Good day, ladies and gentlemen, and welcome to the Third Quarter 2008 Earnings Call. My name is [Bapsey] and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference (Operator Instructions). As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mr. John Craig, Chairman, President and CEO. Please proceed sir.

Thank you, [Bapsey]. Good morning and thank you for joining us for our third quarter conference call this morning. During this call, we will be discussing our financial results for our third quarter, our guidance for fourth quarter, and commenting on the general state of our business. But before we get started, I will ask Mike Philion, our Chief Financial Officer to cover information regarding forward-looking statements.

Thank you, John, and good morning to everyone. As a reminder, we will be presenting certain forward-looking statements on this call that are based on management's current expectations and are subject to uncertainties and changes in circumstances. Our actual results may differ materially from the forward-looking statements for a number of reasons. For a list of the factors, which could affect our future results including our earnings estimates, see forward-looking statements included in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in our quarterly report on Form 10-Q for the quarter ended December 30, 2007, which was filed with the US SEC. In addition, we will also be presenting certain non-GAAP financial measures. For an explanation of the differences between the comparable GAAP financial information and the non-GAAP financial information, please see our company's Form 8-K, which includes our press release dated February 6, 2008, which is located on our website. Now, let me turn in the call back to you, John.

Thanks Mike. I continue to be pleased with our strong performance this fiscal year. As compared to the third quarter of last year, revenue for this year's third quarter was up 46% and adjusted net earnings increased 89%, as we benefited from solid growth, improving pricing recovery, and the continuation of our cost savings programs. Adjusted earnings per diluted share for the third quarter were $0.35, which significantly exceeded the pervious guidance that we provided in November of $0.25 to $0.29 per share. Each of our business segments in geographical locations had strong revenue growth and it was a major factor in the increase in earnings. Although I'm pleased with our success in achieving pricing recovery of over 80% of the incremental commodity cost through the first three quarters of this year, we still have a way to go. and we are committed to recovering all incremental commodity cost. At the same time, we will remain highly focused on servicing our customers and providing new stored energy solutions to our market. As an example, our proprietary thin plate, pure lead technology has led to many new opportunities that are significantly expanding our business. In prior conference calls, I talked about our wide use of thin plate, pure lead technology in tanks and other military vehicles. Premium reserve power product solutions, the highly rated Sears platinum battery, and the battery development project for the United States Navy are to retrofit the nuclear submarine fleet. Earlier this week, we issued a press release stating that we received our first contract award from the United States Navy to bring the thin plate pure lead batteries for the nuclear submarine fleet. This is another major milestone for EnerSys in advancing our superior technologies and meeting or exceeding our customers' needs and expectations. We are…

Thank you, again John. Certainly, our solid fiscal 2008 result continues to demonstrate the strengths of our global business and industry leading position. Our third quarter net sales increased 46% over the prior year to $553 million. On a business segment basis, net sales in the Reserve Power business increased 58% to $248 million, while our Motive Power business increased 38% to $306 million. The consolidated growth rate includes approximately 16% from base volume, as demand for our products and services remains very strong. Also the third quarter growth rate includes approximately 18% due to our pricing recovery actions, 10% from foreign currency translation, and 2% from acquisitions. Further our fiscal 2008 third quarter sales growth was solid in all three regions with growth of 72% in Asia, 54% in Europe, and 32% in the Americas. We believe the combination of our outstanding products, combined with superior customer service, continues to drive our strong top line performance. Net sales for our first nine months were also strong and increased 32% over the prior year to over $1.4 billion. On a business segment basis, net sales in the Reserve Power business increased 33% to $631 million, while our Motive Power business increased 32% to $814 million. The total nine months growth rate includes approximately 12%, due to pricing actions; 11% from base volume; 7% from foreign currency translation; and 2% from acquisitions. We believe our base volume growth of 11% is higher than the market. Accordingly, we believe we continue to increase our global market share. Now, a few comments about our adjusted consolidating earnings performance: As you know, we utilized certain non-GAAP measures in analyzing our company's operating performance, specifically excluding highlighted items, which is primarily litigation settlement income in fiscal 2007, and the European restructuring charges in fiscal 2008.…

Thanks Mike. With that I'd like to open the lines for questions that you may have about our business.

(Operator Instructions) And your first question comes from John Franzreb from Sidoti & Company. Please proceed. John Franzreb - Sidoti & Company: Good morning, guys.

Hi, John.

Hi, John. John Franzreb - Sidoti & Company: Impressive numbers. There is just no two ways about it. My first question is, can you talk a little bit about the sensitivity of your business to an economic downturn, especially what your thoughts are about the mode of business given all the concerns we have about a recessionary environment going forward?

Yes. John, as we talked earlier this morning on that, we're not seeing the impact of a downturn taking place. I know all of us are reading about credit crises and everything. We're seeing that in our business. We believe that the Telecom industry is going to continue to rebuild the infrastructure, or invest in the infrastructure, same thing with the UPS industry. We have seen some mild downturns in certain segments in the mode of power area, however, it's more than offset by other areas that we have, as an example in the Americas the ITA data, or Industrial Truck Association data, when you look at it, it is down year-to-year. But we've more than offset that in Europe, and in our Asian business. So that's one of the advantages of being a global company. When one market is down, the others are up and it's offset quite nicely. John Franzreb - Sidoti & Company: You actually John, it led into another, one of my questions about the growth in Europe on a percentage basis, 54% was seller, how much of that was acquisition, and how much was organic? And could you just a little bit about the drivers, what's going on in Europe?

Well, yeah, Mike, you want to take that?

Sure. And I'm going to reference base volume growth John because obviously there is translation. But… John Franzreb - Sidoti & Company: Okay

The simple answer is Europe continues to be very strong. Year-to-date nine months the base volume of Europe is up 11%, in the third quarter up 17%. In order of magnitude, maybe 2% of that has some acquisitions in it. So everywhere we see the volume growth in Europe, it's very, very strong. John Franzreb - Sidoti & Company: And is that Motive or is that in the Reserve Power business, which is driving that?

It's in both. Although, certainly, the Motive continues to be a bit stronger but it's good growth in both sides. John Franzreb - Sidoti & Company: And there is really not much of currency price benefits because you produce over there, correct?

That's correct. You're correct. The weakening dollar has very minimal effect because we're naturally hedged around the world where we operate. John Franzreb - Sidoti & Company: Great. One last question, and I will get back to queue. Can you talk just a little bit about the timing of your price increases, what do you expect to do this year? And when do you expect to reach equilibrium as far as price in cost, especially given the significant cobalt we've had and lead costs over the past couple of months.

Well, normally what takes place is we're looking at three to six months before we can announce a price increase, before it works through the system, that we finally realize that particular price increase to our P&L. And the reason for that is backlog. We normally give advanced notice to customers but as far as when we reach equilibrium on it. I think that all depends on what happens to lead market. If we were to stick at today's price of $1.26 and if it stays there for the next year, three to six months from now, we will be 100% cut off. But more likely, what will happen is lead will either go up or go down. If it goes down, we will catch up faster, if it goes up, it will take longer. John Franzreb - Sidoti & Company: John, do your customers buy in advance of a price increase?

Some do, but it's relatively small portion of the business. When you're putting an installation in place, say, telecommunications infrastructure, or UPS, and the battery is going to run between 5% to 15%, and usually they have it ordered ahead of time, and the lead time on it is such that they are not going to time the market. Motive Power area, some will go ahead, and if they know a price increase is coming, yes, they will go ahead and buy it ahead of time. John Franzreb - Sidoti & Company: All right. Thanks, guys. I will get back in queue.

And your next question comes from Corey Tobin from William & Blair. Please proceed. Corey Tobin - William Blair & Company: Hi. Great quarter, guys.

Thank you.

Thanks, Corey. Corey Tobin - William Blair & Company: Let me just follow-up on that last question, if I could, then I had a different line I wanted to take things. You gave the breakout rather in your year-to-date for base volumes and also in Q3, can you provide the same number for the Americas?

Go ahead, Mike.

Sure. Corey, the year-to-date Americas is identical, it's 11% and in Q3, it is 13%. Corey Tobin - William Blair & Company: Didn't you saw acceleration in volume for both geographic regions in Q3?

Yes we did. Corey Tobin - William Blair & Company: Great.

Again, meaningful as you've noted. Corey Tobin - William Blair & Company: Great. Great. Okay. Changing gears to second, how much of the CapEx do you have slated for the next year will be for just sort of general planned expansion versus -- planned expansion specifically for that thin plate technology?

Well, the thin plate pure lead technology investment they were looking over a three-year period. As I mentioned earlier it's a significant investment. Over a three-year period order of magnitude we're looking at $50 million. And as I mentioned earlier, the returns on it are significant. Corey Tobin - William Blair & Company: Okay. And well, I guess what's giving you the confidence that it is just touching the product line in the marketplace, or is it demand that you are having from a customer base for this type of product, what exactly is giving you the confidence that put that sort of investment in place?

We have many customers right now that are in our product allocations. We can't keep up running the two plants that we have currently. We are running it seven days a week, around the clock and we're turning away business. Our marketing and sales guys are not really going on and looking too heavily for new business right now because of lack of capacity. We've showed the product to a number of different applications which we haven't talked about. They are very excited about it, but we're not in a position to go forward with it. The demand is way in access of the capacity we currently have. Corey Tobin - William Blair & Company: All right. Great to hear. Final question on this front, how much of thin plate technology, I guess is going to the P&L today? And would you expect that to contribute as we look out to next year?

Corey, I'll give you the broad answer and then come to thin plate. We have other proprietary technology as you know, such as our square tube in Motive Power. In total, that plus thin plate pure lead, is little over 20% of our worldwide revenue and it's relatively evenly balance with certainly both performing very well. Corey Tobin - William Blair & Company: So, 20% of revenue here in the third quarter?

I don't know the specific number, but it's averaged roughly 20% of our year-to-date revenue, about 10 of it's thin plate, 10% is thin plate and 10% of it is our unique square tube in Motive power. So in summary, we generally view 20% of our revenue from our very unique proprietary technologies. Corey Tobin - William Blair & Company: And looking to next year, that would, I am assuming we could think of that as growing as a percentage of revenue?

Absolutely. That will go up, in fact, our third quarter is a little higher than 20. Mike's number is right on the year-to-date but I suspect it's a little higher than third quarter. We're going to -- as we add the capacity, I'm not worried about getting the sales on it, because as I said, the demand is there for the product. As we put the capacity on line, the product will be sold. And I think we're looking at almost doubling the capacity in that business. Corey Tobin - William Blair & Company: Great to hear. Thanks. Congrats again.

Thanks

And you next question comes from Craig Irwin, Merriman. Please proceed.

Good morning, guys.

Good morning, Craig

Good morning, Craig

Solid quarter. Congratulation on that.

Thank you

I just wanted to ask a couple of, general questions around your acquisitions strategy. You really sort of gained the reputation out there in the market as the most aggressive acquirer of the energy storage assets. But I was just hoping, if you could discuss a little bit around your valuation discipline, sort of, what you look for, where you like to buy things and what sort of rates you look to earn on the assets you acquire?

Well. We look at a number of different things, quite a number. I mean, at any given time, in a year's period the 20 to 30 different assets are potentially we will go after. Just to back up what we're looking for? We're looking for companies that would be vertical integrations, like the ones that we've done in our trade manufacturing. We are looking for, what I call, bold on companies who have lot of asset areas, where there will be high synergy place, for they make the same products that we essentially do and we can work the synergies with them. We're looking at alternate technologies. Lithium-ion is our modular energy as an example. We bought a company in Zwickau, Germany. GAZ is the name of it that is surplus. And the other one is geographic expansion like Bulgaria where we're entering the Russian markets. So, those are the ones that we really are focused on highly, and the screening process is really simply this. That, I want to take a look, first of at the [NOD] and what we would be willing to pay in a 25% IRR, that's a starting point looking in a five-year period. Second thing, you show me model with synergies on it, third, who we are competing against to buying it. That's a screening process as we go through. Then we get into the due diligence and really see, how well it fits in and where would we want to go with it.

Excellent. So in the lead-acid market, I understand there are a few of the smaller sort of tertiary guys that are speaking to a variety of people right now. Would you prefer to have an asset like that for something close to acid value or it's more of a turnaround story? Would you prefer to go after one of the high quality providers in the market?

Here about the return on the investment, to be honest with you, I mean that's what it really gets down to. I've said many times that I really don't necessarily care to buy companies that are accretive right on this issue. CM was a good example of it. When we bought the company, we said it'll be diluted $0.02 a share, first year to be accretive a minimum of $0.04 a share, the second year it was breakeven first year, it was way north of $0.04 a second year. The return on it was very solid for us. The ones that are accretive, they tend to be one of higher price. So the metric we're looking for is that return on investment now, fast we can execute in the risk associated with it.

Excellent, excellent. Well, thanks for that commentary and congratulations again on the quarter.

Thanks you, Craig.

Your next question comes from Dan Whang from Lehman Brothers, please proceed.

Good Morning.

Hi, Dan, how are you?

Hi! Dan.

How are you? First question was a little bit more details on the pricing and actually sounds like both reserve and motive are on parity in terms of pricing. I guess, historically reserve market has been a little bit more challenging. But, so is it essentially same that both of those product segments saw 18% price increase?

That's fair to say and as I said earlier our objective is 100% commodity recovery in all aspects of our business.

Okay. Now, I know historically, it's been a little more challenging to get the pricing on reserve, I mean, what’s enabled you to sort of reach parity in those different markets. What changed in the marketplace is it some of the excess capacity going away in the reserve side?

I don't think there is much. You may be right it, may be part of that. But I think more importantly is our thin plate pure lead, which tends to be higher margin products and the change that we are seeing our customers going to that. The capacity in certain customers, I do know there is an issue, where we've been able to get pricing on it that is an issue on some of the other products. But I think the part was there is change in mix.

Okay. And you mentioned the thin plate pure lead opportunity there, and I think historically as you mentioned, the applications had been focused on the military side. So is this the growing opportunity in the thin plate area? Is it just that you are expanding into commercial applications and outside the normal sort of sphere?

Well, you are right Dan. A couple of years ago, sometime in the past, it was highly focused on the military applications, where there was military tanks. We then put the thin plate pure lead into military aircraft like the F16, F18, C130 transport, Black Hawk helicopters. We then expanded into commercial aircrafts. We've also expanded into high end starting applications for diesel starting trucks, diesel starting engines. We've expanded into Sears with the platinum battery. It's gone very heavily in the telecommunications area, and it was started in telecommunications also. But we've done a major expansion in the telecom industry, whether looking for less space to store the battery or put place the battery and more power output that's what the thin plate pure lead has really as it's advantage. There is more power per square foot.

Right. And because of the intricacies in the manufacturing process with thin plate you've held a competitive advantage. I mean, are you seeing other, potential players any signs that had in the marketplace?

Nothing that is really changed in the last several years on it.

Okay, that's great. We look for the good news on that. And finally, I think one of the other battery manufacturers reported results and it's obvious that you continue to gain share. And in that regard, I mean, are you doing anything different out there in the marketplace that's allowing you to outperform or is it just, the same all the -- the maybe that old, but the same EnerSys blocking and tackling?

Okay. I think what it gets back to is best value in the industry. And I think what that is servicing the customer taking care of the customer, looking what the customer wants, sometimes they don't know exactly what does they want and so we’ll come up with new ideas. We try to study their applications. We look at how we can help them improve their business. It's like one our major customers told us recently a large OEM among the best battery supplier that we've you are the best supplier period. And that's the kind of things that we really look for taking care of the customers is what this is about. It's service, service, service, I don't know, how else to put it.

Got it. Thank you very much, and it's a great quarter.

Thank you.

The following question comes from Paul Clegg from Jefferies, please proceed.

Hey, guys congrats on the quarter and let me my congratulations to everyone else.

Thank you, Paul.

When do we see those, $75 per account LME lead cost that we reached late last year moving through your P&L is that more in the March quarter or the June quarter?

You will see it's starting in this next quarter and if you know sequentially that $0.35 going down to $0.33, as Mike Philion alluded to you earlier, that the step up quarter-to-quarter is $16 million, which on a share basis is what $0.22 to $0.23 headwind..

All right, okay. And so you'll see some of that in the March quarter but you also see it carry through to the June?

Very little some, but very little.

Very little, okay. So, okay, very good. And then any update on competitor behavior you are still seeing pretty rational behavior on pricing?

Well, I think many of our competitors are herding, they are following. In some cases, we're actually leading, you're going after pricing. And it's nice to be following a competitor and going up after pricing in some cases since the market has some discipline to it. So, I think it's been very rational recently. I think most of the competitors out there my perception as they have the same situations that we do and the same focus and that is unfortunately commodity cost have gone up, and unfortunately in the lead-acid battery business, lead has a big impact on us. And unfortunately the end user ultimately is going to have to pay for what types of things that we can't control and I think our industry has recognize that.

And are you are seeing that across the board geographically or is it different in some different markets you are seeing more?

Yeah. In Asia the exception would be in China, China is a tough market on pricing. It's a very tough market on pricing. I think ultimately you're going to see changes there. China is about 5% of our total business, but if I had to pick one market that's the toughest that would be China.

Okay, all right. Thanks very much guys.

The following question comes from Rob Campbell from Evergreen, please proceed.

Hi guys, great quarter.

Thanks, Rob.

I just wanted to ask you a question about the new FCC ruling with your UPS changeover and if you could fill up some color about the quantification of how big that is, or when that should go into factor any headwinds that are started going in that direction for you guys?

Yeah. I assume you are referring to the requirement of 8 hour back up on cell phone, 24 hour backup on wireline.

Exactly.

Yeah that was driven by Homeland Security stating that it's been around for longtime. There is nothing new. But Homeland Security, I think at this point is assisting is that put in place is still being contested. I've heard the numbers have been north of $100 million in fact no one really knows what the impact is going to be in it. I'll say though that with a number of large telecoms, we currently are doing surveys on their equipment and what the demand or what the needs would be. They have hired us to do that in the front end and in certain telecoms have already decided to move forward with it and we are doing business with them right now. It will have a positive impact. I believe that to what extent it's hard to tell.

Okay, guys that's pretty much it from me.

Okay, thank you.

(Operator Instructions) The following question comes from [Mike Marberd] from Ramsey, please proceed.

Hi guys, in the last couple of quarters, the gains from your hedging activities have become more material for obvious reasons associated with the lead situation. So, I'm just trying to understand the policy, as it relates to hedging activities, some companies effectively use hedging as zero some situation overtime. They hedge the exact amount of whatever they are hedging, regardless of their specific judgment as to how things may or may not evolve. Other companies use their judgment and they might hedge 30% in this quarter and 50% in another quarter and it's not easy or some gain but actually trying to make a little bit of profit overtime, which kind of bucket, do you guys fit into?

Well let me describe, I think what we've done historically and the way view that, we carry above the next quarter, most of the next quarter of our projected sales is currently in backlog. So, when we are looking at hedging, we are going to lookout in the short window there that if lead were to jump way up or go way down, we are at risk. So, we want to hedge a portion of the next quarter, a fairly substantial portion, because if lead were to drop down, we wouldn't get caught short on it because we want to have the price fixed on that or take in that order. The concern that we've had is that we are not going to go long on the market because it's so volatile. We've demonstrated that when lead was going from $0.20 many years ago, up to a high of $1.82, and I'll remind everybody that $0.01 in lead is worth $0.07 EPS to us. It's a big impact. The condition that we fear has been that if we hedge at a high price and we're out long on it, and lead drops way down like it has recently, from $1.82 in mid October, to down to $1.12 in January, that big drop, if we are locked in at that high price and it stays down, would put us in a world of hurt. So, we are not going to go long it. On the other side as lead creeps up or continues to go up we've demonstrated we're able to pass most of that through. We're at 80% right now. We've made up the difference with volume and cost savings. So, ultimately we're not looking to betting on the market. We're not trying to take and say that we're going to take and make it a profit center to hedge lead that's not our business. Our business is that is lead-acid battery business, we want to be sure that we can remove volatility and remove or mitigate some of the risks associated with our business.

Good, okay that's -- so that would fit into the sort of the first bucket. I can't speak about the people that's what I was hoping for. Then the next question is in this current quarter, what were the realized gains from the hedging activity that flow through the income statement. How many millions or dollars?

Mike, we don't give a prescriptive number. But you will see it in our public filing. I think the nine month number was $44 million. And certainly, there are some meaningful benefits, as John referenced. So, John said it perfect like we hedge for volatility protection. We recognized the link between backlog and pricing dynamics. So, we don't believe in the philosophy with our business model of going long or to do anything that we would characterize is knee jerk or reckless.

Let me pickup that up a little further. If you look through the nine month period, in total commodity cost increase, we've seen a headwind of over $200 million against us, $200 million. And as Mike just alluded to, we've offset $44 million of that in hedging. Where we've lost additional money is we haven't got the pricing to offset it yet. If the commodity costs -- if we could raise the prices at in sink with the increase of commodity cost everything would offset. But what I'm trying to say here is that our total business is down, $157 million. Our total cost, I should say is up $157 million year-over-year. And we've not recognized or realized all the pricing to offset that yet. We've only got a portion of it. So, yes, the lead hedging has helped us during the first nine months, but we haven't got the price increases that we'd like to have either. So, going forward if we loose the hedging hypothetically, we'll offset it with the pricing.

I understand that make sense. And so, the real impact of this $80 to $12 drop on the hedging activity is probably not in this coming quarter but in the following one. By that time you're saying most of the pricing pass through increases should be realized, and it should offset what would be some loss associated with hedging activity?

Yeah, it will be in future quarters, you're right. It won't be in this next. It will be in future quarters.

All right, thank you guys.

Okay.

And the next question comes from Dana Walker from Kalmar Investments, please proceed.

Good morning

Dana, how are you doing?

Doing well

Sure.

Nice to hear your voice and certainly like to see the nice numbers. From an interest rate standpoint, Mike will your debt balance and your debt burden and the cost of that would be affected by the reduction in LIBOR?

Well obviously, near term. We've roughly half of our debt that floats and half is with interest rates swaps. So, in the near term certainly we'll get some modest benefit from lower interest rates.

One way to look at that might be roughly a couple of $100 million that's sensitive to the reduction in rates?

Yes, $200 million is the ballpark number that is did flow, that's correct Dana.

And with LIBOR having comedown a couple of 100 basis points or so, I suppose there might be $4 million per annum roughly of pre tax benefit?

Yeah, in the isolated example you use that is absolutely correct.

Okay. When lead spiked in the late summer, would you say that you were less active in pursuing it and have the ability to be less active or would you say that you're purchasing patterns or just as active given the volume strength that you are having to serve?

I'd say that, we were fairly consistent through that period of time where, we are looking for the orders coming in and while we're going out of pricing, again we were looking at the next three months out and seeing what we want to do.

Any reason to think that your competitors would have taken a different tack and that you would be disadvantaged by the steps that you took versus what they may have done?

I really have no idea what they have done. I have no idea.

The submarine contract that you announced should that be considered a long-term engagement with the Navy or is that going to be done year-by-year?

The first pass on is for two years the contract that we've, but our expectations are it's going to be a long-term and to go further with that this is the start. We do business with approximately 20 different countries in the military area around the globe. This is the first that we've used thin plate pure lead with the United States Navy, but we do plan on offering that to other countries.

Of the 70, some are nuclear subs. How many of them would be retrofit in that to your timeframe?

I don't know the exact number on that and it's one of the things that I'm not sure, if we did, no that the Navy would want us to talk about.

With the strength in your reserve business, you've described how they aren't really on airbox anymore, but the some of the telephone companies have been active in pursuing this FCC mandate. What are some of the other themes that you are alert to that appear to be responsible for the pick up in business?

I'd say that in part it is speed on the internet and new technologies coming out. The competitive situation setup between the telecoms and the cable, I think are probably the big ones. I think the telecom industry is one that seems like it has to reinvent itself every few years because of the competition that's there. And there is a lot of capital that needs to be spent to keep the earnings and the cash flow going with those companies So, I think the growth from our standpoint is going to be substantial going forward. I think the other thing is, now let's talk mainly the United States, I think the same thing applies in Europe. But the other side to it is with many of the OEMs, the equipment manufacturers it's the deployment or the expansion of cell phones around the globe places like China as an example or different countries where the infrastructure is just being developed and they are putting wireless in.

Your relative involvement with cable companies has they build out infrastructure or would you say it is modest or less or more than modest?

Less than modest.

Two last questions

That's in the US, I should say, in the US. We're not a strong player in that market.

Overseas.

We are stronger there.

Okay. Two last questions, where would you describe, you've talked about thin plate pure lead but how would you describe your utilization broadly of your productive capacity of double-digit volume growth you must be taxing that?

If I understand your question correctly, I'd say, there were 10 days in a week, because we just can't keep up, we're working, as I said earlier seven days a week 24 hours a day. And we're not heavily marketing the product right now until to new customers I should say, and we think that there is some very, very large opportunity going forward.

Let me phrase the question?

I’ll answer that. Dan, I think your question might have been broader, are you referencing the total business or anyone particular element?

It was a poorly phrased question, but I was trying to reference the total business, yes?

Well, certainly you are right with the growth that's strong as it is clearly we are at high at capacity utilizations throughout the world and in both segment.

Are you in a position to deal with volume growth of a reasonable level over the next couple of years based on the pacing of your productive capacity at?

Yeah, we're Dana. I think, now I understand your question. I think the thing that we take a look at just to make it clear on the manufacturing plants 24 around the globe obviously these things are not inexpensive to keep operating. We want to be sure that we're running very high capacity utilization. The high 80s to 90s they have full about upside but not a lot. Whenever an appropriation comes in, the first thing I'll say is gees guys, let's take a look at the pricing what we are getting, look at the low margin business and if you raise your prices that business goes away. You got the capacity. In fact at last, we’ve done that and it say's we still are a way short. And it's a good solid investment for us to add. Now if you take a look at the other end of the business, where we are looking at the high double digit growth 11%, 12%, we can have that fairly easily and in the rest of our factories, and it's not going to require the same kind of capital that we are talking about on thin plate pure lead either.

That was very helpful. Final question relates to thin plate pure lead. As you take additional as you more broadly address reserve needs that are outside of Aerospace and Defense. To what degree will you be stepping on your own toes with products that you already have that address some of that need or would you be incrementally serving market that you wouldn't be able to serve otherwise?

I think it's a little above, it's more than, I think it's going to be new business for us and new applications. But certainly, the other products are the calcium batteries. We can expect that we would see some reduction there. However the growth has taking place in the markets, what it would mean is we even more likely not add additional capacity. Dan, in other words, what I'm trying to say is the growth is going to come in thin plate pure lead and if a customer switches away from a calcium product to thin plate pure lead we will use that capacity for something else. Strong demand for that product because the price difference between thin plate pure lead and calcium.

So, there will be some cannibalization but you think part of it's incremental and it would appear that given the premium product status that this would be positive for the profit profile and the return profile of the company?

Absolutely.

John, I mean clearly the reference of thin plate in reserve is principally telecom but the UPS growth prospect which is calcium product continues to be very promising.

Yeah. If we were to see the calcium product go down because of the telecoms switching to thin plate pure lead, it will be more than offset with UPS business, because UPS is growing rapidly too and they tend not to use the thin plate pure lead.

Thank you very much.

There are no further questions. Back to you Mr. John Craig for final remarks.

Well, thank you for joining us this morning in our conference call. We do appreciate your interest in our company. I wish everybody a good day. Thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. And have a wonderful day.