the gross margins you had talked about that and there was a variety of things which you attributed that to. The torque sensor platform or the torque sensor production in the quarter was one of the things which you attributed it to. My understanding was that we weren’t going to see any real material revenue on that for a while, is that just -- is that sort of the R&D costs like you had to front load with the K2 platform or is there something else there? Donald W. Duda: Okay. You’re referring to the other segment? Steven Dyer - Craig-Hallum Capital Group LLC: Yes. Yep. I’m just trying to get a sense for if those were development costs or is that involved with torque sensor production which might…? Donald W. Duda: We moved all of the torque sensor production, because it was mainly Automotive to Europe, our plant in Malta, we felt that they were more suited to handle that production. So the revenues are recorded there and under European Automotive. The expense you see under other is the R&D group that we have here at corporate. So that -- you’re correct, it is our development, but the revenue generation would now be seen in our European operations under Automotive because the products are automotive based. The new program that we announced, that was in the works because of customer confidentiality, we couldn’t announce anything about it until our customer had announced it and both SAG and BMW have talked about it. Steven Dyer - Craig-Hallum Capital Group LLC: And I missed the run rate on that Don from a revenue perspective? Donald W. Duda: It’s well – it’s $2 million a year, but it’s a – it’s on small platforms than what we expect to happen is that it will become really the standard versus the hydraulic units that are out there now. And there is information out on the web on that, not on our site, but under the two, Tier 1 and the OEM. Steven Dyer - Craig-Hallum Capital Group LLC: Okay. Kind of going back to gross margins and how we should think about those going forward, my understanding has always been when you start shipping capacitive touch into the K2 program that that boost your gross margins by quite a bit, is that what you’re shipping on the SUV portion and if so, or if not frankly when will that -- would you anticipate that will start shipping on the truck version? Donald W. Duda: We are not shipping any capacitive touch yet. So we’ve not seen that effect. I can’t really say exactly when we will -- actually when the customer will start, but we anticipate that it is mid 2015. Steven Dyer - Craig-Hallum Capital Group LLC: Mid fiscal 2015 or calendar…? Donald W. Duda: Yes. Yes, I’m sorry. Steven Dyer - Craig-Hallum Capital Group LLC: Okay. Donald W. Duda: And again that’s an approximation because we really can’t say as to when the customer will do the change. Steven Dyer - Craig-Hallum Capital Group LLC: Okay. So, the gross margin overall is still pretty substantially below where you guys have the target for each of your three areas in your slide presentation. Do you sort of view your fiscal Q3 and Q4 as a bit of an anomaly due to mix or should we see that resumption of gross margin expansion into fiscal ’15 or has something changed there? Donald W. Duda: No -- well one of the comment in our prepared remarks about Interconnect and Power, the -- first of all auto pretty much was where we expected it to be, actually higher in Europe than we originally thought. K2 came in where we thought it would and even Asia was up a bit. So auto we were -- for a heavy holiday quarter, auto did slightly better than we expected. We did have a mix change and then lower sales in Interconnect and Power and very unpredictable business we’ve about a quarter’s visibility in that and as I mentioned our big data customer, sales then were down that was of higher margins. I’m not exaggerating when I say that that customer could very well call tomorrow and say I need product and they would expect us to ship it. But we don’t have the visibility that we’d have in the Automotive. So less sales of higher margin business in those two segments really is what contributed to the margin. And that’s why these non-automotive businesses are very important to us as we introduce new products at higher margins; our margins will improve in that area. But when we do have a mix of higher volume low margin that does have an effect on us and that’s what we saw in the third quarter and some of that is also the holiday effect as well. That’s not a -- the third quarter for those segments is generally not a strong quarter. Steven Dyer - Craig-Hallum Capital Group LLC: But you anticipate that will continue through the April quarter is how I read that? Donald W. Duda: Yes, I think -- yes, with what we are saying today, we’d anticipate that will continue into the fourth quarter. I don’t think that changes our view of next year. We’ve seen it happen before. We saw it benefit us in the earlier quarters this year. Steven Dyer - Craig-Hallum Capital Group LLC: Sure. Okay. Lastly as it relates to auto, you put a new risk section in or a new risk bullet point at the bottom that just suggests that obviously one of the risks is finished inventory at a large customer. Should we read anything into that as it relates to the GM business or is that sort of a -- just a blanket bullet? Donald W. Duda: I would say it’s a blanket bullet. It’s been talked about that and on automotive news, it just really occurred to us as we go through our risk that that is something that an auto maker if they want to bring down their inventory, they certainly can do that, whether they do it through incentives or they just reduce their purchases. So it’s a risk, it’s occurred, we’ve seen it occur in the past. Steven Dyer - Craig-Hallum Capital Group LLC: Is your sense that your finished inventory is elevated there or is that still pretty just in time? Donald W. Duda: We are pretty much just in time. Steven Dyer - Craig-Hallum Capital Group LLC: Okay. Last question and I will hop back in the queue. Doug, overall SG&A or selling and administrative I think was a little bit elevated in the quarter due to some compensation etcetera. How should we think about that number either on an absolute basis or percentage of sales going forward? Douglas A. Koman: Well, again I think in my comments Steve, I talked about the variable accounting we get on the tandem cash. So for next quarter and through next year depending on our stock price, we’re going to be either going to -- we’re going to get a benefit or a hit on that piece. The other items we talked about SG&A, I think we saw increased legal and professional services. I think we probably were a little bit high this quarter, but generally not that much above a run rate for those items. And then otherwise as a percentage of sales we still benefit from the higher sales is driving that percentage down. Steven Dyer - Craig-Hallum Capital Group LLC: Got it. Okay. I’ll hop back in the queue. Thanks, guys. Donald W. Duda: Thanks, Steve. Sure.

Thank you. Our next question comes from David Leiker with Baird. Please proceed. Joe Vruwink - Robert W. Baird & Co.: Hey guys, its Joe on the line for David. Donald W. Duda: Hi, Joe. Douglas A. Koman: Hi, Joe. Joe Vruwink - Robert W. Baird & Co.: I wanted to take back up with gross margin questions, if the apple-to-apple margin in the quarter was 21%, if I just consider equal production days, and let’s say product mix was theoretically the exact same sequentially. Would your gross margins have actually been higher this quarter versus last quarter? Donald W. Duda: I’m digesting that question. Let me just play that back to you. You’re saying if revenues were equal quarter-to-quarter which was, they essentially were, and we did not have a mix issue in the non-automotive segments, would our margins have been higher? I guess it depends. No, I would say no, they would have been on par and it depends on what if it was more Hetronic business in Europe that carries higher margins on our big data, potentially it could have been, but we kind of compared second quarter revenues in non-auto to third quarter and that’s where we calculated our, the margin difference. So now, I would -- it could have been but would have been depended upon mix, but had it been the same sales it would have been 21%. Joe Vruwink - Robert W. Baird & Co.: Okay, I guess what we’re trying to figure out is -- figure out what the base should be as a starting point because you’re about to layer on a lot more incremental revenue particularly beginning next quarter with the GM SUV, so the right base number to you is going to layer on the extra leverage and ultimately the vertical integration. It sounds like, if this is the mix you’re going to have going forward 21% is probably the right base number to use, it wouldn’t be the all in 20% that you reported during the quarter? Douglas A. Koman: I think what I know what we were saying in our prepared remarks about the effect on margin for the fourth quarter is we’re going to see that same effect of mix in -- and I’ll say the non-automotive, but I mean primarily it’s Interconnect, and Power, we’re going to see that same, I guess decline in margins in those areas that we said was about $0.05, we’re going to see that. I don’t anticipate that we’re going to see that continuing into fiscal ’15 it is those businesses have been slowed by our customer demand. So, if you’re saying will that return in the fourth quarter, my answer to that is no and that we’ve that -- we’re going to see that, and we know what we’re going to be shipping to a large degree for the next couple of months, so we anticipate that we’ll see that effect. Joe Vruwink - Robert W. Baird & Co.: Would you expect then I don’t know how many production weeks you have scheduled for this Q4 versus Q3, is that a benefit to you at all thinking sequentially? Donald W. Duda: No, it's ’13. Douglas A. Koman: Yes, Joe every four or five years we pick up an extra week just because of our accounting convention, we’re on 52, 53 week accounting year. So this year is a 53 week year, so that got plugged into our third quarter, and so we won’t see that event for another five years or so. Joe Vruwink - Robert W. Baird & Co.: Okay. Shifting over to the five or so expense items you called out on the press release. I just want to confirm that (a) all those items are already in guidance so they’re not unusual, and then is there any one of those items that was may be larger than plans when you last gave your guidance update in December? Donald W. Duda: And you’re referring to the first page of the release? Joe Vruwink - Robert W. Baird & Co.: Yes, the items impacting year-over-year income. Donald W. Duda: Well they’re all contemplated within our guidance just to confirm that. We did -- legal would have been the one area that originally we didn’t anticipate a higher legal expense due to a lawsuit that we initiated where the plaintiffs on a patent related lawsuit, it's not -- it won't rise to the Delphi type event a years ago, but there is something that we initiated they’re going to protect our IP. So well that is included in our guidance but it wasn’t anticipated when we initially set the guidance and of course LTI, as discussed earlier that it goes up and down with the stock price. Joe Vruwink - Robert W. Baird & Co.: Okay. And that $0.08 gain for Q4, that’s also in the range? Donald W. Duda: Yes. Joe Vruwink - Robert W. Baird & Co.: Okay, and then just a few on revenue the automotive awards that you won, first of all congrats. Should we think about those as being helping you fill in the un-booked revenues that you kind of talk about on your future revenue slide or would those things be incremental to those targets? Donald W. Duda: Now those, absolutely they fill in the un-booked revenue that we referred to in our multi-year revenue chart. Joe Vruwink - Robert W. Baird & Co.: Okay. And then last one, just kind of an update on the therapeutic mattress product, you frame that if the center console like revenue opportunity, so if I just think of the market size, that $2 billion market size and I put a center console like share of markets on that, do you kind of frame that as a $150 million to $200 million revenue opportunity, is that internally what you are targeting? Donald W. Duda: If you look at that market which is quite large, if the product is truly a game changer in that market place then we’ll pick the percentage of what we’re going to get out of that market but it would be a substantial piece of business for Methode. Now having said that it could also be a good product that gets accepted by certain portion of the market and we’d anticipate we would more than recover our investment in that but it's just too soon to say that. We are setting up productions. Production is really next door to our corporate headquarters here in Chicago, it's being set up, FDA filings are being submitted. We’re actively marketing it. I can’t answer your question yet. I hope your back of the napkin there is correct, but we will know that here in -- within the next year for sure. Joe Vruwink - Robert W. Baird & Co.: Can you may be say, I know you’ve licensed some IP and you’re leveraging a lot of technology you already had in-house, can you say what that investment breakeven level of revenue might be? Douglas A. Koman: We can -- we would have to calculate it, but it's not a significant amount of money. We spent couple of million dollars last year on it and we’ll spend not counting the production equipment, but even the production equipment is may not that -- we will maybe have spent $3 million this year. Now we’re going to increase our investment going forward but that’s going to be -- and that will be in our fiscal ’15, we will then increase that to $5 million to $7 million. But this is not a -- we’ve got considerably more money in torque sensing than we have in this. Joe Vruwink - Robert W. Baird & Co.: Okay. Donald W. Duda: And actually kudos to our guys because they did this on a shoestring and we embarked on this about the same time we embarked a launch in K2. So the need for capital went to K2 so these guys did a very good job with a lot of used equipment to get where they are. Joe Vruwink - Robert W. Baird & Co.: Yes, I am sure your engineers are not lacking things to do recently. I’ll leave it there guys. Thank you very much. Donald W. Duda: All right. Thanks, Joe.

Thank you. Our next question comes from Jimmy Baker with B. Riley & Company. Please proceed. Jimmy Baker - B. Riley & Co.: Thanks. Good morning, Don. Good morning, Doug. Donald W. Duda: Good morning, Jimmy. Douglas A. Koman: Good morning. Jimmy Baker - B. Riley & Co.: So most of my questions have been addressed, but I did want to dive just a little bit deeper into the guidance and outlook. So, with less than two months ago here in the year, your guidance range remains pretty wide on both the top and bottom line. Is there any reason that we should expect that kind of variability in the remaining months or could you maybe give us a little bit more specific color on your expectations for Q4 profitability relative to perhaps Q2 when you did not have the inefficiencies associated with the holiday shutdown? Donald W. Duda: We face this dilemma every third quarter call and that we don’t give quarterly guidance, we need to get down to the fourth quarter with a couple of months to go and we maintain our range. So your question is very appropriate. That is one of the reasons we gave it much color as we could. And what do we think is going happen in Interconnect and Power that’s $0.05 for this quarter and Doug made some additional comments his remarks. We talked about gross margins. We talked about being on track for auto and particularly a solid SUV started production. So, I believe we’ve given enough color in the release that you can look at our guidance and build the model that, it's okay, this is pretty much where Methode is going to end up. It's just that we don’t -- we’d operate the business on our annual basis and we give in annual guidance and again, we have this dilemma every year, we knew this year would be particularly interesting because of SUV and K2. Jimmy Baker - B. Riley & Co.: Okay, fair enough. And then just a point of clarification that the Lumidigm on sale, did I understand your response correctly that the guidance now includes that benefit? Donald W. Duda: Yes, correct. Jimmy Baker - B. Riley & Co.: Okay. And then … Donald W. Duda: It offset by some of the negative things like the legal expenses that we talked about. Jimmy Baker - B. Riley & Co.: Right, right. Okay. And then lastly this is a follow-up to some of the color you gave on recent Interconnect performance relative to your fiscal ’15 margin expectations there. Are you assuming a meaningful uptick in Hetronic to get into the high 20s, low 30s gross margin there in fiscal ’15 or is that more new product coming online and the mix benefit therein. What really gets you to the kind of improvement that’s in your slide presentation? Donald W. Duda: Well it is improvement in the Hetronic’s business. New product launches we’ve done a product for Halliburton that has shipped, we’re anticipating additional business from them, increased business in Europe, doing large sales activity, so some of that is built in. Power, new products there, continuing with our big data customer. We have also done some product training in Power; we’re into some last time buys. We improve products when the volumes -- they don’t materialize or the products have done end of life, we’ll do the last time build and usually we have seen the margin improvement from that. So it's a combination of management actions, sales actions that gives us confidence that we’ll see those numbers. In auto because the -- while you carry a lot of volume it doesn’t carry the margins we see in some of these other business, so we don’t need as much revenue to have that a very positive effect. And likewise we saw this quarter; it doesn’t take too much revenue reduction to have an effect as well. Jimmy Baker - B. Riley & Co.: Okay. So just to be clear at this point, no reason to think that your conviction has diminished at all regarding those fiscal ’15 targets? Donald W. Duda: No. Jimmy Baker - B. Riley & Co.: Okay, great. Well thanks very much for the time. Donald W. Duda: Thank you, Jimmy.

Thank you. Our next question comes from David Kalis from Calamos. Please proceed. David Kalis - Calamos: Good morning. Donald W. Duda: Good morning. David Kalis - Calamos: I just wanted to get a clarification on the LTI comments. So, what I first heard was that the expenses there were higher because of some performance goals being met or thought about in ’15. Then I also heard that it was because of the stock price moving up. So, could you clarify which of those are correct? Douglas A. Koman: Sure, I mean the increase in the quarter is primarily the increase in the stock price. It was in the fourth quarter of last fiscal year that we were confident enough to book the tandem cash portion of the long-term incentive plan, that was a 2010 plan and the payout is at the end of fiscal ’15. So we recorded that in the fourth quarter last year and then not only does that get been amortized for the remaining quarters through 2015, it's subject to variable accounting and so it's going to increase or decrease based on the closing price of the stock at the end of the quarter. David Kalis - Calamos: Okay, so part of that though is fiscal ’15 which is five quarters out if I’m understanding what you said, correct? Douglas A. Koman: Well the assumption is that the management has made will perform. Our projections indicate the management will perform and that again is, if you look at our proxy it's the internal enterprise value of the company at the end of ’15. So, there’s a cap on that upside, so we know what that amount is. What gets adjusted though is the value of the stock, it will be paid out the value at the end of 2015 and the accounting rules say that every quarter up to that point we revalue it at the stock price at the end of the quarter. David Kalis - Calamos: Okay. Could you remind me of those, the enterprise value goal that’s in the proxy? Douglas A. Koman: Yes, it's 7.5 times our fiscal ’15 EBITDA and then adjusted for cash in debt. David Kalis - Calamos: Okay, all right. Thank you very much. Douglas A. Koman: Sure.

Thank you. We have a follow-up question from Steve Dyer with Craig-Hallum. Please proceed. Steven Dyer - Craig-Hallum Capital Group LLC: Okay. Just a couple of follow-ups. The Tesla business that I think the bus bar business you said was $4 million annual run rate initially. Does that have the potential to grow pretty significantly as they start rolling out some bigger volume products? Donald W. Duda: Yes, where I haven't been awarded additional platforms other than the S, but we did get the business on their star platform. So there will be a potential would be good for that. That’s produced in our Shanghai facility. Steven Dyer - Craig-Hallum Capital Group LLC: And then so all of that would be theoretically be added if to the booked and base business on the chart that you show? Donald W. Duda: It would support the un-booked section of ’16 and ’17. Steven Dyer - Craig-Hallum Capital Group LLC: Okay, so you couldn’t turn it around before then at the earliest that it would hit if you were to win call it the X or what have you. Donald W. Duda: Well it depends on -- depending on when that went into the production if it happened in ’15, yes. There is potential there. Steven Dyer - Craig-Hallum Capital Group LLC: Okay, got it. So it sounds like you got very little SUV jump into the K2, it sounds like you got very little SUV contribution in the quarter a week or so, is that right? Donald W. Duda: Yes, that’s about right. Steven Dyer - Craig-Hallum Capital Group LLC: And in are the, kind of the numbers that GM is telling you there, are they sort of consistent with what you have been expecting and IHS has been saying and so forth? Let me rephrase that, I remember that. I mean have your expectations in terms of revenue changed at all sort of relative to what you’ve been expecting in terms of either the timing or the magnitude of the launch? Donald W. Duda: No, we’re on track, the launch went very well, the volume is where as we anticipated and we don’t -- at this point we’re in production and we’ll proceed into the -- to win our fourth quarter per plan. Steven Dyer - Craig-Hallum Capital Group LLC: Okay. A couple of model questions and I promise that’s it. The 9.5% to 10.5% operating margin guidance, is that -- that’s for fiscal ’14 right or that’s not the quarter, that’s for the overall year? Donald W. Duda: That’s overall year. Steven Dyer - Craig-Hallum Capital Group LLC: Okay. And then lastly Doug, how should we think about tax rate moving forward? Douglas A. Koman: Sure. You said currently we’re below 8% for an effective tax rate and but talked about the fact that we do have valuation allowances on our net operating loss and foreign tax credits. And if we get to the point where the accounting rules say we need to pick those up and reverse those reserves then we have talked about, Steve is that the tax rate will probably be in the mid-to-upper teens for an effective tax rate going forward, so, life after the net operating losses. Steven Dyer - Craig-Hallum Capital Group LLC: And when would you or sort of are you currently projected for those to start rolling off? Douglas A. Koman: All I can tell you is that at the end of the third quarter we were knocked down. Steven Dyer - Craig-Hallum Capital Group LLC: Okay. All right. Thank you. Donald W. Duda: All right. Thank you.

Thank you. We have a follow-up question from David Leiker with Baird. Please proceed. Joe Vruwink - Robert W. Baird & Co.: Yes, my tax question got answered. But I have one more regarding the revenue opportunity as you see Magna-Lastic brought in to other lets call it transmission applications and you touched on what you’re doing in roll stability, (indiscernible). Any idea of what addressable market is there as you get the hydraulic into the magnetic conversion? Donald W. Duda: That’s an excellent question. In the transmission itself where we have really been focused, we have to -- before I can really say how significant that market can be, we need to have the first win where we’re actually putting a torque sensor on a transmission and really to see how that benefits the customer and the consumer. If it becomes a standard then I am -- Joe, I am going to give you a similar answer I gave you on the Dabir Surfaces. It depends on how it's accepted in the market. You go anywhere from over the next 5 to 10 years one on every transmission made that’s huge, they’re automatic transmission and we don’t anticipate that, but that’s probably a couple of $100 million of revenue, maybe even more than that. But the adoption rate and I think we planned this out before is as these transmissions are changed there’s no backwards compatibility. So it will rollout slow, we need our first win. If it becomes a standard for the higher speed transmissions where we think it will be beneficial then we will see substantial revenue from it. But it's too soon to say that -- to depict what that number is going to be. Now from our standpoint it is some point if we get on a small, just a small platform if we don’t see a future for them we will scale backward to where we are. But what I found very -- I guess the degree of confidence in that we were able to get this on as a safety product our vehicle and a substantial vehicle a customer is known for their safety and innovation. So while there is transmission, applications again are going to take a while, active roll was which we have been working on for a while. Again we can’t announce it to our customers, allow us to is very exciting, again small revenue, but that could actually ramp faster than transmission. Joe Vruwink - Robert W. Baird & Co.: Okay, great. Thanks. Donald W. Duda: Thank you.

There are no further questions at this time. I would like to turn the floor back over to management for closing comments. Donald W. Duda: Stacy, thank you very much and we wish everyone a pleasant day and upcoming weekend.