Don Duda - President, CEO Doug Koman - CFO, VP, Corporate Finance Ron Tsoumas - Treasurer, Controller

Steve Dyer - Craig-Hallum Jimmy Baker - B. Riley Christopher Van Horn - FBR Capital markets Joe Vruwink - Robert W. Baird

Welcome to the Methode Electronics Fiscal 2014 Fourth 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 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 filings with the 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; investment in programs prior to the recognition of revenue; timing, quality and cost of new program launches; ability to withstand price pressure; dependence on our supply chain; dependence on the availability and price of raw materials; customary risks related to conducting global operations; currency fluctuations; income tax rate fluctuations; fluctuations in our gross margins; the recognition of goodwill impairment charges; ability to keep pace with rapid technological changes; location of a significant amount of cash outside of the U.S.; ability to successfully benefit from acquisitions and divestitures; ability to avoid design or manufacturing defects; ability to protect our intellectual property; ability to compete effectively; ability to withstand business interruptions; a breach of our information technology systems; and cost and expenses due to regulations regarding conflict materials. It is now my pleasure to introduce your host, Don Duda, President and Chief Executive Officer for Methode Electronics.

Thank you, Mannie, and good morning everyone. Thank you for joining us today for our fiscal 2014 fourth 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 take your questions. We were very pleased to report this morning that year-over-year fourth quarter sales grew 52% to $225 million. And for the fiscal year sales grew 49% to $773 million. Income from operations improved 450% to $20.4 million and in the fourth quarter 88% to $74 million for the full year. Fiscal 2014 sales and income from operations were the best ever since Methode became a public company a milestone every Methode employee can be very proud of. Additionally, gross margin increased 40 basis points in the fourth quarter and 270 basis points this fiscal year over the last. The largest contributor to this improvement was increased sales that margins were also positively impacted by the vertical integration initiative and favorable raw material pricing and the product mix in the power product segment. Sequentially our fourth quarter automotive gross margins were lower due to a higher percentage of sales in North America and in Europe and Asia, which typically produce higher margins than North America. In Interconnect, overall sales and lower data solution sales which then typically carry a higher margin impacted the fourth quarter over the third. Power product margins improved in the fourth quarter over the third quarter due to higher mineral revenues and our cost reduction efforts. Of note, consolidated fiscal 2014 selling and administrative expenses as a percentage of revenue decreased to 9.2% from 13.4% in the fourth quarter and for the year dropped to 10.3% from 12.8% in 2013. We are very pleased with the considerable leverage realized given the substantial rise in sales. Our fiscal 2014 operating margin was 9.5% compared to 2.5% for 2013 and exceeding our goal to improve operating margin by 1% per year. GAAP fourth quarter net income grew to $48.2 million or $1.25 per share and for the year to $96.1 million or $2.51 per share as we detailed in our press release this morning there were some significant factors that influenced the year-over-year comparisons. The main components which impacted net income in both the fourth quarter and full year were the U.S. deferred tax valuation allowance release. We gained on the sale of our investment in Lumidigm, the multi-tax valuation allowance adjustment and the intangible asset impairment charges related to Eetrex. In addition, and strictly impacting the year-over-year comparison was the gain recorded in conjunction with the legal turmoil in fiscal 2013. Excluding these items, Methode's fiscal 2014 fourth quarter net income was $18.8 million or $0.49 per share compared to $6.9 million or $0.18 per share in fiscal 2013. Fiscal 2014 net income was $66.7 million or $1.75 per share in fiscal 2014 compared to $17.5 million or $0.46 per share in 2013 excluding these items. Of note, that our fiscal 2014 fourth quarter non-GAAP income of $0.49 per share exceeded our full year 2013 income of $0.46 per share. Doug will spend some time discussing the non-GAAP adjustments more and the effective tax rate in his comments. While higher sales were the largest contributor to year-over-year improvement to net income in both period. Increased manufacturing efficiencies due to the vertical integration initiative favorable raw material pricing in power product segment and substantially leveraged SG&A in all segments also contributed to the significant growth in earnings. The fourth quarter earnings improvement was somewhat mitigated by higher bonus development and legal expenses and a non-GAAP effective tax rate of 10.6% which was higher than anticipated to – due to higher profits in Asia. The fiscal year was impacted by higher expenses related to bonus and wages, travel, performance based LTI compensation, legal and development as well as the absence of a one-time reversal of accruals related to a customer bankruptcy in fiscal 2013 and again, a higher non-GAAP effective tax rate of 10.6%. As I just mentioned, we incurred increased compensation expense of $1.8 million for the fiscal year related to our long-term incentive program. The long-term incentive awards which are based on the company's performance in this fiscal 2015 will become payable if the warrants on the plan meets or exceeds targeted performance. This adjustment reflects the company's investment of fiscal 2015 performance. Comparing fiscal 2014 results to guidance revenue exceeded our range by $23 million; however, sales of $773 million included $24 million of automotive segment tooling sales at nearly breakeven margins. For the year non-GAAP earnings came in closer to the mid-point of our range negatively impacted by $0.05 due to a higher overall effective tax rate $0.04 due to sales mix, $0.03 due to higher legal cost and $0.04 due to higher LTI compensation expense. These items negatively impacted EPS by about $0.16 in total. Now turning to review of our individual segments, compared to last year, automotive segments net sales grew 93% in the fourth quarter and 68% for the year due mainly to the production of the General Motors K2 program and new program launches in Europe. Fourth quarter automotive gross margins improved to 18.3% from 15.1% last year and full year gross margins increased to 18.8% from 14% year-over-year. In both periods, the increased manufacturing efficiencies driven by higher sales again as well as the benefit of the vertical integration produced higher margins. Selling and administrative costs as a percent of sales dropped significantly year-over-year to 4.1% from 7.6% in the fourth quarter and to 5.1% from 8% for the year. During the fourth quarter Methode was awarded additional business with Land Rover and Ford of Europe as well as additional E5 business for our torque sensing product, which totaled $9 million in annual revenue in fiscal 2017 ramping to $15 million in fiscal 2018. Moving to Interconnect, year-over-year sales, decreased 8% in the fourth quarter, driven mainly by lower North American data solution sales, but increased almost 20% for the year attributable mainly to improve appliance, data solutions and radio remote control sales. Compared to last year, Interconnect's gross margin fell to 23.5% in the quarter and 25% for the full year due to manufacturing inefficiency from sales mix. Additionally, increased laundry sales, which have a higher material content than other products in the segment and a lower percentage of data solution sales which carry higher margins had the biggest impact on the reduced margins. For margins to improve in the segment, we would need improve sales in Methode's industrial business, which we're diligently working towards as well as continued growth in our data solution segment, both significant focuses for management. Moving to power products, year-over-year sales improved nearly 22% in the fourth quarter driven mainly by the launch of a significant program for a big data customer in the U.S. For the fiscal year, sales increased nearly 38% again mainly due to the big data program but additionally due to launch of bus bars for the Nissan Leaf battery pack and a high-current bypass switch both in Europe. Year-over-year power products gross margins decreased in the fourth quarter to 19.4% due mainly to sales mix and higher development costs. For the fiscal year, however, gross margins improved 410 basis points due to product mix and favorable raw material pricing. Looking forward, as we announced earlier, fiscal 2015 sales guidance is in the range of $835 million to $860 million. Income from operations guidance is in the range of $93 million to $100 million and earnings per share guidance in the range of $1.85 to $2. This EPS range takes into account an increase in effective tax rate to the low 20s and a higher share count. Based on this guidance range, our fiscal 2015 operating margin target is in the range of 11.1% to $11.6% which would be in line with our goals to improve our operating margins by approximately 1% every year on average. The expected operating margin increase over fiscal 2014 is an improvement in the range of 1.3% to 1.8%. In our release today, we detailed a number of factors relating to terming our guidance in particular I'd like to note that our first and third quarters have currently had lower sales and earnings in the second and fourth quarters. We remain cautious on the European economy and sales mix particularly in our non-automotive business is important -- all are important factors. As we detailed in our 10-K this morning, we filed legal proceedings in Germany and Oklahoma against our former Hetronic's Germany partner in material breaches of intellectual property and distribution agreements. The affected customers are now being covered by direct Hetronic's sales personnel. We have to consider this issue when preparing the above aforementioned guidance. As a result, we anticipate higher legal expenses were approximately $1.7 million for fiscal 2015, which may be occurred more in the first half of the fiscal year. Then in the latter half, but as with most litigation it is difficult to predict. Further these higher legal expenses combined with higher wage expense were likely to slightly increase SG&A as a percentage of revenues in fiscal 2015 than 2014. On the gross margin front, we anticipate our automotive gross margins will improve throughout the year with the fourth quarter approaching the mid-point of our fiscal 2015 target range of low to mid 20s as the vertical integration of capacitive touchscreens and the 31x program commence. In Interconnect, we will likely not meet our gross margin target of high 20s to low 30s as appliance sales were very low margin than industrial or data solutions, that represent a higher percentage of the segments overall sales. The entire fiscal 2015 gross margins also not likely meet their low to mid 20s due to anticipated continued reduced revenues in the middle lower market as well as anticipated lower year-over-year sales to our big data customers. And we took remedial actions before the quarter to reduce our costs in these segments to this point as I said earlier higher sales will be necessary to improve the margins. However, I want to point out these margins will remain viable targets beyond fiscal 2015. As I mentioned a moment ago, based on guidance we anticipate improving metals operating margins approximately 170 to 230 basis points in fiscal 2015. In 2014, we booked over 68 million additional average annual revenue commencing in Methode's fiscal 2017 and we successfully launched multiple programs during fiscal 2014 including one of the largest center console program ever awarded. Looking forward to fiscal 2015, we intend to invest approximately $4 million in additional development cost compared to 2014 as we bring several new solutions to market. Each of these innovations are key to our long-term strategy of providing our customers technology that enhances their products and competitive position and ultimately results in improved sales opportunities and better margins for Methode. In our automotive segment, our highly patented Magnetoelastic technology continues to be prototype and tested by multiple OEMs for transmission toward measurement. We remain very optimistic on this technology and sales opportunities that can forward Methode. Additionally, as personal electronic devices continue to set the pace of consumer technology adoption and center console evolve to be more of an integrated system. Methode continues to invest in the next generation integrated center stack. Our smart center stack is dying to incorporate modular building blocks that integrate our own organic technology offerings as well as those in our licensed portfolio. The intent is to allow each OEM to determine their needs for their various models and price ranges and only build the functionality required which minimizes engineering and tooling costs. We believe that our smart center stack will enhance the ultimate driver experience by emulating the smartphone experience. We will have initial units ready for OEM evaluations later this year. Additionally, we will continue to develop our mean touch digital printing and glass HyperTouch transceiver solutions and the bear services. To recap these technologies mean touch involves digital printing of graphics and circuit be a Methode nanoparticle conductive inks, it replaced it's conventional printed circuit boards and provided a distinct competitive advantage including reduced inventory lead time and tooling. We believe that with additional development work this process will be deployed in the production of user interface devices such as those we currently supply to the appliance industry providing Methode a very distinct advantage. Digital print and glass replace its conventional screen printing on decorative tempered glass for user interface panels and utilizes ultraviolet durable organic inks defense via large scale digital printers. This process currently introduced and will become our standard product offering going forward. HyperTouch addresses time and challenges associated with various touch technologies such as some thing touched with thicker substrate activating the touch cell through a glove providing water immunity and it will allow greater bearings in the manufacturing processes. Additionally, we are very pleased that the Bear project team completed the registration of both our manufacturing facility and product offering with the FDA earlier than planned. We can now proceed with commercialization once final manufacturing and quality system elements are fully in place and validated which we expect to incur later this summer. Sales people have been hired representatives are being contracted in select markets and we anticipate our first sales albeit minimal of this evolved. Further, on the Bear clinical studies geared to dialysis patients comfort plus MRI deep tissue scanning test are wrapping up in July, planned research over the coming months include an extension of the MRI study with more complex parameters, a long-term surgical procedures outcome study and a long-term care study. Our initial product launch will focus on operating room procedures in excess of two hours and duration were our current product offering is optimally designed. I again congratulate the Bear team as well as all our product development teams and their accomplishments and look forward to the sales and income these unique innovations will generate. The aforementioned are I think are fine examples of Methode's innovation and creativity, which are the driving forces behind our product development design manufacturing and testing capabilities. Further and we believe these and organically developed solutions not only leverage our competencies and technologies to provide sophisticated solutions to multiple end markets, but we will take Methode to the next level of growth and improved shareholder value. So to sum up this year, we are very excited by Methode's future to all Methode employees a job very well done. Doug, I will turn the call over to you.

Thank you, Don. Good morning everyone. Just a few comments on the quarter. Recorded EPS for fiscal year 2014 was $2.51 per share, when adjusted for discrete items all of which occurred in the fourth quarter, the non-GAAP EPS was $1.75 per share. We eliminated the difference – sorry, we eliminated the following items to develop their non-GAAP EPS, $3.2 million or $0.08 benefit from the sale of our investment in alumina, $2 million or $0.05 per share charge for impairment of fixed and intangible assets related to Eetrex, 300,000 of that was in cost of goods sold at fixed asset portion, the balance is intangible asset that was $1.7 million. Below the line in taxes, we eliminated $31.7 million or $0.83 per share benefit from releasing U.S. tax evaluation allowance related to federal and state NOL carryforwards, foreign tax credit carryforwards and other book tax temporary difference. We also had $1.5 million or $0.04 per share charge for adjusting evaluation allowance related to mark this investment tax credit carryforwards. We have $1.3 million or $0.04 per share charge related to our assertion on foreign earnings. And $0.7 million or $0.02 per share charge for federal withholding tax related to release of the U.S. evaluation allowances. For fiscal 2014, the effective tax rate was a benefit of 26.7%, when adjusted for the tax items just discussed. The non-GAAP effective tax rate lets to 10.6% for the year. This is higher than the expected full year effective rate of 7.9% that we had at the end of the third quarter primarily due to higher than expected earnings in Asia. As Don mentioned earlier this increase in effective tax rate cost us about a nickel per share. For fiscal 2015, we expect the effective tax rate to be in the low 20s because we no longer have the net operating loss evaluation allowance to shelter domestic booked income. The good news, however, is that we still have the tax net operating loss available which we expect to keep cash taxes to minimum throughout fiscal 2015. As we mentioned in the earnings release, the shares used to calculate diluted EPS will increase between $700,000 and $800,000 in fiscal 2015. This is due to the performance based restricted stock awards issued in fiscal 2011, which vest at the end of fiscal 2015. The accounting rules require that the shares be recognized when the performance threshold is reached – is achieved which we expect will be in the later part of fiscal year 2015. In fiscal 2014, we expect – we spend $29 million for capital expenditures this includes additional capital needed to launch the SUV portion of the K2 program. The fiscal 2015, we expect capital spending to be between $25 million and $30 million. Deprecation and amortization expense in fiscal 2014 was $23.9 million, for fiscal 2015 we expect the depreciation and amortization to be between $25 million and $29 million. EBITDA was $98.8 million when adjusted for the non-GAAP items based upon that was 2014 based on our fiscal 2015 guidance, we expect EBITDA to be between 114 and 124 and based on our guidance we expect 2015 free cash flow to be between $73 million and $76 million. And that concludes my remarks.

Doug, thank you very much. Mannie, we are ready to take questions.

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions) Our first question is from Steve Dyer of Craig-Hallum. Please go ahead. Steve Dyer - Craig-Hallum: Good morning guys. Nice quarter.

Thank you, Steve. Good morning. Steve Dyer - Craig-Hallum: Couple of things. As you look at the upside to your guidance – your revenue guidance for fiscal 2015 specifically, I'm kind of thinking back to the chart that you guys have done and I don't think you've updated real recently, but the difference between $800 million in revenue and call it $840 million or $850 million somewhere in there. I'm guessing that that is not really driven by new program wins as much as it is just overall anticipated strengthen the underlying business?

Correct, driven mainly by automotive really worldwide mostly in the U.S. but we are seeing growth in Asia and Europe albeit not as robust as we would like to seen it – yes, it is driven primarily by automotive. Steve Dyer - Craig-Hallum: Okay.

Compared to automotive program that's in progress. Steve Dyer - Craig-Hallum: Okay. And then, along the lines, and I don't think you have an updated chart there, but I mean as you kind of think out fiscal 2016 and 2017, I'm guessing that sort of moves in a similar fashion your anticipation there?

It does I think more and more will give a growth in number – compound growth year-over-year. I think we are seeing in the single digits for going forward. The only question I would give on using 2015 has a phase, as we do have product going end-of-life every year, before program start to run of the tail end of this year and then again in a year later, until that's $40 million in that is made up by other program wins. Steve Dyer - Craig-Hallum: Okay. That's helpful. Can you talk a little bit about the auto tooling sales I guess I had always thought of tooling more in terms of your cost of goods to ramp a program. Can you talk a little bit about those and did a big proportion amount of those in Q4 which may be led to the automotive gross margins that were a touch light of expectations?

Right. We did have considerable tooling in the fourth quarter and that is tooling that is paid forward by the customer and that's tooling that we would have to invest. So its injection moulds and you think of it as tooling that touches the product. So the customer might on the injection mould itself, we would have to buy the injection mould machine. There is a very elaborate process for collecting those funds from the automaker takes quite effort a lot of paper work. And we have our teams here selecting all of the tooling monies versus not so much the timing. We can always get the tooling monies quicker if you want to expect discount and we don't. We provide all the paper works sometimes several times to the automaker and we expect to be paid completely for their portion of the tooling. That's an unpredictable process. We were anticipating earlier that some of the tooling reimbursement would come actually in our first quarter and the teams did a very good job of collecting all this dues and that influenced the fourth quarter number. And if you think, we would have high tooling because of the amount of programs that we launched in the last couple of years. Steve Dyer - Craig-Hallum: Okay. A couple of GM-related questions. Can you give any sort of order color on when the 31Xx when you would anticipate beginning to ship into that program and then separately any further color on when you'd anticipate the capacitive touchscreen shipments to commence?

We do know that timings but we have to let our customers announce that, if not we are into launch now that's up to GM. So I really can't answer that. The other thing I should point out on tooling sales is that virtually has no profits. So that as – when you factor that in that as certainly effect on gross margins. Steve Dyer - Craig-Hallum: Going back to capacitive presumably that that launch is captured within your margin guidance for that segment that you talked about?

Yes. It is. Steve Dyer - Craig-Hallum: Okay. Last question, it doesn't sound like you have a lot in revenue sort of built in the expectations for the bed product in fiscal 2015, any more granular about sort of the anticipated cost as well as the revenues for that product in 2015 and 2016?

The cost –

The increase…

We are increasing our R&D spend, we have developed spend. And a portion of that probably the largest portion of that spend is for the Bear services. We are expecting some minimal sales nothing that would move our needle at all that it won't offset the dollars that we are spending. And that's more of fiscal 2016 impact. Steve Dyer - Craig-Hallum: What's your sense on 2016 or is it just too early to say?

Too early to say. Steve Dyer - Craig-Hallum: All right. Sounds good. Thank you guys.

Steve, thank you.

Thank you. The next question comes from Jimmy Baker of B. Riley. Please go ahead. Jimmy Baker - B. Riley: Hi, good morning and nice quarter, great year.

Good morning, Jimmy, thank you very much. Jimmy Baker - B. Riley: So I just want to ask a couple of follow ups on the tooling sales, so looks like that's going to be cut in half year in fiscal 2015, can you just kind of walk us through that dynamic a little bit, if it's just a function of fewer or expose less significant launches this year versus fiscal 2014? And then are those tooling sales in fiscal 2015 weighted towards any specific quarter, or we should be kind of aware of the margin impact there?

The tooling, the lion share of the tooling from last year was K2 pick-up and then really a number of programs in Europe smaller programs. But they all add up will still collect tooling. And we have to keep that before we can even submit the tooling packet, when we still have SUV in 31X of course, and then a few programs in Europe. I mean, reluctant to try to predict what quarter that comes in as I said to Steve, we want the teams to collect all the monies that are due us and that's them another quarter to do it. I'm fine with that. So it's not a very predictable process from that standpoint. But it's also is conservatively reduced from the prior year, so that should have a less of an impact. Jimmy Baker - B. Riley: Okay. Fair enough. And if I was to save back out the tooling sales out of both years it looks like you're expecting about $85 million – at the midpoint of your guidance -- $85 million in revenue growth year-over-year. Can you give us a little color on how you see that spread between segments in quarters and obviously a majority of your growth is dollars coming out of automotive but maybe be more helpful to speak on a percentage basis.

It is driven by automotive. We'll have – as we approach the end of this year, we'll have all three GM programs fully relaunched, capacitive touchscreens will be online. We've got several launches in Europe. And Asia has been, sales there have been very good. From a quarter standpoint, I would point out that Q1 and Q3 as I said in my prepared remarks, tend to be weaker because you've got the summer shutdowns including change over and then we got holiday months in the third quarter. As far as the segments where majority of the growth is coming from model. Appliance will be likely be flat, flat sales and housing starts. And, our industrial business, we're still facing headwind in Europe. I will say the industrial business is getting a tremendous amount of noise as we see that as a business we can grow and it certainly have probably be best margin in the company when we do have a sales growth. Jimmy Baker - B. Riley: Okay. So the Land Rover win that you mentioned I think over the second OEM in there that I just missed for torque sensing. What was the application there for those wins still something outside of the transmission?

The Land Rover and Ford of Europe were agronomics which is a hidden switches in Europe. And then the E5 torque sensor and it's just utilizing the same technology that we use for the Bosch Evite with the different customers. Jimmy Baker - B. Riley: Okay. Got it. And then, maybe just one for Doug, with the full year share count of 700,000 to 900,000 shares. Could you just give us your expectation for the end of the year share count, I assume that 700,000 to 900,000 is for the fiscal weighted average, but what would be exiting the year if you hit your target?

I think we ended up at 38.4 for this year. So that's the best numbers that I think which you close to maybe 39.2. Jimmy Baker - B. Riley: 39.2 was it?

Yes, yes. Jimmy Baker - B. Riley: Okay. Thanks very much for your time.

Thanks Jimmy.

Thank you. The next question is from Christopher Van Horn of FBR Capital markets. Please go ahead. Christopher Van Horn - FBR Capital markets: Good morning. Thanks for taking my call and great quarter and great year.

Thank you. Christopher Van Horn - FBR Capital markets: Just a question about the cash balance, you kind of your priorities around uses of those cash. Could you just kind of give us some color there?

Sure. We pay a dividend and we continue to invest in our businesses. As we said earlier investing $4 million in development this year over last where appropriate and justified, we continue to do very full integrations, some of the capital that Doug mentioned, will be spent are vertical integration as our teams can justify. And then acquisitions, our key focus and we're coming off from major launch with General Motors, we suspended our acquisition activities when we look at business, we're one of the teams focused of course on the successful launch and that has occurred. And so can – I would say six months ago or so we started to turn our focus to looking acquisitions. We hired I guess -- we hired along Methode employee our Vice President of Corporate Business Development. Mark is on Board, he and the CEO of Lumidigm and Mark's main focus is in acquisition. So from a capital or cash standpoint that would be our uses. Christopher Van Horn - FBR Capital markets: Great, great. And could you just comment give me a little bit color on Lumidigm, was that a kind of the timing and how long you've been thinking about that decision. And then as kind of a follow-up, is there any other assets in the portfolio that are under review or is that kind of an ongoing thing that you guys do?

Well, it is an ongoing thing, it's – you always look at your portfolio if you will and make sure everything is core and then you're deploying your capital and your resources in the best area, Lumidigm, we actually own about 10% of Lumidigm. Christopher Van Horn - FBR Capital markets: Yeah.

We were -- Methode and Intel were the only strategic investors, Motorola I think at one point was in there. So the rest were venture capital groups and everyone agree that with the -- I guess the uptick and the interest in biometrics that was the time to monetize Lumidigm. Mark and his team did a great job of getting a good number for it. So we certainly benefit from it. But, I should point out that we maintain our exclusive license for the Lumidigm in the biometric technology for automotive – actually transportation worldwide. So from our standpoint, when the Lumidigm board was discussing – selling the company we were in favor of it, time was right and we had our license. And for anything else, it really does depends on where we're focusing and what is going on in the particular market. Christopher Van Horn - FBR Capital markets: Got it. Thank you very much and again congrats.

Thank you.

Thank you. (Operator Instructions) And the next question is from David Leiker of Robert W. Baird. Please go ahead. Joe Vruwink - Robert W. Baird: Hi, good morning. This is Joe on the line for David.

Hi, Joe. Joe Vruwink - Robert W. Baird: I wanted to start on revenue trends and Interconnect. If I just look at some of the sales results from your customers in that segment thinking a large appliance guy a large data center guys. It would seem like their sales were a little stronger than what you saw, was there any sort of, can you call inventory built up in the channel that might have diluted your results a bit and do you think it's a bit more balanced looking forward?

In our data main product and transceiver product, we did see that. The big customer there is Cisco and that was – we shipped to a hub and we saw that increase considerably and then that has to be worked down. And we think some of that we haven't seen, seen it go back to let's say mid 14 level. So and then particular that would be one area. Appliances, it's been better and then we Whirlpools results, it's not necessarily one for one and this – it can't be a bit spike, even some seasonality to it as well because most of would be kept in laundry, most of our products are in the kitchen suite. And there is a bit of a seasonality to that. Joe Vruwink - Robert W. Baird: Okay. If I just maybe take a step back from a high level perspective you did $225 million in revenues in the quarter, if I just annualize that, you already had $900 million. So I'm wondering relative to the guidance for next year, was there any sort of maybe pipeline sale at GM ahead of SUV launch, or something that I should be adjusting out of an annualized number, outside of just normal seasonality to the auto production?

Seasonality is definitely there. But there was pipeline, we can't tell what that is, it is not differentiated in the releases, but there is some of that. And then you got to be careful with tooling. You got to pack that out. If you are run rating it, you're up playing that tooling number…

For business days running out.

Yes. But also the point for business starts to run and that completely we still have another year on one of the programs, but third and fourth quarters Ford is down. And we can – let's take account into our revenue number. Joe Vruwink - Robert W. Baird: Okay. And then just circling back on an earlier question, you think giving a revenue outlook for 2015, those $800 million number and now you are going to be well above that it sounds like 2016 and 2017 move higher as well. When you think of the inputs you tabulate to come up with a number, so there is end market production, there is going to be tape rates, there might be platform mix, which of those things are moving the needles on most to drive the upside in the forecast just relative to really the last six months when these revenue numbers have been put out there?

It's higher automotive sales particularly in the U.S., we use our own historical data of which we don't have the lot on K2 for them, we use LMT data and double check with some other sources but that's – and we can also look at our releases as well on product that it launched. But also all combined to have a much higher number than we thought six months ago and it is – if you look at U.S. car sales they still remain actually very healthy so that's really driven by that. And Europe, I was cautious on Europe, but we are growing in Europe, again that is much as we have anticipated years ago. But we are really taking market share so that's been helpful. And again, it's a little bit of sporadic and it's a caution I would give on our guidance or did give. And then Asian sales, which mean like I'm back to the U.S., we are on the 276 transmission platform. That continues to be a good platform for us that's through – we are Tier-2 to Conti not quite as predictable perhaps as we would like, but that's also increasing. So just really the combination of really being robust automotive sales. Joe Vruwink - Robert W. Baird: I guess, I'm trying to get a better sense of where the upside might have been because when GM launched the K2 Xx, they were obviously capacitized for a certain volume level and those communicated to the suppliers. The suppliers that are selling in, the volumes that we see from a high level seem to be pretty much dragging to what GM originally communicated. But it seems like the revenue benefit for Methode has continued to ratchet higher as the year goes on. So was there maybe just a little built-in conservatism in the Methode guidance at the beginning of the year and you have fully realized the full GM potential, or is just the GM volumes running ahead of what GM communicated?

We built to a capacity level and contractually that I think it's 15% or 20% over what they’ve put in the contract. And so from that standpoint, we have enough capacity to ship whatever GM would require. Were we conservative at the beginning of the year? You’re making the case for not giving guidance because it's very hard to predict. Yeah, we will get better as time goes on because we have been doing this for a while. We know how to track ongoing programs, but a program of that size plus you still got SUV and 31, it's hard to predict. And we look at releases and releases have changed. They have gone up which is great. So are we conservative, I think we are – I guess practical that is on any number of things that can change 6 months from now. But I don't, we have not had I guess major surprises in recent months on what's going on with the programs, I don't talk of anything after that I think…

I mean I think with last time we got better off guidance. It was probably six months ago. That should be in the second quarter, yeah, and I think we are just doing just better numbers than we are expecting.

That was five or six months ago. Joe Vruwink - Robert W. Baird: I know that's hard enough predicting next month let alone a full year. And then, just a last one for me, the $4 million and incremental development cost, is there a return, or a pay back period, you typically think about when undertaking that incremental investments that might help us get a sense of how quickly you leverage those costs?

Hesitating how to answer that because it is a bit of a mixed bag, I think Steve had the question about where the money has been spent, a good portion of it's being spent on the [Dabir Surfaces] and we would expect and to start see a return on our investment there starting in 2016 and always have to give this caution where we still need to have the product accepted and proven. But we have a payback on that if it takes it off within just two years, I mean it's a medical product. Some of the other investments you might see three, four years before you would, I guess on paper say pay back, but almost everything we do is geared to giving us the advantage to book more business. The digital printing – I'm glad it's -- I think would be difficult to nail down an exact timeframe. And we do that but on the other hand that really give us the competitive advantage. So how much do you add to your payback, the increase sales or margin on that. That's where it gets difficult. But really to answer your question, the majority or good portion of the $4 million geared towards to Dabir and that return should start in 2016. That's what I would say. I mean we have our hurdle rates, I mean all the…

I mean, we determined that it's a good use of development funds. And if it happens sooner, the internal rate of return would be just that much greater. And if it happens later, again, it's medical so I think if we are looking at good returns regardless.

And when a division comes to us with a project, I think you do all the math. But, we look at okay, will this project improve your gross margin and that's what it's all geared to. How do we – for all our efforts get more through to the bottom line and then as I said in my ending of my prepared remarks, we – it is our innovation that causes us to have better margins or increasing margins and better sales. Joe Vruwink - Robert W. Baird: Okay. Great. Very helpful. Thanks very much.

Thank you. We have no further questions in the queue at this time. I would like to turn the call back over to management for any closing remarks.

Mannie, thank you. We will thank everyone for listening today and wish everyone safe and pleasant summer.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. And thank you for your participation.