Good morning and welcome to Wabtec’s Fourth Quarter 2007 Earnings Release Conference Call. All participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. And operator will give instructions on how to ask your questions at that time. (Operator Instructions) Please note, this conference is being recorded and transcribed. Now, I’d like to turn the conference over to Mr. Tim Wesley, Vice President of Investor Relations. Mr. Wesley, you may begin.

Thank you, Ryan. Good morning everybody, and welcome to our fourth quarter call this morning. I’d like to introduce the rest of the Wabtec team who are here; we have our President and CEO Neupaver, our CFO Alvaro Garcia-Tunon, and Pat Dugan, our Corporate Controller. As usual, I will make some prepared remarks and then we will take your questions. We of course, will make some forward-looking statements during the call. So we do ask that you review today’s press release, as well as our SEC filings for the appropriate disclaimers. With that, let me turn the call over to Al Neupaver, our President and CEO.

Thanks Tim, good morning. What I'll do is what I normally do and that's cover our results for the quarter and we will take a look at the full year for 2007. We will talk a bit about our current market conditions and outlook for 2008, and update you on any significant events that are happening as far as our strategic growth initiatives. Then we'll have Alvaro, who cover the financials in a little more detail. We have solid financial performance in the fourth quarter. It was a good finish to the year. Strong sales increase of 24% to a record 365 million for the quarter. We recorded EPS of $0.58 versus $0.53 a year ago quarter, but that $0.53 included a $0.08 tax benefit. Our backlog remained over $1 billion for the seventh straight quarter. This is really worth noting, considering the fact that we had such a strong performance related to our revenues during the quarter and the year. We also had a good cash year. We were able to generate about a 140 million in cash flow from operations. We ended the year with a cash balance of about 50 million higher than a year ago, but even after spending 73 million for an acquisition and 18 million to repurchase stock. That’s a good cash performance, and that’s what really drives our ability to invest in the future and our growth strategies. Based on that ability to generate cash and our board's confidence in the company’s future, we decided to expand our stock repurchase program by an additional $100 million. We can now buyback up to a total of a 150 combined with the amount remaining on the initial authorization in 2006. We can repurchase up to an additional 113 million of Wabtec stock, while leaving us…

Great. Thanks, Al, and good morning everyone. Like we previously mentioned, we had a pretty good quarter and we’ve remained optimistic about the outlook for the future. To get little bit more of the specifics, sales were 24% higher and they hit a record $365 million about 60% of that, which I think is a more impressive statistic, came from an organic growth -- from internal organic growth. And this really reflects the benefits we believe of our strategic growth initiatives. The organic growth came from several units, one of which is WRL, which our transit car refurbishment unit in the UK. They had an increase in its business, and we also had continued strong sales of commuter locomotives in North America, and of course contributed to the overall growth primarily the -- our acquisition of BECORIT in Germany, a friction company in Germany and Ricon the transit lift manufacturer in California. Freight sales, we are also higher than a year ago quarter and this was in line with our expectations. We’re particularly proud of this performance, Al touched on it briefly in just a second ago, we'd been able to offset lower demand for OE freight car components with growth in other areas. Primarily these other areas were our radiator division, which sells to the locomotive market, which has continued to be strong, and also our after market and our electronic units, their sales are particularly strong as well. Operating margins for the quarter were good at 12.5%, this compares to 12.4% in the year ago quarter and for the year, though, we drove operating margin to 13.2 versus 12%, which is a nice improvement. And this is particularly a good improvement given the sales growth in the lower margin the transit segment of our business which went up…

Thanks Alvaro. Well we've had a record fourth quarter and full year results. Growth in 2007 demonstrates that our diverse business model is serving the company well. We have many reasons to be optimistic about the Company's future. The freight market still remains at historically high levels, we have a tremendously strong backlog, our growth strategies, global expansion, aftermarket growth new product development, and acquisitions are producing the results and providing future opportunities. The Wabtec performance system provides a continuing path for margin improvement and we've shown that. We have a strong management team and we're all committed to profitable growth. With that, we'll take some questions. Ryan, if you want to poll the audience for questions? Sounds like we have a slight technical problem that we're going to get resolved.

(Operator Instructions). Our first question is from Brannon Cook of J.P. Morgan.

Good morning, guys, nice quarter.

Good morning, Brannon.

I was hoping you guys could talk a little bit more about your growth expectations in the transit markets as we look to 2008. You've had a number of big contracts ramp up and drive pretty solid levels of growth. Could you talk a little about the visibility for what you see in terms of new potential business wins and organic growth over the next couple years in that business?

Okay. In the transit market as we all know that was a transit bill that was passed and it was retroactively passed back in 2005, 2006 and that transit bill authorization goes through September 2009. And in that authorization, what you saw was a commitment of 6 to 8% of increase spending year-on-year. And the market place right now is really very strong, we have the strong backlog in the transit business. We think that we've seen the ramp up that in 2007 that we expected. As you can see from our guidance for 2008, we don’t expect a similar type of ramp up, but to maintain at a good level there are a lot of programs out there that -- large programs that we still have bids on. The one program that seems to be the center of attention when you talk about transit is the R-160 program and I can give you a little specifics on that. We'll be shipping the remaining of just the first third of that entire program in 2008. The options have been left for the second group, which is again about a third of that 1,760 car commitment and we would expect to start shipping that in 2009 throughout the year and in 2009, we will start seeing the business for 2010, the third portion of that contract. We – when you look at the other big transit order that we have, we only received the initial order from GO Transit on the locomotives. The options we should be seeing that portion later this year. The initial amount was 26 locomotives value of about a 120 million the second is I think 26, 27 locomotives, so would be an equal amount of revenue. And there is a lot other programs that going on North America. We also view opportunities from the transit standpoint as we continue to internally develop our products on the international basis where the market, on a global basis, is much larger than what we have in North America. The transit authorities are quite strong in Europe and there is a lot of development and we're seeing some business in Asia as well. So I think that the market is strong, will remain strong, and we're excited about those opportunities.

Okay. That's helpful color. And a question on the share buy-back authorization. You guys have a stronger balance sheet than you've had historically. You have strong levels of free cash flow. I guess your preference has been towards acquisition in terms of cash uses, I guess, as we go forward given the strong balance sheet and strong cash flow, do you sense that you have the potential to perhaps execute on the share buy-backs a bit more quickly than you have historically? And provide kind of an update on your thoughts about uses for cash?

Well, use of cash, and we just had a board meeting. Every board meeting we sit down and go through all the options and talk about what is the best way to utilize this good balance sheet that we have. And that's really, as you said, based on our ability to generate cash over time and the Wabtec performance system has done that and we think we can continue do to that. If we have our preference on how to invest the cash, we obviously, I think, the most healthy growth is always internal growth and we continue to focus strongly on developing our technology through new product development and market expansion in – of our existing products. Secondly, we would like to utilize this cash to grow through acquisitions and we're going to be very cautious. We're going to be very methodical and we're really going to make sure that we get the right acquisitions. Thirdly, is we would look for other options to deal with our cash, which is obvious that the board has supported a stock buyback program, a large one, and there is other options as well that we explore each and every meeting and we look at what we think is best for the company and our shareholders. So you would see continue a push in that direction. As far as what our plans are on the buyback, I think that I'll just say that it is authorized and we think that the stock price is such that buying back stock right now a smart thing to do for the company.

Okay. Great. And just a last question on the acquisition landscape. Could you talk a little bit, you mentioned some of the opportunities potentially joint ventures internationally. Could you talk about that what's your scene in the marketplace? You know, the weaker economy here in the US is creating essentially more attractive evaluations and how the competitive landscape is for those acquisitions and that if they're fewer private equity parties, et cetera, how that's playing out.

The acquisition pipeline it is very good for us. We're very busy. We've got a lot of activity going on. Some of that activity is really related to global expansion and -- they're not large opportunities, but they're obviously very time consuming and we're moving forward on a lot of those opportunities that are going to create growth opportunities going forward. We also have other opportunities that we're looking at. As far as the private equity involvement in the acquisition arena, we really haven't seen a decline at this point. I also feel that we're seeing that when the railroad was at its peak, the railroad sector, you saw a lot of people entering the market now that there is a softening or a decline. I think that there may be some people holding back a bit, but we've have good activity and we've explored a lot of opportunities. We're going to be very careful and cautious as to what we do with our money, especially when it comes to acquisitions.

Okay. Thanks.

Our next question comes from Jim Lucas of Janney Montgomery Scott.

Thanks. Good morning guys.

Good morning, Jim.

Two questions today. First on the market expansion growth initiative, could you give us an update there in terms of where you are currently and anything that we might keep an eye out for in 2008? And secondly, with regards to the international arena, you know, you touched in the last answer about in the last answer about International Transit presenting a lot of good long-term opportunities. Maybe bring us up to date in terms of some the things you've got going right now and if you could just expand a little bit in terms of organic versus potential acquisition opportunities that would help you expand in the international transit markets?

Okay. First question, Jim, is related to our market expansion experience. Right now, we have about 10% of our business is outside of the rail industry. And the one product that has grown extremely nice for us is our heat exchanger business. We talked a little bit about this in the past and this has become a product that we have found that we have a tremendous amount of differentiation from others. This product was initially designed for the locomotive so it had a run a high temperatures, a very rugged environment. And, it has found its way to be able to be able to solve technical issues related to the [Operator Instruction [Progen] area. People like Caterpillar, Kohler, and others where they have to run at higher temperatures now in order to meet the emission requirement. And again, they're in a lot of rugged areas. So our capability there, we've been able to expand, not only in North America, but we think there is a lot of global opportunities as well for that particular business. The other area is that, as you know, we have a good strong position in friction technology, our braking products in both the transit as well as the freight area. We have tremendous amount of technology and acquiring BECORIT during late 2006, it just added a tremendous amount of technology to what we already had. Their capabilities are really related to testing and extreme environments and a lot of development work and we feel that there is tremendous opportunity in the friction area to really look for business opportunities in that particular area and some of the other industries. And we've already been able to take our existing products and apply it to mining, to the windmill power generation area, as well as some…

That is very helpful. Thank you, very much.

Our next question comes from Art Hatfield of Morgan Keegan. Arthur Hatfield - Morgan, Keegan & Company: Morning everybody.

Hi, Art. Arthur Hatfield - Morgan, Keegan & Company: Hey, quick question on seasonality and I know you're not giving guidance on quarterly earnings, but with the business mix shifting a little bit more towards transit, would that impact the kind of seasonal progression of revenue and earnings for the business going forward?

The one thing about the transit orders, as you know, they're large. And what does happen sometimes, Art, is that you get delays in programs. And I don't think there is a time of the year where it makes that much difference as much as sometimes we'll run into a -- it could be a technical delay that may not -- we're involved whatsoever, but those delays on large projects, obviously could have an impact on the business. As far as seasonality from the transit, I'm not sure that there is much to it. Arthur Hatfield - Morgan, Keegan & Company: Okay. So, is that because more -- for our modeling purposes we can see the earnings progression for the year flatten out theoretically as transit becomes a bigger piece of the business?

I'm not sure that we could -- that's almost providing a little bit….. Arthur Hatfield - Morgan, Keegan & Company: Okay. No that's fine. I don't want to…

One thing related to and one thing I can't say is that when you look at our Wabtec performance system, continuous improvement is what we're about, and, you know, we've seen that margin improvement and whether it's driven by revenues or not and we kind of have a model that we see that, what the mix is going to be and we just drive harder and harder, continue to try to improve those margins as we go forward. Arthur Hatfield - Morgan, Keegan & Company: Thank you. Just real quick, a clarification. Did I hear you correctly, when you were commenting on the R-160 that you did not – did you not receive any revenue on that in 2007?

We had a little bit of revenue in 2007, yeah. Arthur Hatfield - Morgan, Keegan & Company: [For bid].

Yeah.

Yeah, we started shipping 2007 and I'll – R-160’s have been shipping all throughout 2007, I'm sorry Art. Arthur Hatfield - Morgan, Keegan & Company: Okay. So…

We will continue to ship back through the year. Arthur Hatfield - Morgan, Keegan & Company: Correct, but I – when you made that comment, I…

I appreciate, you are making that clear, because no I didn't mean to say that if I did. Arthur Hatfield - Morgan, Keegan & Company: Okay. So, you have been shipping throughout the year.

Yes. Arthur Hatfield - Morgan, Keegan & Company: And so, you are going to see a steady stay on that business into '08.

That’s correct.

Correct. Arthur Hatfield - Morgan, Keegan & Company: Okay. And then, just real quick, you talked a little bit about the buyback and you commented on that I mean other issues relative to – how you want to spend your cash, is there anything to read in the buyback about the fact that there is really no large opportunities for acquisitions that you see in the marketplace?

No, not at all. We just feel that, we are at a position and if you and if you -- we think that where we're valued as a company, it makes a tremendous amount of sense. A tremendous amount of sense to do what we're doing. Arthur Hatfield - Morgan, Keegan & Company: Okay. And then, then finally Al, anything keeping you up at night, right now? Anything that kind of out there on the horizon that you're a little worried about?

Yeah, we had a new grandchild, so my two other granddaughters have been over at the house and I'll tell you, I haven't slept in a week. Arthur Hatfield - Morgan, Keegan & Company: Well, I'm glad it's that and not something else.

No, actually, you know, I think from what is – you know, what concerns us, we're looking at this economy. I mean, I think that will the economy, you know that this is a sickly business. We don't run away from that brutal fact. We have to really have plans in place dependent on what we see ahead and we've got to continue to diversify our model and follow through with our strategic plan. So, I think the biggest thing that we're really worry about as a corporation, we are spending a lot of time talking about it, and preparing for it. And that's, what I am seeing the economy here in United States and we will have an impact on the rest of the world, now that we are more of a global company we were a year ago. Arthur Hatfield - Morgan, Keegan & Company: Great. Thank you, that really helped.

Our next question comes from John Barnes of BB&T Capital Markets. John Barnes - BB&T Capital Markets: Hey, good morning guys.

Good morning John.

Good morning, John. John Barnes - BB&T Capital Markets: Al, congratulations.

Thank you. It was a boy too, after three girls, so… John Barnes - BB&T Capital Markets: There you go. There you go. See, I got my son out of the way early so now anything is gravy after that. So it's all good. Real quick, the tax legislation, this bonus depreciation, accelerated depreciation. You know, we've quizzed all the rails as to what it would mean to their CapEx budgets and I think on average I heard somewhere you could see somewhere between say a 10% or 15% increase in CapEx budgets in the next couple of years if there was some stimulus like that. I mean, do you foresee the same kind of increase in orders coming to you in the event that legislation gets done and there is some stimulus out there?

We would think it'd be equivalent. I think that as you know, they distribute their capital budget about 70% to 80% on the wayside and the balance on rolling stock, I don't think they would change that balance. So if their number went up I think we would see equivalent. Now, are those packages going to get through there, that's a whole another story. John Barnes - BB&T Capital Markets: Yeah.

You know, and I think there is other legislation that is critical as well and that's the safety bill that has passed the house and that would have an impact because it’s really ties into train control somewhat. I think the -- any discussion of the re-regulation of the industry, tremendous negative from a political stand point and obviously if there was some incentives for the railroad, it would be tremendous, not just for us, but the whole industry.

And the key to that John is when we do our planning, you know, we're kind of planning almost expecting the worst and a 10% to 15% bump in the spending, I mean, we can accommodate that very easily. So there wouldn't be any issue with us being able to accommodate an increase like that. I mean, obviously, we'd welcome it, and you know, it would be very easy to accommodate. John Barnes - BB&T Capital Markets: Sure, sure. Okay. And then, you know, as you look at your planned CapEx, if those kind of incentives get passed, what do you think in terms, you know, are there any projects you've got in the pipeline that you would accelerate?

Not really. I mean, I think we basically do our CapEx on an as-needed basis. You know, I think the thing that has the most impact on our CapEx is our QPS system and lean manufacturing where you basically are not as dependant on CapEx as other type of operations. And really, apart from what we need, the other key component of our CapEx is what we need for growth and I think right now, to be honest, we're in a fortunate position that we do have the financial flexibility to be able to invest in all those programs that we think will lead to future organic growth. So to be honest, the additional depreciation would be nice, but it's not going to be -- it's not going to make or break a CapEx decision at our level. John Barnes - BB&T Capital Markets: Okay, very good. Going back to the question that was asked early on about the use of cash, I kind missed the part where you talked about the buybacks a little bit. I mean could you just – could you give us some insight into how you view buybacks? I hate the word opportunistic, I mean, it sounds like you're picking it up a day -- you know, a day when your stock gets trashed for some reason. And I recognize you want to buy smartly, but I just -- give us some insight into how you approach a buyback program?

Sure. I mean, let’s start with the big picture, and really our approach is, you can take a look at the price of our stock. And we believe that the current levels, by our calculations, depending on how you do it and where is that day. But you're talking somewhere between 6 and 7 times EBITDA. Last time I did it was about 6.53 or something like that. So, we are right in the middle. And we think, if those levels, it’s an attractive buying opportunity. We believe in ourselves and we believe in our ability to execute to plan. So to us, the company stock is an attractive buying opportunity. How we go about, executing under the plan, which I think was your other question, is obviously price-driven, but I think we'd move in there now to -- we don't buy during quiet periods. We don't have a 10b5-1 Plan, which you can automatically execute during quiet periods, because we like the flexibility of an open market repurchase plan. But now that the quiet period will open up, we'll be out there buying aggressively, [I think]. John Barnes - BB&T Capital Markets: Okay, Al. And then last question, going back to the acquisition question. Al, your comment about 10% of revenue currently coming outside of the rail industry. You know, what would you be comfortable with as you make acquisitions? How far are you prepared to stray from what's been your kind of core expertise? Are you willing to let potentially 50% of revenue come from non-rail related things or are you kind of keeping it, would you prefer to keep a little bit more in the expertise?

I think, when we judge acquisitions really the important, first important question is, is it strategic, is it not strategic. And we would prefer to stay as close to the core as we can. However, we feel that it is also important to take your competencies and your technological capabilities and expand those from that core. What we wouldn't want to do is -- we've really separated, we've actually analyzed this down to almost a little bit of a science and that we've categorized acquisition potentials in four columns and the fourth column to the side is just anything it's totally non-related to our business. And we really have no interest at all for doing that and as you go further to the left of this sheet; you would find that it's really in our industry core in the first column. What would you feel comfortable with? I think what you feel comfortable with is businesses that are close to your core. I really haven't thought of the -- and I don't know if I'd apply a percentage to that. We're really a rail company and I think that – we think that long-term rail has been the backbone of this country and will continue to be the backbone of this country for many years to come and we really believe in the rail industry. So we're not trying to become a different company. I think it's a compelling industry right now. It's a green industry. It's going to grow It's a green industry. It's going to grow. It's the only way that you could move people and freight from point A to point B economically with the price of oil where it's at and everything else. This is one compelling industry and I think that you're seeing other investors catch onto that. That's what attracted me to come over and work at Wabtec. All right, I think it's a great industry and we're not looking to change our core, but we also are realistic that if we have competencies that we can match up, that we want to take advantage of that. John Barnes - BB&T Capital Markets: Good deal. All right. Well thanks for your time, nice quarter. I appreciate it.

Thank you.

Our next question comes from Waymond Harris of Bear Stearns.

Good morning guys.

Good morning, Waymond.

Good morning.

I had a quick question or a couple of questions. During the quarter you announced ECP order that you talked about. I think interestingly that it was from a utility air shipper and actually not from a rail and I wonder if you could actually talk about how you guys go about attacking that market? Is it that your sales people are actually out there calling on the utilities or calling on the shippers, because they own a majority of the rail cars or is it really the rails forcing the shippers to really consider or to -- into buying ECPs?

Yeah, what you find today is the class one railroads, they run the railroads, but they don't own the cars. And you really hit on a very important factor is that one of the reasons why the adoption of ECP hasn't already happened, the technology is proven, the cost advantage is tremendous, and the report that Booz Allen did and you can't take these numbers exact, I mean, I'm going from memory here. But if every train coming out of the Powder River Basin had ECP on it, the cost would be $400 million to do and the return on efficiency productivity and everything else is like 170 million. So it's almost a no brainer. The problem is who pays for it and who gets the benefit and unless it's a total railroad owned by, say the Southern Company, the utility, they don't get all the benefits of being able to move faster and whatnot. And that's one of the reasons that I think you haven't seen the adoption that we should see. Then you've got the other issue related to mixed cars, but in these unit cars, there is just -- there is no good reason and I think there is a lot of interest in moving forward and find ways to solve these issues. But the cars themselves are actually owned by the utility or the coal company.

Well, I guess what I was wondering is are you guys doing anything to try and -- or can you talk to the actual shippers to -- is there a value proposition or is it something that it's really just, the rails and the shippers have to work it out?

Yeah, well, again that's an important question, because we really feel they're all our customers and we really need to be talking to the utilities, we need to the car owners. We also got to talk to the railroads themselves. We look at -- as all – every part of that is a customer voice. So, that is important, yes. Thank you.

And then just one last question, I know only 20% of your revenues come from the rail car manufacturers specifically, but just, Al, if you could give your thoughts that in the past couple of weeks there has been a 13D filing by American Rail Cars saying they would seek to do some sort of combination with Greenbrier and as a industry insider, so to speak, just your thoughts on how something like that might affect overall industry dynamics?

I can't give you any specifics, but I think that in general you find that there are a lot of the rail car producers and I don't think that the consolidation effort of any railcar producer would have that much impact on the entire industry. For us, individually, we sell to all of them and we have a relationship with them. So we don't see any impact from it. There are – there is a lot of capacity at the various railcar builders.

And finally, I don't know, if I miss this or not, but did you give a specific percentage of your revenues that came from international during the quarter?

I will give to you, we had about 40% of our business was ex-US in the – that was in the -- for the year, for the quarter was 43%.

Okay. Thanks guys. Have a good one.

Thank you.

Our next question comes from Steve Barger of Keybanc Capital Markets

Good morning.

Good morning, Steve.

Good morning Steve.

I've kind of been jumping on a couple of calls, so let me know if any of this is redundant. But, on the freight side, can you talk about the opportunities for market share gains that remain in the US to help keep that sales growth performance versus industry deliveries going? Are there still a lot of opportunities there?

I think from a market standpoint, we don't view it as a great opportunity for growth. We really have to technological new development taken, you know, newer products, because that market share really just flip flops a little bit between the players. So we don't view that as a growth opportunity going forward, Steve.

Okay.

But, here Steve with the new products does that I think we are developing, I think there are opportunities to develop leading positions within those new products.

Right.

And that's where we really our emphasis is.

Okay. Well that kind of leads into the next question. Can you talk more specifically about your progress in penetrating some of the brick companies or countries I should say, Brazil, Russia, and into China, with respect to some of those freight components and is that a share opportunity or do you need the technology there as well or new products?

Well, we are in some cases you do need different technology and there is some cases where it's a share issue. And those countries that have AAR type product, meaning, US product, where George Westinghouse extended his influence over the world and continues to it's matter of going in and getting share or bringing in technology that they're interested in. In those countries that use other technology or other basis and one of them is the European standard UIC, that's where we really have to have technological development in order to enter those countries or acquire a company that has that capability. We have some product that we are now selling into those areas and there is a lot of effort going on to get more products that meet those standards.

Okay, great. The current funding environment, I think you talked about 6% growth on the transit side. Does your thinking change with respect to the outlook given, you know, some of the broader credit concerns, municipal or federal budgets and as it relates to housing re-pricing and tax collections? Or is that kind of ex all that?

I think that that type of increase funding is in pretty good shape as long as the transit bill is there. Now each year, the budgets have to be approved and the spending has to be approved and sometimes they move things around. But if you look at the ridership, I think I read where New York City had 1.63 billion riders this last year was the highest level since 1951 and I stopped to get gas this morning on the way in and with -- as we all know, I mean, it is just – it's amazing. I think the push in transit arenas are going to continue and they are going to have to find ways to fund this particular growth that we're seeing right now and I think we're going to continue to see it.

And the following to that is, European and Asian trains are funding, which I think is robust, but is there any way you can put a range around that or kind of talk directionally by region in terms of what kind of growth you expect as you put your plan together?

We view that the European expansion, I think, is mid-single digits and will continue to be. But the expansion in Asia is double-digits. You're going to see double-digit growth. If their economies are expected to grow with that, the infrastructure has to grow even faster and that's throughout Asia, you know, India, China, we're seeing it all, throughout the world and we need to be in a position to take advantage of that.

Yeah, and what percentage of your transit revenue comes from Asia right now?

I could give you transit outside of the US, I don't know if I could give you a number for Asia right now. Do you know it?

(Inaudible)

Outside the US transit for the full year of – was 55% non-US.

Right.

I would say that, Steve, that it's a relatively small part of that, because when you start talking transit-international you start talking about friction products, you start talking about our car overhaul business in the UK.

Right.

And, so most of that is non-Asian, but I think what that does highlight is the opportunities that are available in Asia and that's why we're targeting that area so strongly, because we think we can improve significantly there.

Okay. One income statement kind of question. SG&A in 2007 grew 14% in dollar terms, you still got 100 basis points to leverage on that line. How should we think about SG&A growth or inflation in 2008 and can you get further leverage relative to wherever that comes in?

Sure. I think the one thing about SG&A, I think, if you take a look at the third quarter and the fourth quarter they were relatively stable. Actually the fourth quarter was down a little bit in the third quarter. And I would say somewhere in that range you always have a little bit in SG&A, an adjustment here and an adjustment there that's going to affect it. But for the most part, that's going to be a relatively good run rate. The reason for the increase from year-over-year is primarily due at acquisitions.

Right.

So, I think what – in general, I think where we are right now is relatively stable. We're very mindful of economic conditions and we are keeping a very, very close eye on SG&A, because of, particularly – I mean we always do that, but particularly right now given the fragile state of the economy, that's one thing that we're really focusing in on. So asset and acquisitions I think you'll SG&A continue to be very stable.

Okay, great. And one last question. You talked about the 10% of the business outside rail, I'm specifically focused on the friction side there. You said mining, wind towers, and crane, all very high demand segments right now, and understanding that's a small part of the business, how fast can you grow those product lines and are they better margin or worse than say the consolidated operating margin?

Obviously, we – the one thing about market expansion, typically you're a small player in a big market. All right, two things that are good about that, number one, you have a discretion whether or not you go into it and that discretion, obviously, is highly dependant on what the profitability of that particular entry is. Secondly, you're starting out a very low small market share, so you see more rapid growth than you're capable of, until you get a more substantial position. So those two factors really make it an attractive to be able to look at this strategic concept that we talk about this market expansion.

And, the profitability of those product lines?

In general the margins on those products, in general, are quite good. They are probably in total, slightly above the company average. One of the issues we have within reality again you got to product-by-product.

Yeah.

Is they don't get a lot of wear. You know the -- in essence the friction material that stops the windmill, the whole purpose of the windmill is to keep on going.

All right,

Or they stop it very rarely, so unfortunately you don't get quite the repeat business that you do with rail, but when you do get it the margins are attractive.

Got it. Thanks very much.

Thank you, Steve.

At this time, we currently have no more questions. (Operator Instructions).

Okay Ryan.

Okay.

No more questions, I think we'll sign off for today and we'll talk to you guys again in a couple months.

All right, see you then, thank you everybody.