Good morning and welcome to the Wabtec Corporation's fourth quarter 2009 earnings conference call. All participants will be in a listen-only mode. (Operator instructions) After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference call over to Mr. Tim Wesley. Sir, please go ahead.

Thanks Vijay and good morning everybody. Welcome to our fourth quarter earnings conference call today. I’ll introduce the rest of our team. We have Al Neupaver, our President and CEO; Alvaro Garcia-Tunon, our CFO; and our Corporate Controller, Pat Dugan. We'll have our prepared remarks and then answer your questions. I want to refer you to today's press release for the appropriate disclaimers on our forward-looking statements. And with that, I’ll turn it over to Al.

Thanks, Tim. Good morning everyone. What I’ll be doing today is covering our fourth quarter and our full-year results. I’ll talk about our market conditions. We’ll also talk a little bit about the progress that we’ve made on our strategic initiatives. Alvaro will cover the financials in more detail for you. In a very challenging year, we had a good performance in the fourth quarter and for the total year 2009. Our fourth quarter EPS was $0.56, excluding the previously-announced charge of $0.06 for an arbitration ruling. As Alvaro will discuss shortly, if you adjust our operating margins to exclude one-time items during the year, we actually improved margins compared to 2008. Even though sales declined by about 11% and our mix shifted more toward transit, which historically had been a lower margin business, our backlog held steady at just under $1 billion and we had a very strong cash flow from operations, $71 million for the quarter and a record $161 million for the year. This is the 12th straight year that our cash from operations exceeded net income and the fourth straight year of being more than $140 million. Keep in mind that this performance was achieved in a weak environment for the US freight rail industry. This performance shows the strength of our diversified business model and that our strategic initiatives are paying off and that we continue to benefit from the Wabtec Performance System. Let’s talk a little bit about our markets. We continue to see a stable transit market in North America driven by federal funding and passenger ridership. We expect new car orders to be awarded from a number of transit authorities during 2010. Some of those include, Metra; WMATA, which is the DC transit system; Miami, New York City transit; and Amtrak. New…

Thanks, Al. Good morning, everyone. Like Al said, to give you a more in-depth review of our financials; sales for the first quarter were $359 million, which was 11% lower than last year. But last year was a record sales quarter, so the drop wasn’t I think as steep as it would ordinarily look like on a surface. The good news is that sales were 9% higher than the third quarter of ‘09, and our highest quarters since the first. So maybe that’s a sign that we have hit bottom and we may be starting to bounce back a little bit. The Transit Group sales as opposed to the Freight Group sales actually were up 2% in the quarter and for the year due mainly to increased sales of transit car components in North America. Freight Group sales, however – they are the ones that caused the decrease, they were down about 25% in both periods mainly due lower OE deliveries of locomotives and freight cars in North America and due to the sharp decline in rail traffic, which caused a decline in aftermarket sales as well. But even though we had a 25% drop in sales, the decline in the OE market was actually 50%; so the lower sales drop was actually a reflection on the benefits of our business model. Margins; we continue to focus on margins and driving margins higher with particular attention on the operating margins; gross margin tends to fluctuate quarter to quarter with mix. We had a good performance this quarter and for the year. For example, for the quarter, if you add back the $3.9 million charge for the arbitrational ruling that we previously referred to, the operating margin was 12.7% for this year versus 12.4% last year on a lower sales. And…

We have a diverse business model, the Wabtec Performance System, I can’t emphasize enough how important this performance system is to being able to generate the type of cash that we did this year. It provides the culture of lean manufacturing and continuous improvement. We have a very experienced and strong management team that is proactively and aggressively trying to grow this business through these difficult times. With that, we’ll be happy to answer your questions. We have a diverse business model, the Wabtec Performance System, I can’t emphasize enough how important this performance system is to being able to generate the type of cash that we did this year. It provides the culture of lean manufacturing and continuous improvement. We have a very experienced and strong management team that is proactively and aggressively trying to grow this business through these difficult times. With that, we’ll be happy to answer your questions.

Thank you, we will now begin the question-and-answer session. (Operator instructions).

Okay, Vijay, let’s take the first question.

Jim Lucas – Janney Montgomery Scott: Thanks, good morning guys.

Hi Jim, how are you? Jim Lucas – Janney Montgomery Scott: All right, thank you. I wanted to start first with a couple of housekeeping questions. For the full year, on a percentage basis, what was freight versus aftermarket and where did the international end up as a percent of overall sales?

Okay. For the full year, freight – I am sorry, you asked OE versus aftermarket? Jim Lucas – Janney Montgomery Scott: Yes.

For the full year, let us see, it was 54% aftermarket, 46% OE.

I think it is 63% freight, right, aftermarket.

I am sorry. I thought he was asking total aftermarket and total OE for the year. Jim Lucas – Janney Montgomery Scott: No. That helps. And then freight was 63% aftermarket?

Right. And 47% for transit. Jim Lucas – Janney Montgomery Scott: Okay. And international, overall?

Jim Lucas – Janney Montgomery Scott: Okay. There was a couple of – you had the litigation, the arbitration ruling in the fourth quarter. There was another recent headline regarding another ruling. When you look at the competitive landscape out there, it is interesting that within a couple-month period you have two legal headlines come out. Could you give us an update of anything else that may potentially be in the pipeline, or is this what we should expect for now?

Let’s talk about them individually. First the simple one is the ITC ruling related to Amsted. That was a lawsuit that was going on prior to our acquisition of Standard Car Truck. We are well aware of it and that was never put into our projections or plan. So, that is something that pre-dated our ownership there. The Faiveley arbitration has been going on. You have to look at the history of how this all transpired. First of all, in 1990, when Wabtec took the business private, only the North American portion of the business was taken private and that consisted mostly of freight products. The European part of that business stayed with a private-equity firm and there was an agreement for licensing that technology back. I think the contract might have been executed in the mid ‘90s. So they had this relationship between the two companies. Faiveley acquired that portion of the business in, I believe, 2004, and at that point there was like a year left on that license arrangement. That dispute between Wabtec and Faiveley started at that point and has been in the court system since then. We feel that the ruling as we put out was obviously a fair one from the standpoint that we are paying royalties for anything we are using, and it's behind us. We don’t know of any other factors [ph] other than those two and don’t expect to be discussing those kind of things into the future. But that’s part of the history of the business. Jim Lucas – Janney Montgomery Scott: Okay. That is very helpful background. I wanted to just get an update with regards to the cost side. Clearly, it seems as if we are finally getting to a bottoming process on the freight side – very admirable, what you've been able to do in terms of protecting the margins despite the top line pressure this year. What are your plans with regards to further cost reductions activities in 2010? What are the carryover benefits from the 2009 actions?

Okay. Two questions there. First of all, what are our plans for 2010 as far as cost reductions? We feel that most of the heavy restructuring is behind us. That restructuring really totaled – we spent about $14 million in 2009, $6 million I think in the first quarter, $8 million in the second. That amount was related to between $35 million and $40 million of sales – not sales, the cost reductions. Half of that we saw in 2009, the other half will flow into 2010. About half of that is fixed cost, the other half variable. So, as volumes start ramping up, obviously we will have to add some variable costs, but we did have a large component to fix costs that were addressed. Now how do we continue to approach things? The same we did over the last four years and that is it’s really being driven by the Wabtec Performance System and continuous improvement. We continue to ask every division to have certain goals related to cost reductions, sourcing, lean kaizens that’s going to improve our productivity, moving some of our businesses from high-cost platforms to low cost platforms. That is never-ending, and we will continue to have that drive to continue to drive our costs down and improve margins over time. To be able to do exactly that during this recession is something that, again, I couldn’t be more pleased with how the management and each and every one of the employees of Wabtec reacted to those challenges in the last year, year-and-a-half. Jim Lucas – Janney Montgomery Scott: Okay, great. Thank you very much for the update.

Okay. Thanks, Jim.

Kristine Kubacki – Avondale Partners: Good morning.

Good morning. How are you doing Kristine? Kristine Kubacki – Avondale Partners: I am great, thank you. My question revolves around the freight backlog. It looks like it grew a little bit organically. I was wondering if you could give us some insight into what is specifically driving that.

Okay. Obviously, in the fourth quarter we had the acquisition of Unifin. I think that makes up about 13 of the increases from the Unifin acquisition and the remainder is – what you are seeing is the pickup in, actually, traffic. If you look at third quarter to fourth quarter, traffic went up about 15%. Kristine Kubacki – Avondale Partners: So, does it have to do more with aftermarket kinds of components or are there any OE kinds of things picking up?

I think there is a little bit of both. We have seen it in the aftermarket; obviously aftermarket has a shorter period. So we saw that increase in freight obviously in the less than 12-month period, and some of that is aftermarket. Kristine Kubacki – Avondale Partners: Okay. Then as we’ve seen some of the forecasters in the industry, it seems like the outlook where you are forecasting for the year in terms of new railcar builds at about 10,000. It seems recently there has been some inflation in that number up to 15,000; 16,000 for 2010, and last week we heard about a rather sizable car order out of one of the car builders. I was wondering, do you think that your forecast is overly conservative at this point or do you think that some of these forecasters are out over their skies at this point?

First of all, the order that you are talking about was an order that’s going to be delivered over a couple years, and not all of that will be delivered in a year. I have to answer your question by saying that I hope and pray that we are overly conservative. But right now, I think that if you look at the number of orders that come in 2009, which was I think 9,250, you are sure wouldn’t take up to the bank and say that that is going to happen and those cars parked create another concern for us. But hopefully we are being conservative and we are ready, if that thing picks up, we will be very read to respond to it. Kristine Kubacki – Avondale Partners: Okay. Then my last question is on the transit side. You mentioned several projects in your opening comments, and I was wondering – as we think about your [ph] finishing up with a sizable contract there, can you talk about the second half of 2010 in terms of transit projects or the timing of those projects too difficult to handicap at this point.

It is pretty difficult to give an exact timing of some of these projects and the awards in some of the new programs. What we are seeing though is we expect that the delivery of transit cars in 2010 will be the same as 2009 realizing that R-160 is essentially complete. At least from our standpoint, there will be some deliveries in the quarter. But with that behind us, there is that much activity still throughout the country on these programs. Now you could always count on a few delays from transit authorities and that is why it is hard to really nail down when this will happen. Kristine Kubacki – Avondale Partners: Can you give us the backlog with the options included or what’s outstanding?

The options that are outstanding is about $100 million. Kristine Kubacki – Avondale Partners: Okay, great. Thank you very much. I appreciate it.

Thank you, Kristine.

Our next question comes from John Mims of BB&T Capital Markets. Please go ahead. John Mims – BB&T Capital Markets: Hi, good morning.

Good morning, John. John Mims – BB&T Capital Markets: Could you talk about – just give us a little bit of info on positive train controls as far as – is there a revenue opportunity at all in 2010 or is that still pushed out for years down the line?

Okay. On positive train control I won’t go through the whole background related to it and try just to deal with your question. As you know there are two railroads that put up pretty large numbers of what they are going to spend in 2010 related to positive train control. One of them was like $170 million; the other was $200 million. When you look at the total spend for positive train control implementation, you have different components. You got a component that’s onboard the locomotive, the computer, the brains of this system and that’s where we have our technology. You’ve got the back office or the dispatch business and we also play in that area. The other area is the wayside or the track and the signals and that is the largest expenditure and probably the one with the most lead time at this point. What’s important for the onboard computer or the PTC that we supply today is to get it through the product safety plan approval through the FRA, and that’s what I talked about; their implementation plan needs to be in by mid-April and we continue to test the system and work toward that certification. Once that certification is given and the total system is understood that’s when we start seeing a lot of this onboard revenue. So what we are seeing right now is a lot of development money to get there. Our system is developed; it’s been approved in the overlay condition and is ready to be commercialized. But there is a lot of things that railroads need to work out, and that’s why they talk about such large expenditures related to this is that they still have to be able to interoperate. They need a radio system to communicate. There are 75,000 switches out there throughout the country that need to have an interface with our computer. And that’s the part, the design of the signaling systems is what’s going on and that’s where a lot of that money is being spent. We expect that to take the lead and the onboard computer will really start ramping up mid-to-late next year 2011. John Mims – BB&T Capital Markets: Okay. Thank you for all the color. Just looking at the guidance for 2010, can you give any sense of progression first half versus second half, how we should look about from a modeling perspective?

Now we do not give quarterly guidance there. So I really can’t add any color to that. I am sorry. John Mims – BB&T Capital Markets: Okay. Doesn’t hurt to ask. And Alvaro, did you give the depreciation expense for Q4?

Sure. Let me give it to you again, happy to do it. Depreciation for this quarter, for the quarter of ’09 was $6.5 million versus $6.2 million last year. And amort was $3.7 million versus $1.6 million last year. And I also added that amort includes some one-time amortization for acquisitions. On an ongoing basis, it will probably be closer to $2 million. John Mims – BB&T Capital Markets: Okay, thanks. I missed a couple in the beginning. Just one last question and I’ll hand it back. When you’re talking about the growth in international, can you give us a sense of – as far as your guidance and just outlook for 2010 or 2011 is concerned, is that mostly organic or where are you on the acquisition pipeline? Is the real engine for growth going to be acquisitions or organic on the international front?

We only project organic growth, we never predict acquisitions. There may be opportunities in that arena, but they would not be in our projections. But to answer your question more precisely is that we did an acquisition, we do have the platforms in place to really take the advantage of this larger market and we are working very diligently on getting our systems approved and in place, okay? John Mims – BB&T Capital Markets: Yes. That sounds great. So you would say the bulk of your acquisition pipeline is international or can you give that much detail?

We look on a global basis. So I think we’ve got opportunities both internationally and domestically. John Mims – BB&T Capital Markets: All right. I appreciate the time. Thanks.

Okay. Thanks.

Our next question comes from Steve Barger from KeyBanc Capital Markets. Please go ahead. Joe Box – KeyBanc Capital Markets: Hi, good morning guys. This is actually Joe Box.

Hi, Joe. Joe Box – KeyBanc Capital Markets: I just actually want to follow up on John’s question. You guys had framed up your expectations earlier for the North American freight market. Can you actually just provide a little more granularity on your expectations for some of your growth-oriented markets, like China, India and Brazil superficially?

Yes, in the case of China, we would expect to continue to see double-digit growth in that marketplace, which we’ve experienced over the last couple of years, when you have that amount of money being spent in that arena. We also see some good growth opportunities in Australia, South America and India; so all of those markets are way above your normal growth rates but you got to keep in mind we are starting from a small base. Joe Box – KeyBanc Capital Markets: Sure. Can you refresh us what China was in 2009 in terms of revenues?

We probably –

Little under $20 million. Joe Box – KeyBanc Capital Markets: Okay.

Okay? Joe Box – KeyBanc Capital Markets: I also wanted to follow up on the PTC question. Just wondering if you guys made any inroads yet with respect to penetrating any of the other categories outside of the NYAB [ph] technology and whether that would be organically or through any acquisitions?

We obviously – as I mentioned, we’ve done well by creating opportunities in the dispatch and the back office software arena. And we continue to look at other areas for growth opportunities. Joe Box – KeyBanc Capital Markets: Also just on the freight revenue side, real quick, your revenues were down 26% in the quarter. How much of that decline was actually volume oriented versus price? How much did Unifin contribute?

The price didn’t have a lot to do with the comparison there. Really, what – and Unifin quarter on quarter was, I think $10 million.

Yes. Unifin added $10 million of revenues to the freight group during the quarter. And I would confirm what Al said, most of that was basically volume driven. Fortunately, we are fighting over a small market. So (inaudible) price to get it. Joe Box – KeyBanc Capital Markets: My last question, and then I will turn it over is in terms of input costs in 2010, obviously we’re seeing some rising steel costs. What is your expectation on the impact for gross margins in 2010?

We don’t anticipate much impact because, remember, we tried to have some type of surcharge or cover the inflation in the direction when it’s going up as well as giving it back when it comes down. So we don't anticipate a large impact from that. Joe Box – KeyBanc Capital Markets:

Okay. Thanks.

Our next question comes from Greg Halter from Great Lakes Review. Please go ahead. Greg Halter – Great Lakes Review: Yes, good morning.

Good morning, Greg.

Good morning, Greg. Greg Halter – Great Lakes Review: The press release references a repurchase of about 670,000 shares. I can't remember the first three quarters, but were there any done in the fourth quarter? And what is your outlook going forward regarding that program?

They were a little bit done at the end of the year, but it didn’t get reflected because it was toward the end of the year. It will actually be reported, I believe –

Usually what happens is – you are familiar with it – you close three days after the trade, and we did some towards the end of the year, which between holidays and being close to the end of the year, they will actually hit our books towards the beginning of the year. But it was pretty minor. It was about 100,000 shares or so, give or take. And we still have about 50 million left under our repurchase program. We are not amending that right now. We still have 50 million left. Greg Halter – Great Lakes Review: $50 million?

Yes, I am sorry. Yes, 50 million shares are pretty much – we'd be the sole remaining shareholder in control of Wabtec. Yes, $50 million. Sorry. Greg Halter – Great Lakes Review: Nice to hear that train behind you.

We like that.

We open the windows when we are on the call. Greg Halter – Great Lakes Review: Relative to your debt, could you discuss the different components there – maturities and rates and whether or not you have any swaps hedging any of that?

Yes, a lot of questions there. We have two main components of our debt. We have about $150 million in bonds that are – I think they mature in ’13, and they are at 6.875. And then we have a $500 million revolving arrangement with a bank, $200 million of that’s a term credit, $300 million of that is a revolver. We are utilizing all of the $200 million. We are in the process of – actually, we had some hedges maturing not too long ago and we are actually – I think, we locked them in yesterday. And on our bank arrangement, we are repaying probably about 2.25, I think with the new hedges in place. So on our bank financing we are paying 2.25 and that’s mostly, let’s say, about 60% of that is fixed, 40% of that is floating; and the portion that’s fixed is out there for 1.5 years to 2.5 years. That gives you enough flavor for it. Greg Halter – Great Lakes Review: That's perfect. You didn't provide a figure for the equity balance, and I just wanted to get that if you have it, given the acquisition you made.

Yes, the equity balance is 778.9, so basically about 780. If you are doing debt to total cap, we’re at about 33.5. Greg Halter – Great Lakes Review: Okay. And what would you anticipate your capital spending to be in 2010, full year?

I would think relatively consistent with the past and what we spent in ’09. The rough range would be somewhere between $20 million to $25 million. Greg Halter – Great Lakes Review: All right, great. Thank you.

Sure.

Thank you.

Our next question comes as a follow up from John Mims from BB&T Capital Markets. Please go head. John Mims – BB&T Capital Markets:

Sure. Basically, the $189 million, the vast majority of that over 90% is in foreign entities. And we basically keep that there, one, to finance future growth in those entities and, two, to provide for future acquisitions abroad. If we were to repatriate it, the US has the second highest tax rate in the world right now. The only one that’s higher than the US is Japan. And if we were to repatriate it, we would face adverse tax consequences as well. But the plan with the cash is to leave it there, again, to finance future growth and future acquisitions abroad. John Mims – BB&T Capital Markets: Great. That’s very helpful. Thanks a lot.

Thank you.

Our next question comes from Fred Speece from Speece Thorson Capital Group. Please go ahead. Fred Speece – Speece Thorson Capital Group: Our questions have been answered. Thank you.

Thanks.

I appreciate that Fred. Thank you.

Thank you. (Operator instructions) We show no further questions at this time. This concludes the question-and-answer session. I would like to turn the conference back over to our presenters for any closing remarks.

Okay. Thanks for joining us everyone and we will talk to you in a couple of months. Have a good day.

Great. Thanks everybody.

Bye, bye.

Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.