Good afternoon. My name is Adrian and I will be your conference operator today. At this time, I would like to welcome everyone to the Williams Controls Hosts Third Quarter 2011 Results 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 session. (Operator Instructions). Dennis Bunday, Executive Vice President and Chief Financial Officer, you may begin your conference.

Thank you and good afternoon everyone, and welcome to our third quarter 2011 conference call. Before we begin, you should note that the following discussions and responses to questions reflect management's views as of today, August 4, 2011, and may include forward-looking statements. Actual results may differ materially from those projected in these forward-looking statements. Information concerning risk factors and other factors that could cause actual results to differ materially is included in our filings with the SEC, including our 2010 Annual Report on Form 10-K, our 2011 quarterly reports on Form 10-Q, and our fiscal 2011 current reports on Form 8-K. Specific factors that may cause such a difference include, but are not limited to, availability of adequate working capital, domestic and international competitive pressures, increased governmental regulations, increased costs of materials and labor, and general economic conditions in the United States and abroad. I will now turn the call over to our CEO, Pat Cavanagh, for his comments on the quarter.

Thanks Dennis. Good afternoon, everyone, and welcome to our fiscal third quarter investor conference call. Obviously it’s been a very interesting day in the market. This morning, we released our financial results for the third fiscal quarter of 2011. Our sales for the third fiscal quarter were $16.8 million, up 22% over the same quarter last year. Sales for the first nine months of fiscal 2011 increased $7 million or 18%, to $45.1 million from the comparable period last year. Net income in the third quarter was $1.5 million or $0.20 per diluted share compared to net income of $903,000, or $0.12 per diluted share for the corresponding quarter of fiscal 2010. Net income for the nine months ended June 30th, 2011 was $2.4 million or $0.32 per diluted share compared to net income of $866,000 or $0.12 per diluted share for the same nine-month period ending in fiscal 2010. From a revenue standpoint compared to the first nine months of last year, our Asia Pacific sales were up 25%, our European sales were up 43%, and our North American sales were up 10%. Within Asia, China was up 13% and Indian sales were up a 140% from a small base, Japanese and Korean sales were also up as a result of new program wins last year. Sales in India in fiscal 2011 should easily exceed $1 million, up from full-year 2010 sales of $609,000. As of this month, we’re now in serial production for three major Indian OEMs from our new facility in Pune, India. While we remain optimistic for our growth prospects in China and India, these markets also remain highly competitive and very challenging. As it’s widely known the retail price of a new heavy truck in China or India is only a fraction of that of…

Thank you, Pat. As Pat stated net income for the quarter was $1.5 million or $0.20 per diluted share compared to $903,000 or $0.12 per share in the third quarter of 2010. And for the first nine months was $2.4 million or $0.32 per diluted share compared to $866,000 or $0.12 per share in the first nine months of last year. Although there were no one-time or unusual charges in the current third quarter, there were charges in the first nine months of 2011 as well as in the third quarter and first nine months of 2010. As we discussed in last quarter’s call, the 2011 year-to-date numbers include an after-tax charge of approximately $395,000 or $0.05 per share related to a potential acquisition that we decided to terminate during the second quarter while in due diligence and a legal settlement of a long outstanding claim against the company. The 2010 third quarter and first nine months included an after-tax gain of approximately $290,000 or $0.04 per share from the sale of stock obtained in the settlement of an environmental claim. For the nine months of 2010, this gain was more than offset by an after-tax charge of approximately $485,000 or $0.07 per share for the settlement of the Cuesta class action lawsuit. To summarize, when excluding all of these one-time items, third quarter 2011 diluted earnings per share of $0.20 with compared to 2010 third quarter EPS of $0.08. On a year-to-date basis, the adjusted EPS would be $0.37 for 2011 or more than double the $0.14 for 2010. For the quarter, the basic EPS share count was 7,300,277 and the diluted EPS share count was 7,503,313. At quarter-end, we had 7,302,339 shares outstanding. Third quarter 2011 gross profits were $5.7 million, a 40% improvement over last year’s $4.1…

(Operator Instructions). The first question comes from the line of John Nobile. Your line is open.

Well, good afternoon, everyone.

Hi John.

Good afternoon, John.

Hi. We had a crazy day in the markets today, although your stock held up rather well considering [inaudible]. But I wanted to ask you why – you had mentioned that the China Euro 4 standards being implemented in China was not until now mid 2012, and I think they were actually enforce since about 2005, I guess China is taking a while. But usually there is pre-buying ahead of the enforcement of emission standards.

Right.

Do you anticipate obviously pre-buying in the China market before mid 2012? And if you do like a quarter or two ahead or could we even start seeing it now?

Well, first of all, John, I’d like to say that it hasn’t been officially announced. Our sales team over there has indications from some of the OEMs that this is a likely change that they’re going to move it out to mid 2012 and it’s been moved several times as you know. I think that if the customer base in China believes that it’s really going to happen, I would expect that there will be some pre-buy. I don’t think it’s going to be large however, but I think yet there will be some.

Okay.

And I would expect it would probably start somewhere between five months and six months before they actually believe it’s going to happen. But if they think it’s going to move – it’s going to move to the end of 2012, all bets are off.

All right, it’s been moved already.

Yes, it’s been moved several times.

Okay. And, I’m fully aware; I think we brought this up in the last call about the part shortages. I know that there is no problem at Williams at meeting any anticipated demand, but my question is how much longer do you believe the NAFTA truck market will be constrained with the part shortages? I mean there still is a constraint on that and I’m not sure if we’re just about over that or do you anticipate another quarter or two of this?

Well, the projection remains as I said in the call, there is an increase in the second half of the year and the OEMs still ramping up. We expected that by the end of the year the daily production rate is going to be up about 26% from where it is today and that’s what we’re seeing in a lot of the forecast. But I don’t expect that – I think it’s going to take at least six months to remove some of the constraints in the system.

Okay. But that that obviously wouldn’t be in concert with the 26% increase. I mean you feel that maybe we might not see a 26% increase over the –

Well, I’m saying this John, I think my comments were that we expected in the second half of the year to see about – the production rate through the first half I think what did I say was a 114,000 units were built in the first half of the year Class 8. And the second half we’re expecting about 136,000 units. And during that period you’re going to start seeing higher daily build rates what we expect that we’re up at the end of the year about 26% higher than we are today so. And next year, in 2012, we’re looking at somewhere around – assuming the economy holds which is the big question mark at this point, we’re expecting 290,000 units to 310,000 units. So there is going to have to be a continued building, but I don’t think we’re going to get up to a full production rates for six months or so.

Okay. Just one other question, I was curious if you can give us a sense of how significant that two new India programs are? I know you didn’t put any numbers in there, but I was hoping you might hint to what this actually means in that market.

Well, I would guess – the two programs together will obviously be over $1 million. I don’t want to speculate $1 million a year. I don’t want to speculate on the total volume. I know some of our competitors do that, but I’ll just say they are significant programs with significant manufacturers, and we expect sales with those programs as they ramp up to over $1 million a year.

And currently you’re at about $1 million pace in India, I believe?

Probably higher than that, but we will do $1 million there this year with only – with not full production. Remember John, we only started production over there I think in May – April, May, and we’ve got new programs since then, and it’s on a ramp right now, and – but we’ll finish this year at $1 million or more.

Okay. So it’s relatively significant obviously what we’re looking at as far as the two new Indian programs.

Yes, it’s going to take us –

At the levels right now I’m seeing. Yes.

Yes, it’s going to take us two, three years to get to full production over there for all the programs. We’ve been very successful over there and our plant is a real show place. I had one of our Board members over there for the grand opening that we had and customers were doing a lot of customer tours and it’s gotten a lot of reviews. It’s a real first-grade manufacturing facility and we were quite pleased with it, and it’s been a pretty smooth transition to the production over there.

I’m sure it’s going to be a relatively big market in the short time. And this is again the extra million from the two new awards we’re talking about beginning in 2013, correct?

I think that’s right.

Okay, thank you very much.

Thanks John.

(Operator Instructions). And we have a question from Peter Knitz [ph], who is a stockholder. Your line is open.

Gentlemen, I recognize the opening of both China and India, do you still have significant manufacturing capacity in the United States?

Yes, we do.

Second question –

Our approach Peter is primarily to serve the Asian customers from our manufacturing facility in China, and the Indian base from our Indian plant.

Okay. If you had some sort of economic or social catastrophe type problem in any one of your three plants, could you ramp up the other two to cover your needs?

Absolutely. That’s been our plan from the get-go.

Okay.

We have capacity in the United States and we have capacity in China. Not as much capacity in India, because it’s relatively new. I think that we have four cells in that plant right now. And it probably couldn’t carry the load of either one of these plants, but obviously it would take some time, but we have the capability of doing this.

Thank you.

And I might also see Peter that our manufacturing processes, methodologies are exactly the same at all three of our plants, all of our testing equipment, our management equipment, everything is all tied in with one central computer. So if we lost for example Suzhou we could bring that up in Portland in very, very short order vice-versa this type of thing. So we are – we do have a real advantage in that. Although for a small company we do have redundant productive capacity without a doubt.

It is part of our sales philosophy when we’re talking to customers that we have this kind of capability to be able to serve them either from Asia, or India, or the United States.

That’s excellent. Last question I had was, I looked back at the financial highlights of ‘05, ’06, and ’07, and it appears that the net income in relationship to sales were significantly higher on a percentage basis than it is – it looks like it’s going to be this year. Is there some reason for that or –?

Well, first of all, there is some one-time charges that Dennis outlined in his earlier comments in the first and second quarter. I think it was almost $500,000 that we had in a acquisition that we terminated in due diligence along with the settlement of an employee claim that had been outstanding for about seven years. And there has been some trends in the marketplace. I mean when I talked earlier about the Class 5, Class 6 and Class 7, that market – I mean the volumes in Class 6 were much, much higher than they are now. I mean we’re looking at in the Class 5, Class 6 and Class 7 market which is important to us also about a 150,000 units compared to – boy it was 300,000 units in 2006 in addition to the 368,000 units in the US market. Where we’ve grown our business has been in with new customers and new regions in China and India and others. In many of those cases, as I said, the trucks are at half the price that they are in the United States and Europe, and the prices of the components that go in are much less. So all of those combined, obviously our margins are similar, but the margin dollars are not when you’re producing that many more products in those markets.

Thank you.

(Operator Instructions). And there are no further questions at this time. I’ll turn the call back over to the presenters.

Well, thank you. This concludes our third quarter conference call. We’d like to thank everyone for attending today. Bye now.

Thank you.