Sanmina Corp (SANM) 2003 Q4 法說會逐字稿

Good afternoon. My name is Brian and I will be your conference facilitator today. At this time I would like to welcome everyone to the Sanmina-SCI fourth quarter and fiscal year end conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer period. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. If you would like to withdraw your question, press star and then the number 2 on your keypad. At this time I would like to turn today's conference over to Mr. Jure Sola, Chairman and CEO of Sanmina-SCI Corporation. Mr. Sola, please begin.

Thank you, Brian. Good afternoon, ladies and gentlemen. Welcome to Sanmina-SCI's 4th quarter conference call. Here with me today on this conference call is Randy Furr our President and Chief Operating Officer.

Good afternoon.

And Rick R. Ackel, our Executive Vice President and Chief Financial Officer.

Good afternoon.

I would like to start by thanking you all for your support. Agenda for today is Rick Ackel will review financial results for this quarter and fiscal year 2003 then Randy Furr will review operation and future outlook. Then I will follow with additional comments relative to Sanmina-SCI's results and future goals. And now Rick?

Thank you, Jure. Before we get started please note that selected financial portions of this presentation which I will speak to verbally are also in the form of a slide presentation and available by logging on to the Sanmina-SCI website at www.Sanmina-SCI.com. I'll be making references to these slides through the course of my discussion. Prior to reviewing our financials with you, I would like to take a moment to review the following Safe Harbor statement, slide two. During this conference we will make projections or other forward looking statements regarding future events or the future financial performance of the company. We caution you that such statements are just projections. The company's actual results of operations may differ significantly as a result of various factors including economic conditions in the electronic industry, changes in customer requirement and sales volume, competition and technological change. The company's actual results of operations may differ significantly from those contemplated by such forward looking statements as a result of these and other factor and we refer you to the document the company files from time to time with the Securities and Exchange Commission, specifically the company's most recent annual report on form 10-K for the year ended September 28, 2002 filed on December 4, 2002, form 10-KA filed on June 18, 2003 and the company's most recent quarterly report on form 10-Q filed on August 11, 2003. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward looking statements. In addition, during today's call we will refer to certain pro forma financial information. The corresponding GAAP financial information and a reconciliation from pro forma to GAAP for such information is contained in our quarterly releases of results of operations which are available on the investor relations section of our website at www.Sanmina-SCI.com. You will note from the press release that we have, as is our custom, provided you with two statements of operation. One reports our results on a GAAP basis to include merger, integration and restructuring cost, impairment and other infrequent or unusual charges and includes the results of the SCI merger from the closing date. The others presented on a pro forma basis and is presented without these charges and includes the results of the SCI merger for the entire period 2002. We have provided a reconciliation from GAAP operating results to operating results presented on a pro forma basis, and that can be seen on slide 16. On today's call, I will review the results of our operations, discuss the balance sheet and corresponding metrics, provide an update with respect to restructuring and debt reduction and finally I will conclude with guidance for our 1st quarter of fiscal 2004. In general, for consistency, I will confine my comments to our results without charges for merger, integration, restructuring, cost, impairment and other infrequent or unusual charges and on a pro forma basis to facilitate comparability to prior periods. Slide three. Sales for the quarter which represented our 4th quarter of fiscal 2003 were 2.7 billion, this reflects an increase of 5% over the sales from our 4th quarter of last fiscal year and a 3.1% increase in sales over last quarter. Sales for the year were 10.4 billion, this is up 3.2% over last year's sales of 10 billion. Slide four. Our top 10 customers made up roughly 71% of the total sales this quarter. The second 10 made up approximately11% of total sales, thus making our top 20 customers about 82% of sales. For the year, our top 10 customers made up roughly 68% of total sales. The second 10 made up approximately 11%, making our top 20 customers, on an annual basis, about 79%. We had one customer in the 4th quarter, as well as for the fiscal year, whose sales were greater than 10% of total sales. IBM and the second customer that accounted for just under 10% of our sales for the quarter. For the quarter the mixed up revenue and percentage terms breaks down as follows. Third party merchants circuit board sales were 2%, assembly and other EMF sales were about 98%. These percentages are basically the same as last quarter and basically the same for the entire year. Slide five. Gross profit was 129.2 million, reflecting roughly a 17% increase over last year's 4th quarter of 110.1 million and an 8% increase over last quarter of 119.6 million. As a percentage of revenues for the fourth quarter, gross profit was 4.7%, up from 4.2% from our Q4 '02 and up from 4.5% from last quarter. For the year, gross profit was 462.5 million, thus is up over 31 million or 7% from last year's gross profit of 430.9 million. Selling, general and administrative expenses for the fourth quarter were 2.7% of sales or 72.5 million in absolute dollars. This represented roughly a 6% decrease compared to last quarter and a 4% decrease from Q4 '02. For the year, SG&A expenses were approximately 2.9% of sales and were 305 million in absolute dollars. Total operating expenses are composed of selling, general and administrative expenses with the addition of 1.7 million in amortization and 7.3 million in research and development, including the R&D related to the Newisys acquisition which brings the total 4th quarter operating expenses to 81.6 million or 3% of sales. Total operating expenses for the year were 326.6 million or 3.2% of sales. So as you can see we were able to offset the increase in R&D primarily related to Newisys with further reductions in SG&A compared to Q3. Although we achieved good results in this area, we will continue to focus to keep these costs at or below 3% of sales. Depreciation was 46 million for the quarter and 216 million for the year. Cap-Ex spending this quarter was approximately 24 million and for the year we spent just under 71 million. Operating income, or EBIT, was 47.6 million for the quarter which reflects an increase of 59% over last year's fourth quarter and just over 24% increase over last quarter. For the year, operating income increased approximately 16% to 135.9 million. Operating margin was 1.7% for the quarter and 1.3% for the year. Our EBITDA was 95.2 million for Q4 '03 and 358.5 million for the year. This reflects about a 4% increase from Q4 of last year and roughly a 2% increase over Q3 '03. Other expense net was approximately 34 million. Our tax for the quarter was 33% and we estimate the rate for FY 04 will be 33% as well. Net income for the quarter was 8.8 million representing an increase over last quarter of 7.4 million and over Q4 '02 of 5.7 million. For the year net income 7.6 million. Additionally adjusted pro forma net income for the 4th quarter was 14 million and 28.3 million for the year. Basic and diluted shares for the quarter were 511 million and 518 million respectively. Adjusted pro forma diluted shares were also 518 million, giving an adjusted pro forma EPS of three cents for the quarter. This quarter, our 4th quarter, is the quarter where we are required to perform our annual good will impairment test as required under FAS 142. Consistent with the prior year, our testing was the first month of our fiscal 4th quarter and the test was performed on a reporting unit basis for the domestic and international segments. The analysis was completed and the assistance of an outside independent firm and indicated that no impairment of good has occurred. As many of you are aware, our lower volume higher mix business, primarily our board business and to some extent our enclosure business, which is tied primarily to the communications infrastructure sector, continued to see declines during the fiscal year 2003. As a result, it was determined due to this continued decline since the beginning of the year and the capital intensive nature of the business, that a triggering event could have occurred and we performed an acid impairment test pursuant to FAS 144. The results indicated that an acid impairment of long lived assets did occur of approximately 96 million. It was primarily related to equipment and buildings and we have therefore written these assets down to fair value. This is a non-cash charge and is an unusual event, hence it has been excluded from our pro forma results. The writedown reduced depreciation in Q4 by approximately 5-6 million before tax. And we will have a similar impact on depreciation for the coming four quarters. Slide six. Turning to our balance sheet, cash and short-term investments were approximately 1.1 billion. Accounts receivable at the end of the quarter were 1.6 billion. Accounts receivables remained essentially flat over last quarter and actually decreased in spite of a increase of revenue of over 83 million.. Inventories decreased this quarter over last quarter by 81 million in absolute dollars to a balance of 978 million. This was significant in that our business actually grew during the quarter and was achieved by increasing our turns from 9.6 to 10.6, one full turn in just one quarter as seen on slide seven. Taking a look at our cash cycle days, we ended the quarter at 33. This represents an improvement over last quarter by 5 days and an improvement of 10 days from last year's 4th quarter. Cash cycle days were determined by inventory turns of 10.6, DSO of 52, and AP days of 53. Also as a reminder we do not have any off balance sheet financings or factorings that affect the computations of these metrics. I would like to take this opportunity to thank all team members for maintaining focus on the key metrics. Our working capital was 2.1 billion for the quarter. Slide eight. Cash flow from operations was approximately 90 million during the quarter,which has again allowed us to be able to self fund debt repayments, current quarter acquisitions and CapEx. For the year cash flow from operations was just over 551 million, free cash flow for the quarter was positive at approximately 66 million when deducting CapEx from our cash flow from operations. For the year, free cash flow was roughly 481 million. Slide nine. We continued with our program of debt reduction. As I described what debt we retired, as in prior quarters, to avoid confusion I will discuss these numbers on the basis of the accreted amount that would be due on the September 2005 put dates for our zero coupon debentures. Consistent with debt reduction strategy, we redeemed the outstanding balance of the 4.25 bonds due May 2004 and the amount redeemed was approximately 264 million. Also during the quarter we retired our term loan totaling 275 million with a final maturity date of December '07. During the quarter, we were able to further reduce our interest rate on our high yield bond by converting the balance from fixed to floating rate debt. Our new interest rate on the high yield bond is now 7.4%. Since the beginning of Q4 '02, we have eliminated approximately 635 million, or roughly 50% of shorter term debt due by 2005 and about 960 million of total debt. Slide 10. Prior to the launch of our debt reduction strategy, we had approximately 1.9 billion in shorter term debt due by 2005. In roughly 12 months we have reduced our debt due by 2005 to 632 million, a 66% reduction through a combination of debt pay down and extensions maturities. From a debt maturity profile, we now have shorter term debt, zeros, due at September 2005 of approximately 632 million and a maturity profile that shows further debt not due until 2007 and 2010. The debt pay downs during the recorder have resulted in a GAAP charge of almost 22 million from early extinguishment of debt which is unusual or infrequent and therefore has been excluded from the computation of pro forma earnings. So in summery, during the quarter we continued to make steady progress towards our finance strategy thereby significantly strengthening the balance sheet. We expect to continue moving forward with our game plan to reduce and/or extend the maturities of our debt where it makes business sense to do so. Let me now turn to restructuring. During the quarter, we incurred approximately 22 million in restructuring cost of which roughly 15 million was in cash. Further, seven million of these charges were recorded as a purchase price adjustment and the remaining 15 million were recorded on the PL for GAAP purposes and thus were excluded from a pro forma perspective. This leaves us with an approximate balance of 110 million of restructuring charges to be incurred over the next couple of quarters, of which 90 million will be cash charges. In addition to restructuring charges, we incurred 2.5 million of integration cost. We expect to have all previously announced restructuring completed by our March 04 quarter and we expect to be within a window of 5-10% of the 250 million amount provided to you one year ago. Slide 11. Now let me turn to the guidance for the 1st quarter of fiscal 2004. The information I will provide will be generally before integration, restructure, impairment and unusual or infrequent charges. We are targeting sales to be between 2.8 to 2.9 billion. Gross margins will be between 4.7 and 4.9%. SG&A is expected to be around 2.7 to 2.8% of sales. OpEx is expected to remain roughly at 3% of sales. We are targeting our operating margin to be around 1.7 to 2%. Net other expense is expected to be approximately 30-31 million. Basic shares for Q1 '04 are expected to be 513 million and diluted and adjusted pro forma shares are targeted at 523 million. This equates to an adjusted pro forma EPS range of 3-5 cents per share. We are targeting continued improvement in asset management for the quarter and would anticipate a slight usage of cash from operations at the upper end of our guidance and positive cash flow from operations at the lower end of our guidance. We estimate a quarterly depreciation for Q1 '04 will be approximately 48-52 million, quarterly CapEx spending will be in the 25-30 million range and quarterly amortization to be around 1.8 million. We are anticipating CapEx to be in the realm of 100 million for the entire 04 year. Obviously this could change as our economy improves and/or with new acquisitions, etc.. So in conclusion, we continued our focus on controlling costs, generating cash from operations and paying down debt. We believe we have managed our resources and cash responsibly. Our goal is to continue this trend next quarter. We'll continue to focus on earnings growth and shareholder value. Thank you for your time and I will now turn the discussion over to Randy.

Thanks, Rick. As you can see from our Q4 '03 earnings release and as Rick mentioned in his comments, the June quarter came in with the top line of 2.73 billion in adjusted pro forma net income of 14 million. This gives us a pro forma EPS of 3 cents. As usual I would like to start with a few minutes on our top line. So again, as you can see the 2.73 billion has placed us solidly within the 2.6 to 2.75 billion guidance we set in July during our last quarters conference call. Just as important, however, is the fact that this is the first quarter since December 2000 that we actually experienced growth in our base or our organic business. In other words we grew the top line with no help from acquisitions for the first time in 10 quarters. So we certainly believe that this is a reflection that our primary markets are improving. In general I would again characterize the mix as again less than favorable. Our high volume personal and business computing sector, which includes our Wintel base servers, again showed considerable strength. However, also very positive is the fact that we also achieved growth in sales from both our communications infrastructure and our enterprise, computing and storage business sectors as well. Now for a little bit more granularity. For the quarter, the communication infrastructure market sector again representing both voice and data was 24% which is 1% down from the prior quarter. However, most of this is just due to a small amount of rounding here. And this sector was actually up in absolute dollars. In this sector our more heavily weighted telecommunications focused companies, the ones who primarily rely on carrier spending, were up about 2% for the quarter. We believe this reflects the over all inmarket trends being seen throughout the industry. In general the strength comes from wireless programs, primarily GSM and CDMA in North America, and CDMA in China. And from some DSL initiatives underway in several of the RBOX.. Also in this sector are our more heavily weighted networking focus companies. This group was up similarly about 2% this quarter. Personal and business computing sectors was 40% this quarter. This compares to 38% in Q3. As many of you know, we have two customers that make up the vast majority of this sector. Both experienced strength broadly across the entire portfolio of programs that is we're involved in. Enterprise computing and storage was 20% in Q4. This was consistent with the 20% reported in Q3. Strength here was really driven by our high end storage customers. Industrial medical instrumentation was down this quarter. This sector includes three broad sub-sectors. They're semiconductor capital equipment, medical instrumentation and our defense and aerospace business. This sector represented 10% of our total revenue this quarter. It compared to 12% represented last quarter. The majority of the softness this quarter comes from one large medical customer who is in the process of a product transition and wanted to significantly reduce inventory of the current products before introduction of the new products. This introduction is slated for just after the first of the new year. We do expect this sector to bounce back nicely in our December quarter. Our final market segment is multimedia. This segment was up this quarter, reflecting our guidance from last quarter for the fiscal 4th quarter or this sector was 6%, which is up 1% from June quarter's 5%. This translates to nice growth in absolute dollars and again is reflective of the normal seasonality trends for this business. So in summary, with the September quarter being the first in 10 we saw positive organic growth, we do believe that we've turned the corner with respect to seeing a general recovery in the economy. Let me turn the discussions to some comments of what we are really seeing in each of these primary markets. First, again, communications infrastructure. In some of the components that are used in this sector, some of the components that we use, we are seeing increased lead times and positive movements on pricing. Last quarter I mentioned that our customers were forecasting an increase in demand for the second half of this calendar year with a nice sequential increase in December quarter. I'm happy to say that they pulled in accordance with their forecast for the September quarter. Built into our present planning for the communications infrastructure sector is up in the 5% range for our fiscal first quarter of 04, or the December quarter. This strength is expected to come from typical seasonal year end strength historically seen in the industry and more specifically increased demand for access and wireless infrastructure programs. Both are enterprise, computing and storage and our personal and business computing sectors are tied to enterprise or business spending. We still believe we will see a nice recovery of the enterprise, commuting and storage sector, a [INAUDIBLE] in the capital markets For Q1 we expect enterprise, computing and storage business to be in the up 5% range and again we believe this will generally track over all spendings for the industry plus some market share gains there for this particular business. For our personal and business computing sector, we said in July that we believed that this business was going to be flat to slightly less range. It was actually up about 8% revenue as you can see. As such it's a little bit difficult to project here. But being a bit on the conservative side, we're going to forecast that this business will be in the flat range for our December quarter. For our industrial, medical, defense aerospace, instrumentation sector, again as I said earlier we expect this business to bounce back nicely in Q1 and we expect this business to be in the up 5-10% range for the December quarter. The strength will come from across all three of the important elements of this sector. Again semiconductor, capital equipment, medical, and defense aerospace and I'm very confident that we will experience further growth in this important strategic sector throughout fiscal 2004. During the September quarter, we won a number of new programs that will benefit the sector going forward and again our strategy is to continue to grow all three of these important businesses. Finally in our multimedia sector, we expect this sector to be in the up 10-20% range for Q1, again reflecting traditional holiday season demand. So now what I'd like to do is turn to profitability and although we will never be happy with operating results until we achieve our long-term goals, we do believe the September quarter produced some nice results. Operating income increased from 38.4 million to 47.6 million or about 9.2 million. Roughly a little over three million, about 3.2 we estimate come from the 83 million increase in the top line. The balance come from cost reduction efforts. When you consider the over all and favorable mix experience in the quarter, I think our team did a very nice job at not only maintaining profitability but actually improving profitability. I would now like to make comments on our components business, that being our PCB fabrication, enclosure and memory solutions divisions. Let me start again with a few comments on the PCB Fabrication business. First, the September quarter was another essentially flat quarter with respect to actual shipments and profits and we did experience a loss in the 3-4 million range. However as Rick mentioned, during the quarter we did revalue our PCB Fabrication assets and the result was a writeoff of approximately 63 million dollars after tax. This provided a benefit of approximately 5-6 million a quarter and in such resulted in the September quarter being a profitable quarter as a result. However, and very much more importantly are the trends that we are seeing in this business. The September quarter actually started off slowly with respect to bookings. However during the September quarter, the weekly bookings trends had picked up significantly. In fact weekly bookings averaged over 8.6 million for the last nine weeks of the quarter, resulting in a significantly higher backlog at the end of quarter and that trend not only continued into the first three weeks of this quarter, but we actually saw an even higher amount of weekly bookings. Again, all very positive trends for this business. For those of you who keep track of utilization in this business, we believe at today's pricing we're running about 50% capacity utilization in terms of facilities and equipment and 80-85% range based on head count. We saw a reduction in pricing of between 3-4% during the quarter, however pricing on new bookings is moving up and we expect to see from flat to slightly higher pricing for shipments in our December quarter. Both our enclosure and memory solutions business were again solidly profitable at the operating profit level and capacity utilization for those businesses remains in the 50-55% range. Now I would like to make a few comments relative to the future. Even though predicting the future is always challenging, I think we have done a great job of providing you with guidance. For the last several quarters we provided you with what I believe is a fairly narrow window and we've landed within that window each time. For fiscal Q1'04, and again as Rick mentioned, we expect to see a top line between 2.8 to 2.9 billion and our bottom line in the 3-5 cents adjusted pro forma EPS. Our challenge continues to manage through this difficult time in balancing the needs of you our investors with our customers, our employee and our suppliers. This balance includes positioning the company for a bright future. Once again we are not happy with our operating results, however we do believe there are a lot of bright spots again coming out of the quarter. Again just to point out, we organically grew our top line the first time in 10 quarters, we increased operating income by over nine million despite experiencing a bit of an unfavorable mix and increasing sequentially our R&D spending by 5 million. We exited the quarter with much larger backlogs in our key component businesses, we improved our asset management achieving 10.6 inventory turns and cash cycle days of 33 without any help from factoring of receivables, asset securitization or similar products. We paid down our debt by well over 500 million which results and will result in improved profitability going forward and we generated roughly 90 million of cash from operations resulting in a nice increase in free cash flow while at the same time we grew our top line. Again, we are a long ways from being happy, however, when you factor in the challenges of the environment, we are making some very good progress and most importantly we're doing exactly what we said we're going to be doing. The biggest hurdle in making substantial improvements to our bottom line is still the over all demand for low to medium volume high technology products. As you know we have the technology, I can assure you we have the culture, we have the capacity, we just need demand to improve. We will continue to focus on the fundamentals to include improvement in asset management, cash flow, we're going to continue to improve our technology and certainly, and most importantly, our solid business practices and financial controls. We still believe that our industry and our company offer continuing significant long-term growth prospects. We recognize that we still have a lot of work to do, however I can assure you our team is up to the challenge. Our goal has not changed. It's still to stay on track with quarter after quarter of positive news. So with that I would like to turn it back to Jure and say thanks.

Thank you, Randy. Ladies and gentlemen, as Randy mentioned during the quarter we saw positive improvements in a market that we serve. Actually our bookings in Q4 were positive which is great news. But it's still very hard to forecast the future. I can tell you what our customers are seeing today. The forecasts are growing in the near term and we believe this will continue in calendar year 2004. And also, which is very exciting, that our customers are a lot more optimistic about the real recovery next year. So what does this mean to Sanmina-SCI? We should see improvements in demand in the fiscal year 2004 across all of our service offerings and product lines for three reasons. Number 1, organic growth of existing programs, number two, new program events with existing customer and number three, new market and new customer wins. As I look ahead, I remain personally very positive about the growth opportunities Sanmina-SCI is gaining in the market share. Our customers are continuing to outsource all, if not most of their products in the EMS industry at a faster rate and Sanmina-SCI will benefit from this trend. Sanmina-SCI is in a very good position to leverage outsourcing opportunities as economy and demands for our products continue to improve. So let me tell you about some of our technology products. We expect nice growth in our component businesses and also we see price improvements this year in the following products. Engineering design, services and our ODM products and services that we offer. Advanced printed circuit boards, complex and large backplanes, high end enclosure systems, cables both out of technology and optical systems and custom memory modules. Also what we see is that our customers will be out sourcing more complete system build which includes final system tests. And with our capabilities and build to order, configure to order, we do believe that we have a competitive advantage here. So going to the fiscal year 2004, Sanmina-SCI has a well diversified market and we also have a strong customer base. Now let me also tell you a little bit about the markets, how we see them when it comes to the growth in the next 12 months. Networking communication part of the business, we expect growth. On wireless communication we also expect growth there. Fixed wire communication at this time is more harder to forecast, but however we're starting to see some strengths in a product start such as Access products. On the medical side, of course that's an area that we really focusing on last 18 months and we see a nice growth coming up. Industrial and semiconductor we expect growth, defense and aerospace we also expect growth. High end computing and storage, expect growth. Personal and business computing, for next year we expect a flat but we are more or less focusing here of adding more value to this product and improving the margins. With multimedia, we're opening some new markets and we expect to grow there, at automotive, same thing, we're opening new markets and we expect to grow. So as you can see, we are optimistic about next year. So what we are going to do today as we did in last few years is really focus on the basics of our business, we're going to continue to reduce the cost, we're going to focus on key technology development, such as the custom products and ODM products, focus on quality and performance of our customers, build up our customer relationship and bottom line, improve the margins. We also have a strong balance sheet with strong liquidity that should give us a bright future to grow as demand picks up. So in summary, in the near term, visibility continues to improve for our Q1 '04 and also all the signs are pointed to a nice growth in calendar year 2004. So in summary, our number one goal is to continue to improve our bottom line and deliver the leading industry in financial results. So let me give you some of the goals that we have internally when it comes to our long-term financial metrics. DSO we expect it to go under 50 days. Inventory turns to continue to improve and get them over 11 turns. Get the cash cycle days down under 30 and long-term operating margin goal is 6-8%. Basically return on investment capital to be over 20%. So now I would like to extend special thanks to all our investors and analysts attending this conference call. At this time Randy, Rick and I would like to answer any questions that you might have. Thank you.

At this time I would like to remind everyone, in order to ask a questions please press star then the number one on your telephone keypad. We will pause just for a moment to compile the Q&A roster. Sir, your first question comes from Mr. Steven Fox.

Hello, Steve.

Good afternoon. Two quick questions for you. First of all the average layer count in the board business during the quarter and then secondly, you mentioned that cash could be an outflow if you're at the high end of your revenue outlook. Generally speaking once you cross over that threshold, what type of cash requirements do you have for every incremental dollar of revenues?

Steve, I will take the first question and then I'll turn over second question to Rick. I don't have exact data, but I was in a meeting the other day and we discussed the average layer for a quarter I believe was running over 16 layers.

Okay.

[INAUDIBLE] Since we are not giving guidance for the year, it's difficult to articulate the detail to that level, but we are expecting growth in revenue and certainly continue to improve in a cash cycle days as Jure outlined. This business is a bit unique where by as revenue grows, certainly working capital usage increases. But as revenue and mixed growth, profitability ultimately drives positive cash flow from operations. Looking our for the full year, my goal certainly would be to have cash from ops probably exceed $100 million. But that's kind of the guidelines I can talk about right now.

Thank you very much.

Thanks, Steve.

Our next question comes from Mr Thomas Hopkins.

Hello, Thomas.

Good afternoon, Jure, Randy and Rick. I want to pick up on where I believe it was Jure ended on the longer term operating margin target of 6-8%. Why, Jure, do you think you can get that? Obviously it would be on a recovery basis, obviously you've looked at the last cycle and obviously it has to do a lot with the vertical components business. But when Flextronics was here, which has a lot of vertical components, plastics, enclosure and boards, they said they were modeling out longer term recovery, operating margins to 4% and I asked them why given that J Bell and Benchmark are already kind of at 4.5. But 4 to kind of 5 is where they're looking. You are saying 6-8. There some differences in the mix, obviously, but how do you get to 6-8 and is it 18 months, 24 months, what kind of time table are we talking about.

Let me first of all comment on how we're going to get there. First of all if you look at our product here, we have a lot more technology than any of our competitors out there. The capabilities in our printed circuit boards all focused on the high end. We believe that we're going to have a recovery there, we're going to grow that business this coming quarter over 15%. And we are starting to see some really good improvements in a pricing when it comes to the quick turn and PI's. So that's usually a good sign that things are starting to go in that direction. We are also number one in enclosure business, high end enclosure for a high infrastructure product. We are leaders in the backplanes, we had tremendous potential there. In the cable business, memory modules and also optical modules. Those are the components. If you look at the history on that product, we used to generate gross margin on average on that product of well over 20%. With new models that I am talking about here, operating margin of 6-8, actually we discount that because we believe it's going to take longer term to get there. Because of our vertical integration, the pricing definitely on a component business the last couple years was the lowest that I have ever seen, but when you combine overall growth and everything, we feel very comfortable delivering these margins at 6-8%. On a timing basis, that's a little more difficult to forecast at this time. But I would expect as this company, it's all based on a mixture, but as we get the right mix and we start shipping over 3.5 million plus per quarter, I think you're going to find out that we're going to be coming very close to these margins.

Tom, let me add again kind of repeating a little bit what Jure said. We're going to talk a little bit about this in our analyst day here coming up next week. But it's a combination of four things. It's a combination of improved capacity utilization, it's a combination of some improvement in pricing, not huge, but some improvement in pricing. Importantly it's an improvement in mix and finally it's the leverage from our components business. And we're going to breakdown each piece of this to show you how with that, depending on the volume level, we believe we can get this business to really back up in the 7% operating range. Which is roughly one half of what Sanmina did from '94 through 2000, most of that period. And even if you combine Sanmina and SCI it's not too far off of that. And again we are going to do that through the leverage of being a vertical integrated company for which SCI was not. So we certainly think we can get back to those numbers just through paying attention to management and accomplishing each of these four pieces to get there.

Great. And just to follow-up, the acquisitions and the plan for your starting to design your own servers, original design server initiatives, where does that stand, how does the integration of the acquisition work with that and what kind of margins, say relative to your assembly server business, did you do for your Wintel customers, could you earn on your ODM server business.

That's a lot of questions and I'm going to attempt to go for it here. First off, clearly there're a handful of large potential customers for our 2 P and 4 P server design that was related to the New acquisition here. I would love to be able to say we signed up all three to six of these customers or 4 or 5, however many ever you want to talk about, unfortunately I'm not able to say that at this point. I can tell you that we're diligently working with all of them and hopefully at some point, as soon as this quarter, we will have some news in that particular space. And I think we are encouraged with what we are seeing that's out there. I really can't say much beyond that as far as announcements go. With respect to the model, the model will be a different model. As you know, we kind of offer, or the EMS model that we have today has some advantages and disadvantages. One of the advantages is that there is not a lot of risks for us in terms that we take with this. The disadvantage, there's not a lot of margins that are in a lot of EMS work as well. With respect and that's what our Wintel based servers are done today. They're done on a traditional EMS model and we told you at the time we did the transaction that these margins are slightly better than traditional PC margins, but basically in the same ballpark. There is no difference. We do expect that the model that we will do in terms of the Newisys servers or the 2 P and 4 P servers from Newisys, we expect to be done on a more traditional ODM model which will have better margins with respect to that, but the risk structure associated with that will be more of the ODM model as opposed to the EMS model.

Thanks a lot.

Your next question comes from the line of Scott Craig.

Hello,Scott.

Just with regard to the forecast that you are putting out for the PC oriented business, flat sounds really conservative, Randy, when you kind of look at the seasonality that would normally happen there. Do you think you experienced a pull forward of demand there and have customer forecasts trended a little bit lower recently or are you guys just being ultra conservative here?

In fairness of a full disclosure here, I really don't think we are being overly conservative, I think we're being somewhat. Bear in mind that more than 90% of the products done in our personal business computing are custom configurable products that are sold to enterprises or businesses and they're not put through the channel that's there. So although we do expect a little bit of seasonal strength, we expect a lot of that to come from budget flushing and those things as opposed to being on the shelves and being ran through the holiday season crowd there. Because that's not how the channels are for most of the products that we do. There is some of that, but most is not that way. So therefore, I think we are being a bit conservative because we do kind of expect the seasonal strength here. We are forecasting essentially to be flat, but I would rather be that and have favorable surprise out there than being the other way. We were pleasantly surprised at the strength of that business in the September quarter being up 8%. We didn't expect that as you know, as I said. So hopefully we will be favorably surprised there as well. But we would rather be conservative going into it. But I do want to point out this is not something that is consumer driven. It's more enterprise or business spending driven.

Just a quick follow-up for Rick. On the revaluations, Rick, that was a little bit unexpected, helped you guys out by 5-6 million in the quarter and going forward, and that's just in the PCB business. Are you doing any sort of revaluation work outside of what you did last quarter in any of the other segments that we could see a further reduction in appreciation going forward?

No. Scott, at this time I think when we did the testing and just because of the over all industry trends in largely PCB and I did mention some small enclosures as well, that we don't anticipate anything further at this point in time. But again the real reason is if you take look at the trend, the trend of those businesses were down and when you take a look at whether or not you have a testing event, we felt that in conjunction with doing the overall annual impairment test, it warranted a look and that's what created it.

Okay, thanks a lot.

Your next question comes from the line of Louis Miscioscia.

Hello, Lou.

Hi, guys. How are you.

Good.

Let me go to Jure first. I think you pointed to a number of areas, networking, industrial semiconductor, high end computing, where you mentioned growth. Now were you suggesting that for organic growth or growth through the end markets, I guess when we look out let's say over the next 12 or 24 months?

When I'm talking about this is really specifically to Sanmina. I'm talking about how we really did a good job in last, I would say, 12 months diversifying our customer base and also diversifying the markets. So when I look at the forecast that we are looking with the key customers today in this area such as,let's say, industrial semiconductor, we have been working on some of these programs for the last two years, we want some nice programs, we are starting to see the whole industry is becoming more positive and our customers are more optimistic about the future. And based on our forecast that we are getting from our key customers here, we will grow in this business. The same thing like the medical side of the business. Again we put a lot of work into that side of the business and we're expecting a nice good growth this year. Defense in aerospace, since we merged with SCI we're really focused to growing this business and think there is a tremendous opportunity to grow, so these are some of the key markets that we did not focus on them as much before, but in the last couple of years, we refocused and it's starting to pay off. And it will payoff in this 2004.

Could you give us a thought maybe when we look out over 2004, either fiscal or calendar, let's make the very conservative statement that all of tech is flat. Would you think you'd be able to get 3, 4, 5% kind of organic growth in these different ones you just mentioned?

I would expect more than that.

Okay, great. And then any comments, I guess, just on the pipeline of other business and other wins out there? Does it still look pretty good and maybe interested in putting a dollar amount on it.

First of all, let me give you an example. When I look at our growth right now, we are mainly focused on organic growth and we are going to do deals like we did with Tellabs, in North America where this is our customer for the last 15 years they decided to outsource and we were fortunate enough that we earned that business with them for many years and they give us the full business to us. We expect growth like that and we also expect some maybe strategic acquisitions to help us grow some more businesses in let's say in a defense industry or some other probably a more strategic for a long-term growth.

Last question is that as things kick in 2004, do you think you're going to end up getting the leverage you think the pricing environment by just checking a lot of your end customers are still going to be pretty difficult putting continued pressure on you.

Well, you know there always is going to be pressure from our customers for a better total cost. But I think that as an industry, we bottomed out, I think we pushed down as low as this industry can survive. If I analyze this, I'm talking out there with my customers, they are looking for a stable supplier, the technology is changing, there is a lot more demand of technology and I think the companies that can provide the leading edge technology and time to market I think we'll be able to get a little bit prices and I really believe the pricing environment will improve in 2004 on.

Great. Thank you.

Sir, your next question comes from the line of Michael Morris.

Michael.

Good afternoon, everyone. So I wanted just to ask a couple of questions about your 6-8% operating margin goals and when we think back to the old SCI and if we look at let's say your high volume computing segment, PC and Enterprise computing segment, and maybe multimedia, that's about half of your company. I guess I would like to know if your assumptions on the 6-8% EBIT margins assume that SCI is operating at about the same kind of profile that it operated at during the 90s, something different and I guess, [INAUDIBLE] I'm saying can you manage that business better than SCI managed that business?

We are not SCI, we are the new company called Sanmina-SCI. And that's what we did in the last two years, Michael, is really to create what I would call new company that can be very competitive in the world. I can tell you we are well positioned to do that. That was really the whole idea behind the merger. As we put these two companies together, the goal was to really to create more value for our investors and I believe that we accomplished that and we now need to start delivering the results. Let me go back to why we think we can. Again, Randy and I explained it a little bit earlier, but we believe the our board business should be generating hopefully in the near term over 15% operating margin. our enclosure business should be generating over 10% operating margin. our backplane business typically generates over 14-15% operating margins. We're tremendous leveraged and we're starting to see a demand there. The lead times on boards are going out, the lead times on enclosures are going out. And I think when you combine with what we are selling today with our focus, what we call focus markets, that we are going to the full system in a high end systems in wireless side, in a networking side, in a medical side. We are selling the systems, we believe that we are adding a lot of volume through all these things and better management, it will feel very comfortable hitting those margins and I can tell you right now, this industry as a whole has to deliver the better resolve than what we are delivering today.

I want to add here, Michael, for your help here, if the high volume business remains as you said roughly half, we are not saying we are going to deliver 6-8% margins. What we are saying is we believe that going out over the next 2-3 years, we are going to grow the business that tends to be more low to medium volume high complexity kind of business, like com infrastructure, enterprise computing and our industrial medical defense business. We are going to grow that to where this high volume business is more like a third of our business. And we don't expect the margins to significantly change in the high volume part of our business. What we do expect to get is a lot of leverage from the growth and the com infrastructure, enterprise computing and the industrial section of our business. Because that leverage will come from higher capacity utilization. A great example is that we used to have two [INAUDIBLE] space stations factories in North America. Both were running at the bottom here, around 15% of capacity utilization. We decided to close one and move it into the other, but all that did was move, that did save some costs, and you saw some improvements, and that's what you have seen over the last year, but still capacity utilization is hovering in that bay station factory maybe around 35%. As that volume picks up, they will become more efficient and clearly with that efficiency will come an improvement in over all margins. So again I think our goal is to break that down next Tuesday, but I do want to clarify, it's not just managing the business better, because there is only so much we can get. We can't get from 1 1/2 to 6% just by managing the business better. It has to come from a combination of those four things, improve capacity utilization in those three businesses I mentioned, somewhat improved pricing As a result of those businesses growing at a faster rate than personal and business computing, it'll be an improved mix, and then finally as Jure said, the leverage from our components business which includes leveraging some of the stuff that the former SCI used to do, like for Ericsson and Nokia and Nortel because they didn't have these components and we do today.

Geat, very helpful and just inferring from that, Randy, then your goal would not be on the high volume side necessarily to provide any of the vertical inputs to that process. That's not necessarily anticipated.

There is a little bit there that is, and I'm getting into this a little bit deep, but as some of our platform products, like the 2 P and 4 P processors that we have that Newisys is going to do, we do expect that some of that stuff could fall under this business, but margins will be significantly enhanced there. Our goal is not to grow that bucket of business that represents 40% of our revenues today. That's not our goal, nor do we expect to grow that in the future. We expect that it won't go away. We just expect to grow the rest of our business at a faster rate and somewhat enhance the margins in that business through the ODM strategy not as a result of anything else in that business.

Okay. I'll just shift gears and we appreciate the level of detail on your businesses. Was there anything by geography that you can share with us in terms of trends that you saw in the quarter, that you expect in the fourth quarter?

From the business development point of view, we saw nice demand of course here in North America and Asia and Europe maybe starting to move in the right direction, but most of the exciting news came from North America and Asian markets.

Okay. And my last question, maybe for Rick, was there any currency impact, Rick, in the quarter? Nominal, Michael. It was very immaterial. It was probably less than $3 million the other day. Okay, great. Thanks very much.

Thanks a lot.

Your next question comes from the line of Patrick Parr.

Good evening, guys.

Hi, Patrick.

Regarding the ODM initiative, I guess when you did the Newisys deal you talked about being able to do something in the range of 200 million in ODM related sales in '04 and around 500 million, I guess, in fiscal '05. Is that still sort of the intension here?

Patrick, there's still intension there, I believe that combining the Newisys project and other ODM products that we have in design, we expect to get to that run rate exit the year, and then next year, 2005, the potential for that product should be 500 plus.

Okay, and the returns on that would be in what range, perhaps. That will be as Randy said, they should be at the better margin than our standard EMS product. These things we're going to build in our own board, our own metal, our own design, definitely will be a lot more profitable than what we have today on the standard products.

We don't want to be too much right now cause we're going to really sell these products at the market right now, there's a lot of negotiations going on with some of our key customers, so it's not probably the best time to discuss the margins.

Regarding the restructuring. I guess you're at least planning on completing it by, now the March quarter of '04, I think that's what you've been saying, though.

Patrick, we will complete it by March quarter, let me say that and I'll let you ask the rest of the questions.

With what you have remaining, what sort of incremental benefit would we expect to see in terms of cost savings, if you could attempt to quantify that.

Patrick, what we've been saying all along is that obviously you're going to see the real benefits from that kick in when it's about completed. So, you're going to have a little bit come in Q1, this coming quarter, but most will kick in in Q2, the March quarter. And we would anticipate that the overall quarterly savings at the end of the day there, to hover around $50 million give or take a little bit.

Okay.

We're pretty consistent with that, and nothings going to change at this point in time from that focus.

Okay. And then one final quick one. Given the profile of your business now from a customer perspective, I know you're not giving guidance for the March quarter, but are we in a seasonal pattern such that March could be down from the December quarter, or is that not the intension at this point?

Randy?

That's a good question and I know that that's a question everybody probably is eager, and I wish we had enough visibility, or we were comfortable enough to provide some visibility there for March, and we did not do that. With that said, I can tell you internally our goal is to have March at a minium flat with December. I know that isn't growth, but given that we do expect a seasonal uptick in December, I think if we can deliver a March that's flat with a strong December, and we do expect December to be up this year. I think that's going to give us a tremendous jump on FY '04. So, even though we're not providing visibility, and I can just tell you at this point, our goal is next quarter at this time when we do provide visibility, our goal is to keep March pretty close to flat with the December quarter.

And, Randy, that's really based on offsetting some of the natural seasonality with new business wins that you have in the pipeline.

That's exactly the case. We did announce one because we were kind of asked to do that by our customer, and that was Tellabs. You know that transaction is really going to benefit December very very little, almost nothing, and it's really going to benefit the March quarter. We have another similar one that we didn't announce, that's not too far off the same ballpark size as that, that should kick in and help March as well. So, specifically to answer your question, yes, it is a combination of what we think is going to happen in the market with new wins out there to supplement specifically the March quarter.

You are not ready to announce this other one today?

Our style is not to do that at all. We wouldn't have done Tellabs if they didn't ask us to do it. So, we prefer not to do that just for competitive reasons.

Thanks.

Thanks, Patrick.

Your next question comes from the line of Michael Walker.

Hello, Michael.

Thanks a lot. Good afternoon, guys. Just two questions. The first is you briefly mentioned that the wire line area is something that you are not comfortable predicting any growth for next year. I'm wondering, outside the DSL's if you are seeing any signs of life in long haul wireline.

The reason I said that, Michael, is at this time it is hard for me to forecast. I'm basing strict like this I want to make sure that when I'm talking forecast, I'm really basing on a project and a customer that I'm involved. I'm really not trying to be an expert in the industry, because I am not. We are not. We do have some good fixed wire programs in place, including [INAUDIBLE], believe it or not, there is a lot more activity and signs in that business today than was definitely a year ago. So I can tell you that I'm optimistic, but I have a tough time right now justifying with the numbers I'm looking at to say we're going to be able to grow X next year, but it could happen.

Most of the things we are seeing today really have to do just with just the fiber to the premises initiatives that we have primarily DSL in the residential and IP&ATM in the enterprise space. We've got our fingers crossed for the long haul, but right now that's not really where we are seeing most of the activity.

Okay, thanks. And the second question is I need a little bit of help with the IBM numbers. You said it was a little below 10% this quarter. I'm showing that as being less even than the quarterly run rate for just the server deal that you signed earlier this year and then I think you have the desk top on top of that. I am trying to figure out what the mix of IBM business is looking like right now..

I think what we said there was the one customer over 10%. Which in this case for a quarter and for the year was IBM. But definitely our business for the IBM is bigger than 10%.

Okay, great. I had it wrong. Thanks a lot.

Your next question comes from the line of Thomas Dinges.

High, guys. I'm hoping you can help me a little bit on the outlook into September and what the impact is on margins. If we assume the operating expenses and R&D stays relatively at these levels and SG&A moves up maybe a tad, at the middle of the range that would imply that margins on the gross margin line probably don't move all that much. Rick, is that a fair assumption here.

Help me out with your question again. Are you talking about through the year or into the December quarter?

Just into December.

December quarter, I think I indicated that the margins were going to be somewhere in the 4.7 to 4.9% range, if I'm not mistaken, that's gross margins.

If you take the mid-point of that..

Take the mid-point then you can go ahead and do that math. That's correct.

Okay. And then also this one will probably be for Jure. Jure, Randy had mentioned that the weekly bookings were running well above what you were running in September which was quoted somewhere as below about nine million. If we just mark that up a little bit would imply that you are running quarterly, or this quarter probably somewhere in maybe the 110-120 range at about 50% of utilization would put you above say a billion dollars in total capacity. Where does that business have to get to before you guys start to really see those contributions where you're talking about operating margins in sort of the greater than 15%.

Let Randy take that one.

We don't break down the necessarily outlook for individual businesses, but we really think that our board business is going to be up a minimum of 15 and hopefully 20% in terms of revenue going forward. And as we disclosed to you, because we want to be full disclosure and we want you to understand that business got a big, big boost as a result of this one-time asset impairment charge and as a result it was profitable in September. And clearly if it was profitable in September at run rates that were in the 80-85 million dollar range and expected to grow 15-20%, it 's going to be profitable going forward. I don't want to predict the exact profit of that here. I will tell you that we think it's basically linear in terms of as volume goes up. And although if you take that 15-20% and you multiple it out, you are probably just shy of 100 million, it's still a nice sequential growth and we're optimistic that based on the trends we are seeing that's a sustainable number, because now we're pushing 13 weeks in terms of seeing that trend. We think it will be there going forward. So the good news is that I think we are clearly in the black from here on out. And I think it's just going to continue to go up.

If I can add not just for that business, Thomas, we're also on our enclosure business and another component business we are experiencing the same, demand is going up and actually some of these products, it will be tough to be able to fill our orders in December.

Thank you very much.

Your next question comes from the line of Todd Coupland

Hello, Todd.

Good evening, everyone. I just want to ask you a little bit about your wireless business. Just wondering has there been any market share shifts amongst the tier 1 EMS guys with respect to the infrastructure business.

It really depends on how you look at the data. I think all tier one's are involved in a wireless infrastructure business in one way or another and really all the fans in a program that one of us have or don't have depends how much of that business is going to grow. As you know in this environment when the last couple of years that the prize was a key in a lot of these things, a lot of our customers were shopping around anything that was available. But I think that's changing and I think what's happening, I think the company that performs well will continue to gain the share of that business. Let me tell you about ours. Our wireless overall business is growing this quarter. And we expect it to grow next year.

Todd, I'm going to add, cause maybe you've heard some things out there, I don't know. We try to position ourselves for the programs that we think are in the future are going to be positively in terms of growth. And we have not really had a problem with shifting some of this work that was older technology in exchange for winning some new programs here going forward. So if you've heard some things out there maybe with respect to TDMA or something, we're not going to deny that, but in exchange for that we want some new programs and that business is actually as a result of that, is really up for us going forward. I do think there might be small shifting in what's going on out there. But we are okay with it because we are positioning ourselves for the programs we think that are going to be key to the future.

Fair enough. Just going back to the operating margin question. So just to be clear, your goal of 6-7% is something that is a couple of years away. You hope to start to trend toward that in 2004. Did I hear correctly?

That's correct. Our goal, Todd, right now is to make improvements every day. How fast we get to those margins is going to be all depending on a demand and how fast this economy grows. It's all mixed too. It's not all revenue driven. We believe all the analysis that we did and we already talked about it, we can get there comfortably with the right mix.

Okay. Then I'm just going to try this seasonal question one more time. If we X out your PC business, which you're saying is not terribly seasonal, you obviously seeing seasonality in the infrastructure and multimedia business, etc.. So it's fair to assume that probably some of that's going to come off in the March quarter as well. Is that a reasonable way to look at it?

I think the thing that definitely I would agree with that is the multimedia business which is 5-6% of our business. I think we could expect some of that down in the March quarter in the personal business computing. Again a lot of that is going to be depending upon things like enterprise spending in terms of this, if they are going through an upgrade and really it's a very good question, Todd. It's hard for us to predict that. But I want to keep pointing out that our portfolio of personal and business computing really solves or serves enterprise and business spending by about 90% as opposed to consumer spending. So it's hard to predict exactly what's going to happen in enterprise spending in March, but just as I said I don't expect the big benefit in December nor do I expect, as it would be if it was consumer driven, nor do I expect necessarily the big downward trend in March if it was consumer driven.

That was my assumption. I was thinking more along the lines of multimedia communications.

Multimedia will clearly falloff in March, no question.

Okay, thanks a lot.

Operator, we have time for one more question.

Your final question comes from the line of Jim Savage.

Hello, Jim.

Hi, how are you?

Good.

I do have a couple of questions having to do first with the margins you are expecting. Our expectation would be that if printed circuit boards is up 15% that you should be able to get some contribution margin that's well in excess of what your normal margins are in the rest of your business. Your peers in printed circuit boards are saying 40% contribution margin on any [INAUDIBLE] revenues.

You are right. You know that business pretty well, Jim.

If you put 15 million dollars there, you've got a 6-$7 million incremental gross profit. Is there a mix shift, a negative mix shift in the December quarter otherwise? Is it because of the multimedia strength that you are expecting that is lower margin business.

Right now today the visibility for this quarter, as I said earlier, Jim,is excellent. It all depends, another day, what customers are going to take. It's hard for us at this second to predict the mix. But over all I would expect a better product mix in the December quarter than what we had in September.

If you have a better mix, then you should have better gross margins.

Yes. Let me comment here a little on that as well. Again, as you know I really focus on operating margins in this business so you can reflect this up as well. But if you take the mid-point of our guidance going forward, it's about $12 million increase for next quarter as a result of the pick ups. So we do think that we will see a pick up in terms of both gross profit as a result of the leverage here and as a result of the growth on the top line here going forward. We're going to be relatively conservative in our forecasting because we want to deliver on that, but we do expect an improvement as a result of the very thing you said.

Okay. Another question that has to do with an allied thing, we've been hearing a lot about backplane that there was a market shift into Asia for a lot of backplanes. Do you think that there has been that kind of shift away from North American suppliers and as the infrastructure business comes back, where do you think that that business can go and what kind of revenue growth can you anticipate from it.

Jim, the only shift that I have seen so far on the backplane were lower technology. But still the high end backplanes are still staying here. I think the biggest growth in the backplanes you're going to see as you see recovery in the telecommunications side of the business and infrastructure. We have been doing a lot of new products and a lot of quick turns. So we believe that we want a lot of good programs for future demand. We expect our backplanes to grow nicely. As you know that business really suffered as a telecom collapsed in the last couple of years, but we are starting to see recovery and if that comes back, as you know the margins on that thing when you build a bare board, the back plane plus the assembly and the testing, they become actually better than a bareboards. I don't know where it's going go, but definitely is needs to go. That business for us three years ago was over a billion dollar run business and today that business is a run rate probably closer to 300 million. So it has a lot of room for growth.

That business for us was up in the September quarter both on the top line and bottom line.

Okay. That's great. One other thing which is that as we look toward your margin goals and obviously part of that has to do with the mix shift, can you, even though obviously we know that you are not going to tell us who you have wins from, can you give us some idea as to the sectors in which you're expecting the growth to come during the course of fiscal 04.

I talked about it earlier all those different markets involved. Definitely I thought we would get into some really good gains in a semiconductor area, industrial, military, medical, also high end computing and communication side of the business with some new programs.

These are wins that you've already booked that are scheduled to start production during the course of the fiscal year?

That's all we talk about.

Great. Thank you.

Ladies and gentlemen, sorry that we could get all of your questions today. But if you have any more questions, please give us a call. But before I let you go I just want to also remind you that we are going to be in New York, we're having an Investor and Analyst day in New York. That's going to happen on Tuesday, October 28. It's going to be at the Great Hyatt from 8:00 to 2:00 that day. I hope I can see you there and please register. With that, thank you for your time.

Thank you, bye bye.

Thank you, bye bye

Ladies and gentlemen, this concludes today's Sanmina-SCI fourth quarter and fiscal year end conference call. You may now all disconnect.