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Tyco Electronics, Ltd. (NYSE:TEL)

F1Q09 (Qtr End 12/26/08) Earnings Call

January 28, 2009 8:30 am ET

Executives

John Roselli - VP, IR

Tom Lynch - CEO

Terrence Curtin - CFO

Analysts

Shawn Harrison - Longbow Research

Brian White - Collins Stewart

Steven Fox - Bank of America

Matt Sheerin - Thomas Weisel Partners

Jim Suva - Citi

William Stein - Credit Suisse

Amit Daryanani - RBC Capital Markets

Carter Shoop - Deutsche Bank

Amitabh Passi - UBS

Operator

Ladies and gentlemen thank you for standing by and welcome to Tyco Electronics First Quarter Earnings Call. At this time, all phone participants are in a listen-only mode.

Later, there will be an opportunity for your questions. Instructions will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to turn the conference over to Vice President of Investor Relations, John Roselli. Please go ahead, sir.

John Roselli

Thanks, Gail. Good morning and thank you for joining our conference call to discuss Tyco Electronics first quarter results for fiscal year 2009, and our outlook for the second quarter. With me today is our Chief Executive Officer, Tom Lynch, and our Chief Financial Officer, Terrence Curtin.

During the course of this call, we will be providing certain forward-looking information. We ask you to look at today's press release and read through the cautionary statement that we have included there.

In addition, we will use certain non-GAAP measures in our discussion this morning, and we ask you to read through the sections of our press release that address the use of these items.

The press release and all related tables can be found on the Investor Relations portion of our website, at tycoelectronics.com.

Now let me turn the call over to Tom for some opening comments.

Tom Lynch

Thanks, John. Good morning, everyone. I am going to give you an overview of our performance, and some headlines of what's going on in the business. Then I will turn it over to Terrence Curtin, who will walk you through our Q1 results in detail, and provide you a status of the cost actions we are taking in response to current conditions.

It is a bit of an understatement, but this is clearly a tough business environment and, in many ways, unprecedented. It does not feel good, frankly, but despite the circumstances I will talk a little bit more about this later on.

I am glad we are in the kind of company that we are in. It that has financial strength; it is a leader. Besides driving cash and getting the cost out, the other key area we are focusing on is making sure that we really do come out with some competitive advantage after all of this. I will touch on some of the things we are doing in this regard further in the call.

Let me talk about the first quarter. We expected a tough first quarter, when we were on the call with you three months ago. It turned out to be even tougher than we thought, as a result of continuing and weakening demand through the quarter.

Most of this weakness was in our Component segment, where approximately two-thirds of our sales are related to consumer markets. This is the area that was hit most significantly in Q1.

We saw, and we continue to see, weakness across virtually all our markets served by our Components segment, and it is in all regions of the world. Asia is just as soft as Europe right now.

In Q1, sales in this segment were down 25% year-over-year and orders were down 34%. Based on the current order levels, we expect the Component segment sales to decline in the neighborhood of 40% in Q2. This is an additional 15% decline from our Q1 revenue levels (inaudible) we expect them to be down about 40% in Q2.

You can see that across our Components business the weakness is very broad-based. However, we do have areas like aerospace and medical that are holding up okay. In our big markets, computer, appliance, Automotive, business is very soft.

Now, it is clear that we are being impacted by both end user demand and inventory reductions by our customers. This inventory reduction is pretty much occurring in every end market. Just to give you a little bit of a flavor; in our European Automotive business, our sales were down 36% organically in Q1, compared to European new car sales and production being down in the range of 20% to 25%.

Everybody in the chain is aggressively trying to adjust their inventories, not only in line with the current low levels of demand. Everybody is trying to preserve their liquidity situation. We are definitely in the middle of that, and we are feeling the effects of that in a big way. We do expect those inventory adjustments to continue through the second quarter.

In our other three segments; Networks, Wireless and Undersea, which serve primarily industrial and infrastructure markets and account for about 30% of our revenue, sales declined organically 6%.

Now these are longer cycle markets in nature and we would expect less volatility in demand. We are seeing our customers being increasingly cautious in their spending levels in the current environment.

Let me touch on each of them a little bit. In our Network segment, sales will be down about 10% year-over-year in Q2. Within the Energy and Telecom businesses, within that segment, sales will be down slightly. Again, the demand is holding up, and in our building networks business we are going to be down about 20%. We saw those trends in the building networks business start last quarter.

Our Undersea, Telecom and our Wireless segments will be about flat with last year. In Undersea and Wireless, order rates continue to remain pretty solid. Overall, with this kind of demand environment and the inventory correction going on; Q2 is going to be weaker than Q1.

We currently expect that our Q2 sales would be in the range of $2.4 billion to $2.5 billion. This is a 32% to 35% decline from last year's $3.7 billion, and it is a sequential revenue decline of about 11% to 14%.

Now, we are not sure how long this situation is going to last; I am not sure anybody is out there. We are taking a number of actions both to sort things up in the short-term, as well as to make sure that we come out with better leverage when the business starts growing. Fundamentally, we are very focused on improving our competitive position. It is not just about cost; we are also focusing on making sure we strengthen our competitive position.

Let me go through a few of reasons why I feel despite the current circumstances, continue to feel very good about our prospects. As the world leader in interconnect, we are continuing to invest in new technologies, and we are also focused on improving our engineering productivity, so better solutions, faster, more products, those are very key to growing in this business.

The long term drivers of our markets are still attractive. Of course, they do not feel so great right now. When you step back and when you look at what drives this business, which is fundamentally smarter electronics in almost every applications in the world, you know, it is a good business to be in.

These electronics enable new features. We all know about the drive for energy efficiency and alternative energy solutions. There's higher data speeds required in virtually all of our products; so this kind of fundamental dynamic, while slowing down right now, really plays to our strength because of the significant amount of resources we have in sales, marketing and engineering around the world.

It is also a time when customers need to know that their key suppliers are financially viable. Not only that they are going to be here for the short term, but that they can continue to invest in innovation in years to come. I think there is no question that our customers can count on us for that.

We are seeing a little bit of evidence out there that the customers are starting to look to their strongest suppliers for new programs, and we are making sure we are going to be in a position to take advantage of that.

We also continue to make organizational changes, to strengthen our company for the long-term. We are taking four businesses with high growth potential our Aerospace, Medical, TouchSystems and Circuit Protection businesses, which are currently part of our Electronic Components segment, and are moving them into a newly created Specialty Products Group.

That is not the most creative name in the world, but the purpose of this move is to increase the focus on growth in these businesses and we have recently included a new leader to run this group. These businesses represent about $1.6 billion of annual revenue. We have a range of products in these businesses, and we expect that these will be high growth for us as things begin to return to normal.

In the second quarter, we will begin to report this Specialty Products Group as a separate new segment to give you more insight into what's going on there.

In addition, in other areas of organization as I discussed on the last call, we have combined two of our largest interconnect businesses within electronics Components, what we used to call our computer and communications business and our global industrial business.

We put them into one business late last calendar year. That merger, so-to-speak, is going very well, and we expect to get significant improvements in operating leverage, technology and market scale out of it.

Let me talk about our cost and productivity improvement plans. As you know, before we launched.

John Roselli

We are going to actually move to a different location. We understand there is a lot of static on the other end. If you could just bear with us for a couple of minutes, we will be back on.

Operator

Ladies and gentlemen, once again, please remain on the line. Your host line will be re-established momentarily.

John Roselli

Thank you for holding. We apologize for that. We had a serious static issue in the previous room we were using. We are going to resume now. Tom's going to start at the beginning, and we will go through it. Please bear with us if you did hear clearly. Thanks.

Tom Lynch

Thanks, everyone. I will speed it up a little bit on the first part of this. Apologize for that. I guess when it rains it pours. As I was saying, we expected a tough first quarter and it certainly turned out to be tougher than we thought, as a result of continued weakening in demand throughout the quarter.

This was felt especially in our Components segment, where approximately two-thirds of our sales are related to consumer markets, and in the first quarter it was the consumer-related businesses that were hit the hardest.

In Q1, sales in the segment were down 25% year-over-year and orders were down 34%. Based on this rate of orders, we expect Component segment sales to decline about 40% in Q2. This is an additional 15% decline, from our Q1 revenue levels, and of course as would you imagine, our Automotive business, which is our largest business is also going to be down about 40% in Q2. It was down 31%, organically in Q1.

Now, it is pretty clear that this is a combination of weak end demand, coupled with significant inventory corrections going on. Everybody in the supply chain is trying to get their inventory in lines and shore up their liquidity as fast as possible which is exacerbating the inventory declines.

Just to give you a little bit of a flavor for this, European new car sales and production in our first quarter were down in the 20% to 25% range, and our volume was down 36%; so, clearly a significant inventory piece.

We are also seeing the same kind of adjustments in mobile phones and the computer end markets. We do expect that this trend is going to continue through the quarter, through the second quarter.

In our other three segments; Networks, Wireless and Undersea, which serve primarily industrial and infrastructure markets and account for about 30% of our revenue, sales declined 6% organically. These markets are longer cycle in nature and we would expect less volatility in demand, but our customers are clearly being cautious in their spending levels, because of the uncertain environment.

Let me talk a little bit more specifically about these segments. In our networks segment, sales we will be down about 10% year-over-year in Q2. In energy and telecom, we will be down slightly and in enterprise, which is our building networks business we will be down about 20%.

In the Undersea, Telecom and Wireless segment, order levels so far are holding up, and we expect revenue to be about flat this last year. When you take all this into account, the weak demand environment, the inventory correction going on, Q2 is going to be a weaker quarter than Q1.

We currently expect that our Q2 sales will be in the range of $2.4 billion to $2.5 billion. This is a decline of about 32% to 35% from last year's $3.7 billion; and it is a sequential decline in the range of 11% to 14%.

Now, as I mentioned earlier, these are clearly really difficult times, and our business is definitely right in the middle of all these tough times. When I step back and look at the company from a distance; there are a lot of good things going on in the company. The fundamentals, once we get through this, will remain strong.

I want to share just a few things, why I remain really bullish about our company. First and foremost, we are the leader in the interconnect industry, we continue to invest in new technologies and we are also focusing on improving engineering productivity. We need to continue to drive new solutions for the customers even though demand is way down. They need solutions that are integral to their architectures in the future.

The long-term market drivers are still attractive. Doesn't feel that way right now but, again, the demand for smarter electronics, which enable new features, energy efficiency or alternative energy solutions and higher data speeds in almost all applications, to name a few, is not going to slow down, and this plays to our strength with our 5,000, 6,000 sales folks out there calling on customers and our roughly 7,000 engineers designing products and introducing products into our factories.

In a time like this, it is really important that customers know that their key suppliers are financially viable and continue to invest. In this regard, we are beginning to see some early evidence that the key customers are looking more to their stronger suppliers for new programs, and we will be prepared to capitalize on that.

We also continue to make organization changes to strengthen our company for the long term. We have recently taken four businesses with high growth potential; our Aerospace, Medical, TouchSystems and Circuit Protection business units and which are currently part of our Electronic Component segment, and are moving them into the newly-created Specialty Products group.

The purpose of this move is to increase the focus on growth in these businesses and we have also recently recruited a new leader from outside the company to run this group. Today, these businesses represent about $1.6 billion of annual revenue and they all have attractive growth characteristics and very nice product offerings, and this is a group of businesses that we have high expectations for. We will begin to report them as a separate segment in Q2.

In addition, as I discussed on the last call, we have combined two of our largest interconnect businesses within Electronics Components, Computer, Communications and Industrial into one, in order to better leverage our operating technology and market scale.

The way to think about this new business is, it is principally an interconnect business, now that we have taken some of these other more niche businesses out of it and put them into Specialty Products. Let me touch briefly, and Terrence will cover this a little more later on, on our cost and productivity programs.

As you know, when we launched almost two years ago, this was a key focus of us, to restructure the company, especially our manufacturing footprints, so that we could increase our operating leverage. We've made good progress on the footprint simplification efforts.

By the end of this fiscal year, we expect to have less than 100 manufacturing facilities, and that represents a decrease of about 25% from where we were at the beginning of fiscal 2007.

Admittedly, the benefits of these actions are a little hard to see right now, because at the rate at which the volume is declining, is overwhelming it a bit, but we are making good progress there in both taking the cost out and simplifying the business.

The key to these actions or really the goal of all these actions is to make sure that we can get to 12% operating margins at about a $12 billion sales level, which then will enable us as normal sales growth comes back, to continue to move towards our 15% operating income goal. We have not taken our eye off that. It is going to take a little bit longer obviously because of what's going on in the global economy. I still believe that in the mid-term, that is the right target for our company.

Last, but certainly not least, in this regard, we have a strong balance sheet, and I expect us to continue to generate solid cash flow, even at these low business levels. We did use cash in Q1, but this is typically our weakest quarter, as we come off our year-end, and frankly we are still chasing the business down from a production standpoint, so our inventory grew in the quarter.

If business were to continue at the Q2 levels, I would expect us to generate free cash flow in excess of $800 million, excluding cash restructuring outlays and that is $800 million for the year.

A couple of other topics; as regards our wireless business, the State of New York contract: on January 15th, the state notified us that they were terminating the contract for the state-wide wireless network. This was not a surprise, but we believe that state's termination is improper and we stand by the system we delivered.

Just a note, we have more than 400 systems currently in use in operations and we continue to win new projects. Our backlog is at the strongest level it is ever been in this business and in just the last two weeks we have won three important new strategic projects with an initial value of about $100 million.

We also announced on January 14, that our Board had approved a proposed change of the company's place of incorporation from Bermuda to Switzerland. This proposed move is subject to shareholder approval and if approved, we would expect this would become effective during the second calendar quarter.

Now, I am going to turn it over to Terrence Curtin, our CFO who will walk you through in more detail on our performance and then I will come back to talk about our outlook and answer your questions.

Terrence Curtin

Thanks, Tom and good morning everyone. Let me start by reviewing the sales performance by segment and end market, and then I will review our earnings, margins, cost actions and a few other items.

Starting with our largest segment, Electronic Components, sales declined 25% in the quarter and were down 22% organically. The decline was broad-based with EMEA and Asia being down approximately 25% and the Americas being down 16%. These decreases were in almost all end markets, particularly hard-hit by the consumer related markets.

Let me spend some time on the major consumer markets that we serve in the segment. In the Automotive market, our sales declined 35% overall and 31% organically. This was worse than we expected coming into the quarter as OEMs made deeper cuts in production to reduce vehicle inventory levels and this had a corresponding ripple effect throughout the entire supply chain.

We estimate that global production was down 20% to 25% in the quarter. From a geography perspective, our sales in Europe declined 36% organically; North America, we experienced a 33% decline, and in Asia, we declined 22%. We do expect a further drop in global production in quarter two, particularly in Asia, where OEM production levels are forecast to be down as much as 40% year-over-year.

In two other important consumer markets, computer and mobile phones, our sales declined 30% organically reflecting declines in both end unit demand coupled with supply chain adjustments. In the mobile area, despite the market slowdown, we continue to make good progress broadening our product offering, and our customer base in this market.

Now, let me cover the major industrial and infrastructure markets served by Components. In the aerospace and defense market, we grew 1% organically. Sales to distributors, which account for approximately 40% of our sales in this market, were down much more than the overall market, as we saw distributors aggressively reduce their inventory positions.

Order rates have slowed, particularly in the commercial portion of this market, and we do expect revenues in quarter two to be slightly down organically on a year-over-year basis. On a positive note, we have increased our content on new Boeing and Airbus platforms, and we expect to see the benefit from these wins later in our year.

In the industrial equipment market which for us include traditional industrial equipment, HVAC, and building equipment as well as the solar programs we talked about, our sales were down 9% or an organic basis. Demand for these solar products that we sell, we still continue to see growth there, however we have seen the rates slow and then in the industrial equipment and commercial building side, these markets are certainly being impacted by the global slowdown and we do expect this to continue as people trim back on capital spending.

Finally, in the communication infrastructure market, sales declined 13% organically. We do see these sales being impacted by lower capital spending by both businesses and telecom operators.

Now, let me turn to our Network Solutions segment, where we had a sales decline of 11% on a reported basis and 2% organically. Sales to the energy market grew 3% organically in the quarter. We did experience solid growth in North America and emerging markets which more than offset a continued slowing in EMEA.

The structural changes that we made in our go to market organization in North America over the past two years, we are now beginning to see the benefits as we are picking up share gain. This North America market in the energy space has historically been an under penetrated market for us.

In the building networks market, our sales declined 5% organically. As we stated on the last call, order trends in this market have continued to slow as project delays have become more common, particularly projects related to new commercial construction. As Tom mentioned, we expect sales in this market to decline further in quarter two.

Finally, our sales to the communications service provider market declined 5% organically. While we continue to see customers select to invest in fiber-to-the-home and broadband wireless projects, spending on upgrades and maintenance of existing networks, we have seen slowed.

In our Undersea Telecommunications segment, as expected, sales declined 16% organically versus the prior year, due to the construction of the large transpacific project last year which is now complete.

New project activity has slowed from last year's base but remains solid. Our backlog in the segment remains over $1 billion, and we continue to expect full year sales of approximately $900 million. For quarter two, we expect sales in this segment to be similar to quarter one levels.

Finally, in our wireless system segment, our sales grew 5% organically, and we continue to build backlog as Tom mentioned.

Now, let me talk about our operating income and margins. Overall, we had a loss from operations of $21 million on a GAAP basis. This loss included $78 million of restructuring costs, $111 million of charges related to the termination of our New York wireless project, and $17 million of litigation items. Adjusting for these items, our operating income was $185 million in the quarter and our adjusted operating margin was 6.6% compared to 13.9% in the prior year.

The decline is driven almost entirely by our Component segment due to the significant sales decline, as well as approximately $50 million of hedging losses related to certain Eastern European currencies which I discussed on the last earnings call. These currency losses impacted our margin by 180 basis points. If you adjust for these hedging losses, our operating margin was 8.4% which is down 550 basis points over prior year.

If you look at gross margin, our adjusted gross margin was 22%, compared to 25% in the prior year. Just to remind you, our research development and engineering expenses of approximately $150 million per quarter and that runs about 5% of sales at these revenue levels are included in gross margin.

The main driver of the decline in gross margin was the 22% organic sales decline we experienced in our Components segment. In our other three segments, gross margins were flat with the prior year. Specifically, lower volumes reduced our gross margin by approximately 400 basis points. We were able to recover about 100 basis points through the cost actions, but we are not able to keep up with the pace of the volume decline.

To give you a sense of the actions we were able to execute in the quarter, we reduced our manufacturing related headcount by 8,000 employees and total headcount by about 9,000 by the end of the first quarter. The reductions were through a combination of elimination of temporary workers, attrition, and a reduction in force.

We do have additional actions in process and will continue to reduce our manufacturing costs where we can to adjust to the volume levels. Our current expectation is that we will reduce our headcount by approximately 20% for actions that we are taking and certainly that percentage will be higher in the manufacturing area than in the engineering, selling and G&A areas.

The remaining reduction that we saw in operating margin was driven by negative leverage on our overhead structure. When you adjust for the currency losses that I mentioned previously, our adjusted SG&A was down approximately $20 million from the prior year but up as a percentage of sales as we were not able to reduce at the same pace as the sales decline.

Now, our margins, both gross and operating will be lower as we move into quarter two as we see further volume declines and also we'd bring down our inventory levels.

Now let me talk about the State of New York restructuring and litigation charges we recorded in the quarter, starting with the State of New York wireless contract. We recorded a $111 million charge related to the state's termination of the contract earlier this month. The charge includes a $61 million impairment of the assets, basically the assets we had on our balance sheet for the system, as well as a $50 million related to a payment to the state in January under a standby letter of credit.

On restructuring, we incurred $78 million of charges which related primarily to a reduction of the employees as part of our cost actions. In the quarter we incurred $17 million of charges related to litigation. Of this, $9 million related to our share of settlements for the Tyco International legacy shareholder litigation and the remaining $8 million related to a several year old product liability matter in our Components segment.

Now, looking at items below the operating line, net interest expense was $36 million in the quarter, which was down versus last year reflecting lower net debt levels. Our other income and expense was an expense of $1 million, which was worse than our estimate of approximately $13 million of income.

The difference was due to one-time adjustment related to the tax sharing agreement with Tyco International and Covidien that negatively affected other income, but also reduced our income tax expense in the quarter.

Our tax rate on adjusted income was 30% in the quarter. This rate is lower than guided as the non-taxable negative effect of the hedging losses was offset by a positive one-time adjustment to tax expense that I mentioned previously in other income. For the second quarter, we expect a similar tax rate as quarter one.

Our cash taxes paid in the quarter were $64 million in and our cash tax rate on adjusted income was 43%. This is significantly higher than our typical 20% rate, as cash taxes paid in the quarter really relate to prior year tax returns where we had much higher income levels.

Now, let me talk about cash flow. Cash flow from operations was $33 million and free cash flow was a use of $79 million. The decline in free cash flow compared to last year was primarily due to lower operating income and increased cash restructuring costs of approximately $40 million.

Two areas I want to touch on are capital spending and inventory. On the capital side, we reduced spending from approximately $170 million per quarter run rate at the end of 2008 to $116 million in quarter one. We will continue to manage our capital spending at a lower rate, and I expect it will be below $500 million in 2009 compared to the $619 million we spent in 2008.

On inventory, the rapid deterioration in demand prevented us from reducing inventory in the first quarter. With our sales level at these lower amounts, we would expect to see further liquidation of our working capital over the next several quarters, including a reduction of inventories to get more in line with current business levels.

With respect to share repurchase, we used $125 million to repurchase $6 million of shares early in the quarter. We had approximately $600 million remaining on our share repurchase program at quarter end. We have suspended the repurchase of shares due to the uncertainty in the current economic environment and we expect to resume the program once market conditions stabilize.

Now let me update you on the cost actions as we enter into the second quarter. Remember that on our last call we laid out cost improvement actions in three main areas; manufacturing simplification; secondly, SG&A overhead; and thirdly, commodity tailwinds.

In the manufacturing simplification area we are making good progress, but these actions do take time to execute, particularly in Europe. We communicated that we expect $40 million in savings in 2009 from actions taken in prior years and these savings continue to be on track.

On the SG&A front, we initiated $100 million of annualized cost reductions in the quarter. We expect to generate about another $10 million of savings from these actions in Q2 when compared to quarter one, and we will reach the full quarterly run rate by quarter three. We also remain fully on track in this area.

Finally, with respect to metals, we expected a full year tailwind of approximately $75 million from the decline in copper prices. This tailwind will now be diluted by lower production volumes. When we look at the current volume levels where we are at, the inventory reduction efforts and considering the amount of copper that we fixed with our supply base coming into the year, full year savings would be approximately $25 million and would be achieved later in the year.

Finally, for the second quarter, we expect to incur approximately $125 million of costs related to restructuring actions, including the initiation of two additional plant closures that we recently announced; one in the US and one in Europe. The majority of this charge relates to headcount reductions as we continue to reduce both manufacturing and indirect headcount in line with volume.

We currently expect full 2009 costs to be about $250 million and we expect cash spending to also be approximately $250 million in 2009. The cash spending Component does include both current year actions and prior year actions. As Tom stated, the benefits of these actions in total should allow us to get back to an operating margin in the 12% plus range at a $12 billion annualized sales level.

Now, let me turn it back to Tom.

Tom Lynch

Thanks, Terrence. I am going to talk about Q2 and then wrap it up and we will open it up for questions. As I covered earlier, we expect our Q2 sales will be in the range of $2.4 billion to $2.5 billion, which is a 32% to 35% decline from last year's $3.7 billion. This sales decline coupled with our efforts to reduce our inventory will result in further reductions to our gross margin, as Terrence indicated. As a result, we expect the Electronic Components segment to have an adjusted operating loss in Q2.

For the overall company, we expect adjusted earnings per share in the range of $0.05 to $0.10, and when you include the impact of the restructuring costs, this will result in a GAAP loss of $0.10 to $0.15 per share.

Now, while we are not giving full year guidance, I would expect if end demand in our customers' markets levels out even at these low levels, our sales should begin to recover sequentially in Q3 as inventories in the supply chain get back to a little more normal level. Clearly, it is too early to tell to say this with confidence right now.

Just to summarize what I mentioned earlier, the strategy that we launched two years ago and the financial goals that we set out, which were basically to strengthen our portfolio, position the business to grow consistently at 5% to 7% and deliver a 15% operating earnings in fiscal 2010, are still the right goals for us. Obviously, the timeframe has changed because of what's been going on in the global economy. We have not taken our eye off these goals.

In the meantime, we are focused on four key areas. One, ensure our liquidity and strong financial position by reducing inventory and carefully managing our capital expenditures. Two, continue to invest in engineering and key technology. It is the bread and butter of the company and one of the real strengths of the company. Our staying power in these kinds of times is going to enable us to continue that, although we will continue to drive efficiency in this area.

Three, as Terrence took you through, continue to aggressively reduce costs, especially discretionary costs and accelerate structural efficiency. That is the big thing we are doing. Obviously, we are not spending anything. We do not have to. Beyond that, it is continuing to do things to make the company more efficient from a structural point of view like the org changes I talked about, certainly the expanded manufacturing and footprint simplification.

Last, but not least, very high priority, make sure we capitalize on opportunities as they arise. As I mentioned earlier, in these times our long history with our customers is more important than it is ever been, and they know they can count on us. We are out there, reminding them of that everyday.

We are certainly not alone in this environment, but I remain confident that with our solid competitive and financial position, we are going to be able to navigate through these times and we are going to emerge a stronger company when business improves. I realize that is easy to say, but I feel like the things that we have been driving for the last 18 months to two years, and that we are going to continue driving are paying off, it is hard to see in volume, in an environment when your sales are down 25% to 35%.

With that, we will open it up for questions, and I apologize again for the technical problems.

Question-and-Answer Session

Operator

(Operator Instructions).

We will go to Shawn Harrison with Longbow Research. Please go ahead.

Shawn Harrison - Longbow Research

Hi. Good morning. Looking at some of the additional restructuring announcements, as well as that 12% EBIT margin target, that requires, I guess, $12 billion in sales. What would you believe consolidated EBIT margins would be with the current sales run rate if we level out here in the June quarter?

How much of these additional moves would flow into 2009 in terms of a dollar amount? Would any of these moves get the Electronics Components business back to break even in the June quarter?

Tom Lynch

Right now, with the actions we are taking, when we get through them all, and they do not all hit this year, it is about $300 million worth of cost savings. We would expect to be in the neighborhood of a $200 million savings run rate as we end the year. What that would do, if volumes stayed at our Q2 level, is to put us in the mid-single digit adjusted operating earnings range. What was the last part of your question?

Shawn Harrison - Longbow Research

It was about the incremental savings from some of the actions announced this quarter, and whether the Electronic Components business would be breakeven in the June quarter? It does not sound like it, at least from the initial commentary.

Terrence Curtin

Shawn, on that, certainly right now components is being hit very heavy with volume, as well as, as we go through and we reduce our inventories. When you look at that, with the cost actions Tom laid out, you know, it would be around breakeven where we are at certainly, it will also be dependent upon how fast we take our inventory out.

Shawn Harrison - Longbow Research

Okay. With the $200 million savings run rate, how much of that is incremental this year from what we have already witnessed in 2008?

Terrence Curtin

All of that is incremental.

Shawn Harrison - Longbow Research

Okay. Given the fact that you have suspended the share repurchase program, and maybe priorities for cash usage right now, or are you willing to let it build on the balance sheet until things begin to stabilize and then you start up the program again or do you have acquisition potentially you are looking at in this down market?

Terrence Curtin

Let me talk about one part, and then Tom can talk through the acquisitions. When you look at it, Tom mentioned $800 million of free cash flow if we stay at this level before restructuring cash. I mentioned there is about $250 million of restructuring cash that we will do as we go through these actions this year, and then certainly we have our dividend, which also runs about $290 million per year. They will be the first two priorities, Shawn. Capital above that, we will certainly retain as we go through this uncertain time. They are the priorities right now. Tom?

Tom Lynch

That is absolutely right, maintain our liquidity, pay the dividends, but we continue to scan in these environments, because there are going to be, I think we talked about it last quarter as well, more opportunities. We are going to be very selective as we said. Up until now, most of our efforts have been strengthening the portfolio through divesting. Clearly, we believe that there are a number of areas that we are going to want to make acquisitions in, but we have to make sure we do first things first

Shawn Harrison - Longbow Research

Just following up on that, there is been no discussion on looking at the dividend then at this point in time?

Tom Lynch

No.

Shawn Harrison - Longbow Research

Okay. Thanks a lot.

Tom Lynch

Thanks, Shawn.

Operator

We will go to Brian White with Collins Stewart. Please go ahead.

Brian White - Collins Stewart

Good morning. I am wondering if you could talk just a little bit more about the auto markets in terms of the inventory levels that you see there? Also some of the plant shutdowns, what did you see they the December quarter? Is this carrying into the month of January?

Tom Lynch

Sure. There were unprecedented plant shutdowns over the holidays. Typically, many of the OEMs in the US and Europe will shut down for a couple weeks. I think the average was four to six weeks at virtually every major OEM in those two parts of the world. I am sure you have read about what is going on in Japan with Toyota shutting down and doing furloughs. It is pretty broad based right now.

It feels like inventory is about twice as high as most of our customers would like it now. The shutdowns are starting to bleed that off and then the harness makers and the cams, the folks who make the subsystems, we actually get specked in by the OEMs, so we sell through them. They are working their inventory down as well.

As I said earlier, if demand were to stabilize now, it is going to still take through the rest of this quarter and into part of the third quarter to get inventory levels balanced. Once that happens, then you should see our revenue start to track with end demand

Brian White - Collins Stewart

On the restructuring, I just want to be clear, when the down-sizing in the March quarter is finished, are you saying that in the last two quarters you reduced your workforce by 25%?

Terrence Curtin

20%. Some of that will happen in Q3, but when you look at that, we started the year right around 94,000 employees. You're basically going to have approximately 20,000 employees out, certainly, heavier weighted in the manufacturing area, as we bring down the manufacturing resources.

Brian White - Collins Stewart

Okay. Where is it more heavily weighted in terms of region of the world?

Tom Lynch

Asia by far that is where we have the most of our labor intense production jobs, although there is some in the US. As you know, we have been adjusting the US footprint in the past for a while, a little bit in the US, quite a amount in Asia in Q1, a fair amount in Europe and Asia in Q2.

Brian White - Collins Stewart

Thank you.

Tom Lynch

You're welcome.

Operator

Our next question comes from Steven Fox with Banc of America. Please go ahead.

Steven Fox - Bank of America

Hi, good morning. A couple of questions; first of all just following up on the auto question, can you give us a sense of where you stand in terms of sales split between that go directly to OEM versus going to Tier 1 or harness makers, how much exposure do you have and how much inventory is that, which different level in the supply chain do you think?

Tom Lynch

Most of our sales go to the harness makers and the cams as to Tier 1. We do not sell very much directly to the OEM. Although, the vast majority of what we do sell is specked in. The way it works is, we actually do the selling and the engineering early on in the architecture, heavily with the OEM, but the shipments actually go to the harness makers who attach the connectors or to the Tier 1, Boschs of the world, who put the headers together.

Steven Fox - Bank of America

Given that you are seeing more concern about those suppliers to the OEM, for instance, Visteon, there is been talk about Visteon potentially filing for bankruptcy. Can you talk about how you're protecting yourself, since it is a more fragmented customer base, how do you feel about your receivables there?

Terrence Curtin

Steve, it is Terrence. Number one, Visteon we have no exposure to it.

Steven Fox - Bank of America

Okay.

Terrence Curtin

Taken action previously with Visteon to make sure, we manage our credit risk. Certainly, we are monitoring across all of our industries, not just automotive or customers. When you look at our receivables, certainly our largest customer, which is in the automotive space, is less than 4% of our receivables. Our receivables continue to be good, collections are steady, but we are monitoring that actively. We have taken actions, like we did with Visteon, where appropriate. It is really a day-to-day monitoring that we are doing in this environment to protect ourselves.

Steven Fox - Bank of America

Great. That is very helpful. Just two clarifications; basically the restructuring that you just reviewed, I mean there were two plant closing announcements. Would you characterize everything on plan? There is been no acceleration of the plans or? It seems like everything is steady state with where you thought it would be about three months ago, is that fair?

Terrence Curtin

I think right now, Steve I would say it is on plan. As, you know, at the end of summer last year, we announced three significant actions in Europe. Still working through those; they are on plan. These two additional ones, we recently announced here. The bulk of the cost take out right now is just getting production levels in line with the current low levels of demand.

Our intention is to accelerate some programs, if possible, that were originally intended in 2010 until later this year. We need to get through the five we have just announced in the last few months and the five that we were winding down before that. We have about 10 actions that we are closing out, as we speak.

Steven Fox - Bank of America

Okay, fair enough. Lastly, could you give some clarification on the decision to reduce your exposure to the commercial paper market in the quarter?

Tom Lynch

Steve, that reduction was done back in right when the commercial paper was disrupted back in October.

Steven Fox - Bank of America

Okay.

Tom Lynch

Actually, right after year-end and I believe we talked about in the last call. When the market got disrupted and it was challenged, we did go into our credit facility for about $190 million. We are in the commercial paper market actively, but we have had what we have put in our credit facility, we have maintained onto that. We still have access to the commercial paper market, and we anticipate we will.

Terrence Curtin

We did bring down debt about $200 million in the quarter. As what we are maintaining capital as Tom talked about.

Steven Fox - Bank of America

Okay. In other words, that whole change on the cash flow all appeared in October, when things were at the worst?

Tom Lynch

Correct.

Steven Fox - Bank of America

Okay. That is helpful. Thank you.

Tom Lynch

Thank you.

Operator

We will go to Matt Sheerin with Thomas Weisel Partners. Please go ahead.

Matt Sheerin - Thomas Weisel Partners

Yes, thanks. I just want to ask a question regarding your revenue guidance and the confidence that you have it. In fact, the range looks a little bit more narrow considering that it looks like it is going to be very back-end loaded quarter. You talked about inventory reductions at your customers.

Could you talk about the confidence that you have, what backlog looks like, what book-to-bill looks like in the areas where the range specifically in end-markets, where the range should be a little bit wider?

Terrence Curtin

If you look at our Components segment, we are going to be down about 40%. Clearly, that is the piece that is getting hit hardest. That reflects the order rates we have been seeing. The orders for the last few weeks coming out of the holiday time have settled in around where they were in November, before the holiday time. I mean, there is not enough data points there to call it a trend.

I guess as much confidence as can you have in this environment, as well as based on what your backlog is. In our other businesses, the orders are softened. They are holding up and we are looking at their wireless and undersea being about flat. That is all in the backlog, for those two. That is not really contingent on any orders really at all. In our networks business, we are going to be down about 10%; that is a little softer than Q4.

I think I feel reasonably confident. I mean it is a pretty low-level of business being off 35%. If you look at the dull weather of companies in the industries that we sell to, whether it is semiconductors or that could compare to handsets, automotive, their end demand is not down that much. A big part of this, as we mentioned earlier, is inventory correction, but it is hard to call, I mean.

Matt Sheerin - Thomas Weisel Partners

Yeah. Sure. It sounds like you have seen at least a little bit of stabilization in terms of daily order run rates even though it is at a much lower level?

Terrence Curtin

Yes, we have. I feel a lot better and we have a couple more weeks like that and starting with the beginning of December, we hadn't seen that until this point. That is what our forecast is based around.

Matt Sheerin - Thomas Weisel Partners

Okay, great. Just as a follow-up, concerning the pricing environment. Are you expecting customers to come out and are you expecting lower ASPs once volume orders come back?

Tom Lynch

We are going to see more price pressure. I think there is more, certainly customers are, when you go see them, they talk about hey, in this environment you need to give us lower prices. I mean, our position as well, the agreements we entered into with you were at volumes that were significantly higher. As you know, especially in the interconnect business, every particular project or opportunity is its own negotiation.

Our Q1, our pricing did not deteriorate. It is pretty much held on, and that is one thing that we are being very disciplined about. We have to play it out. We do not want to lose good business, for sure. I would expect that there will be a little more price erosion. So far, we haven't seen it and we haven't lost any new awards, because we are not willing to drop price. It is something you have to watch every day.

Matt Sheerin - Thomas Weisel Partners

Okay. Thank you.

Tom Lynch

Thank you.

Operator

We will go to Jim Suva with Citi. Please go ahead.

Jim Suva - Citi

Thank you. Regarding your EPS outlook of a nickel to a dime, I understand that the inventory work down has a big impact. Maybe can you split out of how much inventory you expect to work down? What did that do to EPS and/or margins for the March quarter? Do you think it will be all worked through in the March quarter or is this multi-quarter work down that Tyco and the supply chain needs to work through?

Tom Lynch

If you look at the second quarter, we estimate right now that that will have about a 200 basis point impact on our margin as we work through our inventories. With what we are planning to, we will need probably more than a second quarter to work through it, to be fair. The plans that we have in place right now would be about a 200 basis point impact on our gross margin at that 2.4 to 2.5 level that we quoted.

I would anticipate, if we stay at that 2.5 level, around, we would need more time to work through inventory to continue to bring it down and continue to liquidate the working capital.

Jim Suva - Citi

Great. Regarding these tax sharing agreements that you have; can you remind us of how long they continue to go on? There has been a tremendous amount of volatility in the other income line as well as the tax sharing agreement and when we have you reincorporate to the other jurisdiction will that impact that at all?

Terrence Curtin

Yes, number one; let me take the second half of your question first. Moving to Switzerland from Bermuda does not change the tax sharing agreement. That relates to legacy Tyco liabilities that all three of us share. Just changing the jurisdiction of incorporation of our parent company does not impact that.

These relate to open tax matters that go back to 1997, up to basically the date of separation. This will be ongoing for quite some time, as we go through audits, both in the US and in other places. You will see, as you have seen, some adjustments as matters are closed out or settled.

What you saw in the quarter are other income that we guided, about 13% came down to $1 million of expense. Almost the exact same corresponding effect was the benefit in our income tax expense. Net-net it had a very negligible impact on EPS. I think it was about a penny. Due to how the arrangement is set up, we will continue to have volatility through that for quite some time.

Jim Suva - Citi

Quite great. As a housekeeping item, is there any precedence or have you been notified by Standard and Poor's about inclusion or exclusion the S&P 500 for this change?

Operator

Our next question will come from William Stein with Credit Suisse. Please go ahead.

William Stein - Credit Suisse

I'm going to wind up asking that one as well. First, I'd like to focus on inventory. Was kind of surprised, I think it was down slightly, but I think there was a $61 million write-down from state of New York, which would imply inventories excluding that actually grew in a quarter where sales were down pretty significantly sequentially. Can you help us understand how that happened?

Terrence Curtin

Let me handle the first part here. Inventories grew about $100 million, when you take out what you said, State of New York, when you look at the face of the balance sheet. You got to that take $61 million out. When you remove currency effects it grew slightly over $100 million.

It really was us trying to chase it down. When we started the quarter, we assumed we were going to be around $3 billion. That is where we were loaded to and really late in the quarters when it slipped.

From that viewpoint, we built inventory which now we have to work out like we talked about both in Q2, and if it stays at a lower level after that. From that viewpoint, that definitely inventory, when you look at the cash flow, is an area where when you look at working capital, we have to make ground up there, based upon where the market ran away from us in quarter one.

Tom Lynch

I would add to that Will, that we definitely cut production in Q1 versus Q4 of last year, but we did not cut it enough. I think it just a simple way of saying it. We were planning for that higher sales level and we just did not cut it enough. It is not an area that I think we shined on in the quarter.

William Stein - Credit Suisse

Based on the current guidance for the March revenue, can you give us an idea of where you are targeting inventories to wind up?

Terrence Curtin

Basically, we are shooting right now in the range of basically recovering about what we built in quarter one, to give you a range. Certainly, that varies by market and what we are trying to take out, but basically taking out what that build was in quarter one, which is in excess of $100 million, and certainly if we can do more we will.

Tom Lynch

Yeah, we are being aggressive at the same time. Not only is demand down, but the demand we are getting is more volatile than we have seen it. Releases particularly from our biggest customers are changing quite dramatically from what the backlog is. It is a challenging environment, but we are making progress on the inventory.

William Stein - Credit Suisse

Okay, and then just one follow-up if I can on the reincorporation. Can you give us a sense as to the timing on this, whether there is any impact on the P&L and whether you have considered that there may be a change in your index membership?

Terrence Curtin

Couple of things; timing-wise, we did file our S4 with the SEC. They have to review that and that is the process. As Tom mentioned, we would expect that we will be able to complete that in our fiscal Q3 or calendar Q2 as Tom mentioned. In that regard, we are on track for that.

When you look at impact to the financials, there really is none. When we did this move, we are moving to a place where we do have much more presence. It is in a big region, and from that viewpoint, similar to what I answered with Jim on the index incorporation we had not heard anything from S&P on that yet.

William Stein - Credit Suisse

Thank you.

Tom Lynch

Thanks Will.

Operator

We will go to Amit Daryanani with RBC Capital Markets. Please go ahead.

Amit Daryanani - RBC Capital Markets

Thanks a lot. Just a question on the Electronics Components side on the auto degradation you guys saw. Can you just talk about what the monthly trends were in the December quarter and how does the month of Jan look like so far?

Tom Lynch

I mean October was worse than September, November was worse than October, and while we expected December to be worse than November, it was a lot worse. We saw really around the 10th or 15th of December on, just the orders even orders that were ready to ship were put on hold. It was pretty drastic and it was over close to 45% down in December.

January, as I mentioned earlier, is leveling off a little bit. We haven't seen enough to feel like it has bottomed out yet. I wouldn't argue that, it hasn't either, but it is not materially better. The factories are just coming back on. The OEMs are really just coming back on line. I think it is going to take several more weeks to sense where we are really at with their end demand.

Amit Daryanani - RBC Capital Markets

Got it. Could you just maybe talk about how do we think about the wireless business at this point, post the State of New York decision because my understanding is that it the only reason it was considered part of core operations was because we have that program?

Terrence Curtin

First of all, all along, we viewed the wireless business as one of these parts of the portfolio with very high growth potential, because the reason we have been able to grow the business at double-digit rates and build the backlog and even with the trials and tribulations of New York have won significant businesses, because we really have state-of-the-art solution there, that especially in today's time, the need for interoperability is really very important, and it is IP based.

It is really the only system that is being installed out there that is IP based which very much gives public safety communications leaders a lot of flexibility. Our wireless team understands this. We need to have high growth, high margin profile for this business in order for us to keep investing in it.

We are all disappointed with the New York situation, but the team has ploughed through there and continued to win important deals. I think that is the most important thing for us right now, is to deliver on the other business we have and work through this dispute we have with New York.

Tom Lynch

Go ahead, sorry, Amit.

Amit Daryanani - RBC Capital Markets

I just had one quick one now. If you look at the last 10-K, it looks like the international pension plan is under funded by $670 million or so. Could you just talk about any thoughts on topping that off or is there any issue we should be aware of with regard to the international pension plan at least?

Terrence Curtin

Let me take that, Amit. When you look at the international pension plan, you can't think about the international pension plans like we think about US plans. Most of these plans do not have trusts and they are not funded plans, which is just how the plans are structured internationally. Certainly, it will be a commitment over time, but you do not do contributions to the vast majority of our international plan.

Most of our funding relates to the US plan, which was previously fully funded and is now slightly under-funded based upon market movements. But, the international plans really would not make contributions of any substance.

Amit Daryanani - RBC Capital Markets

All right. Thanks a lot, guys.

Terrence Curtin

Thanks, Amit.

Tom Lynch

Thanks, Amit

John Roselli

We have time for two more questions, please.

Operator

We will go to Carter Shoop with Deutsche Bank. Please go ahead.

Carter Shoop - Deutsche Bank

Good morning, just a couple of quick clarifications and then one question. When you talked about the free cash flow goals of $800 million at existing levels, was that existing 1Q levels or where you expected to be in 2Q. If it is for where you are in 1Q; what's your expectations given what we know about 2Q?

Tom Lynch

It is based on second quarter level, Carter.

Carter Shoop - Deutsche Bank

Okay, great.

Tom Lynch

The key, as you know, is working off the working capital.

Terrence Curtin

Right.

Carter Shoop - Deutsche Bank

Were you saying that you expect to reduce inventory by the $100 million that you have built in 2Q or is that in addition to the normal inventory reduction in conjunction with the sales decline?

Terrence Curtin

It will be to basically burn off what we built in quarter one by the end of Q2 and then certainly we will have to continue to go above that and some of that may come in Q2 or Q3.

Carter Shoop - Deutsche Bank

Despite the sales decline, do you expect inventory to only decrease by about $100 million?

Terrence Curtin

It is about 150.

Carter Shoop - Deutsche Bank

Okay. Lastly, why aren't we getting a little bit more aggressive here on the restructuring, given what we are seeing on the sales side? I know there is a lot of facilities in Europe where it takes 12 plus months to restructure, etcetera, but why aren't we trying to accelerate this sooner versus waiting until the second half of the year?

Terrence Curtin

Well, we have added two more in the US. We have three under way in Western Europe, which is quite a lot actually at one time. Because despite the volumes being down, we still have to be able to close the factories and the challenge there is it takes such a long time to work through with it you're always nip and tuck and then introduce those products into the receiving factory.

Our intention, as I said earlier, I think we said at last quarter too is definitely along those lines, to bring more restructuring in, but we have to get these three done or substantially complete and we are making good progress.

We are getting to a lot of the really critical milestones. You have to avoid the strikes and things like that. Even with volume being as much as it is down, if we would have a prolonged strike or something it would be pretty painful.

We are making good progress there. Our intention is to definitely take advantage of the weakness out there and do more.

Carter Shoop - Deutsche Bank

Would you say that management bandwidth at this point is the key bottleneck for more restructuring? Not necessarily just at the executive suite but in general.

Tom Lynch

It is risk reward. It is a balancing risk reward. I do not want to have more than three Western European auto plants in a state of transition at once. It is very, very expensive if you have a problem. You do not deliver for the customers, that is expensive in your reputation and it is expensive, and the penalties you could face and we have been avoiding that so far.

We just really want to get further along on these and sort of be in to the last quarter of the game, so to speak on these, and then continue to move aggressively, because that is our plan.

Carter Shoop - Deutsche Bank

Okay. Last question; you talked about a 12% operating margin at a $12 billion run rate. Looks like for the second quarter you'll be at roughly at $10 billion run rate. Would you be willing to comment on where that operating margin can go after the current restructuring is implemented at a $10 billion run rate?

Carter Shoop - Deutsche Bank

Yes, for the balance of the year on the second half of the year as I indicated. I think about mid-single digits. If we were to stay at $10 billion, obviously would have to do more and I would say you'd start moving up toward high single-digits.

Carter Shoop - Deutsche Bank

Okay. Thank you very much.

John Roselli

Okay. Well just one more question.

Operator

We will go to Amitabh Passi with UBS. Please go ahead.

Amitabh Passi - UBS

Hi, thanks. I had a couple of clarifications, and then just a couple of quick questions. The first one was Terrence, I guess for you, the $0.05 to $0.10 guidance that you gave for the second quarter for EPS, I just wanted to confirm that there are no incremental losses anticipated in relation to currency hedges.

Terrence Curtin

None.

Amitabh Passi - UBS

Okay. You might have given this, I missed it. I think you talked about a $250 million figure for full year '09 as far as your restructuring charges, cash restructuring charges. Did you give a number for the second quarter?

Terrence Curtin

We did not. It is for the full year. Certainly we are in the middle of executing. I would say the second quarter will be higher than about the $50 million we had in quarter one, but it will be how they execute out. I believe, right now, it will be between $50 million and $100 million for quarter two.

Amitabh Passi - UBS

Okay, great, thanks. Tom, this is for you. If indeed we were to see demand trends stabilizing a little bit, how do you envision sort of a potential restocking in the channel? Would you expect sort of a more gradual buildup as we progress through the rest of the year or could we potentially see a snapback for a quarter before we get back to a more gradual ramp?

Tom Lynch

I think it would be more gradual given what everybody is going through. I think it is going to take a while for people to believe it is actually coming back. That is my own view.

Amitabh Passi - UBS

Okay, and then just my final question. I was hoping you could maybe help understand the dynamics in your Communication Equipment segment within Electronic Components and your Comp Service Provider segment within Network Solutions. One was down 5%, the other down 20%. Just any color in terms of the dynamics in those two areas?

Tom Lynch

Com equipment, that was down about 13% organically. Certainly, we are seeing on the com equipment side the inventory that we talked about in the channel and demand, we are seeing obviously the Telco operators spending being down about 5%, projected, as well as businesses cutting back on capital.

When you look at the communications service provider, what we saw in the quarter was slowing in US spending, but we did see some pickup in certain European carriers that for the past about year or so we have not seen. I would say the focus really is on fiber investment.

When you look at it, one is the com equipment would both have a business element as well as a telecom operator element, whereas the service provider is all telecom operator.

Terrence Curtin

The one portion of our networks business that was down 20% is our Enterprise or our building networks piece. That is a combination of new building construction really having slowed, and especially we are feeling it in the financial services market as IT spending has been cut really way back in light of the circumstances in that market. That is the one that was down 20.

Amitabh Passi - UBS

Okay. Got it. Thank you.

Terrence Curtin

Thanks a lot. Thank you, Amit.

John Roselli

Okay. With that we will wrap up the call. Once again we apologize for the technical difficulties. Keith Kolstrom and I will be around all day to answer any follow-up questions. Thanks for joining us again and everyone have a good day.

Terrence Curtin

Thanks everyone.

Tom Lynch

Thank you.

Operator

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Source: Tyco Electronics, Ltd. F1Q09 (Qtr End 12/26/08) Earnings Call Transcript
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