Greetings and welcome to the Astronics Corporation Fourth Quarter 2007 Earnings Call. At this time all participants are in listen-only mode. A brief question-and-answer-session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ms. Deborah Pawlowski, IR for Astronics Corporation. Thank you Ms. Pawlowski, you may begin.

Thank you Ryan and good morning everyone. We appreciate your time and interest in Astronics Corporation. On our call today we have Astronics' President and CEO, Peter Gundermann; our Chief Financial Officer, David Burney; and Mark Peabody, Vice President for Astronics AES. They will be covering the results, outlook and prospects of the company. You should have the release that went out this morning and if not, it is available on the company's website at astronics.com. As you are aware, we may make some forward-looking statements during the formal presentation and Q&A portion of this teleconference. These statements apply to future events which are subject to risks and uncertainties, as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in our earnings release, as well as in documents filed by the company with the Securities and Exchange Commission. They can also be found on the SEC website at sec.gov. So with that, let me turn it over to Pete to start the discussion.

Good morning everybody and thanks for tuning in to the call. As Debbie indicated the rough outline will be to talk about 2007 and review first including our fourth quarter. And then I'll turn the discussion to 2008. So with that 2007 obviously was a fantastic year for the company. Sales ended up being $158 million for the year, up 43% over 2006. This caps a series of high growth years for the company over the last four years we've maintained a compound annual growth rate of 65% very, very high for a company like ours in our industry. Net income for 2007 was $15.3 million, up from $5.7 million in 2006. The $15.3 million resulted in $1.80 per diluted share, compared to $0.69 the year before. Profits during 2007 were somewhat driven by revenue growth exceeding our infrastructure growth. I think that's been the case for a few years now, or we've been scrambling organizationally to keep up with revenue that something that tends to make profits look pretty strong and something that I think we'll get a little bit of breather from in 2008, which we'll talk about in a minute. Results have been driven in 2007 as most people know heavily by our cabin electronics product line. If you turn to page five of the press release, there are a couple of tables there and I am going to be referring to these pretty often as we worked through this discussion. Cabin electronics sales for the year were up 82% that's clear on the bottom table there and on the second column from the right and cabin electronics mostly in our business are sold to the commercial transport segment and if you look at the top chart sales for that segment were up 64%. So clearly, cabin…

(Operator Instructions) Our first question comes from the line of Michael Ciarmoli with Boenning & Scattergood. Michael Ciarmoli - Boenning & Scattergood: Hey, guys. Thanks for taking my call. Pete, I know you went into a pretty good detail about the '08 outlook. I can understand the R&D spending. It sounds like there's a lot of great programs out there. The pipeline looks good. You're not seeing any deterioration in the market conditions. I tend to look at some of the other aerospace names in the group, particularly BE Aerospace as a good proxy, maybe of your business. And the 7% growth, it just seems excessively conservative. I know, in the past, you guys have given very conservative guidance. Over the past three years, you have tended, in the beginning of the year, you have laid out a number and you beat that number almost every year by more than 10%. On the last quarter, you gave a 10% to 20% outlook for '08. Now, it's 7%. What's really changed? And is this a case of you guys being just overly cautious again? Or I know you have said some of the retrofit business is winding down, but it just seems to go from, I didn't think the extreme level of 40% growth could last, but you go all the way to 7% and below your kind of initial outlook after the Q3 call, what's really changed out there. If you can give me some, I guess more rationale on how you are forecasting the business that will be helpful?

Okay. First of all, just as a philosophy even though it may appear that we are really, really conservative in our forecasting, I would suggest to you that rather its been a situation where we have been pleasantly surprised by the size, magnitude and quantity of our wins on the retrofit side over the last few years. I think in many respects we tend to be pretty accurate. In fact, on new airplane launches if I were to take you through the number I could show you that, I think we are more accurate than our customers are, in forecasting how many airplanes they are going to build. But that being said, what's changed since the end of the third quarter, well one thing is we are one quarter late and we don't have any of these retrofit programs that we have been pursuing. There is a kind of germination period that has to happen, it's one of those deals where you pursue it, you pursue it, you pursue it, you pursue it, a lot of times a major retrofit program like, I'll use Air Canada as an example, and this may not be exactly factually accurate but that's a program that we knew about for may years and made many proposals and had to do some development work and you wait, and you wait, and you wait, and they say they are going to make it work and they don't, and they don't, and then finally they make one, and then it is go, go, go. Michael Ciarmoli - Boenning & Scattergood: Right.

And so, there is some less predictability on that retrofit side in general. And what's happened since the fourth quarter is the quarter is gone by and we haven't seen those programs, kind of materialize like we saw it and the end of 2008 hasn't slid out at all, it's getting closer and closer, so… Michael Ciarmoli - Boenning & Scattergood: Right.

It brings a certain level of clarity and that's what's driving the change there. Now… Michael Ciarmoli - Boenning & Scattergood: The retrofit work you've been pursuing, is that from US carriers, is it from overseas carriers?

It's both and it's also on the military side. We see some pretty good opportunities, both domestically and overseas and military. So we will win what we will win, but from a prospect list I guess my main point is that we are really pleased with the things that are out there ahead of us. And we are not the least bit concerned that it's downhill from here. We think that just due to timing, 2008 isn't going to be the same kind of year as 2007 for those kinds of jobs. Michael Ciarmoli - Boenning & Scattergood: Are you losing visibility or I guess in the terms of the way you win jobs, are you -- is Panasonic gaining more of that business sort of? Are they winning the business? Are you negotiating less with the end customer, the carriers? I would be curious to know what, if you have Panasonic outlooks for this year or for sales for that matter, some of the big in-flight entertainment system providers?

Yeah, it's a very good question. And it is one that we wrestle with a little bit. Panasonic has become an extremely important customer to US. We feel it's a very strong relationship and they are one of the 'A' list customers that are asking us to do new and better and different things that we maybe didn't anticipate doing at one point. So, we are optimistic that, that relationship is going to continue. But your point is a good one in that to a large extent they have got between us and the customer in a certain class of products. So we make sales to Panasonic and Panasonic in turn make sales to customers that we've traditionally done work with. Now Mark Peabody is on the line. Mark, I am going to turn it over to you in just a second.

Okay.

But I would just add that we continue our marketing and promotion efforts as actively in the field as we ever have. We're not letting that part of our business go and there certainly are a lot of prospects in the market for in-flight power like they always have done for products that are not particularly of interest to Panasonic, or to Talus another company that we're working with. And so there is a little bit of a change in our business there, but I think we generally know where the opportunities are in the market, we generally know if those are opportunities that are going to come to us directly or may go through Panasonic. But obviously, Panasonic is a much larger company than are. They have things going on that maybe sometime we aren't as intimately aware of and we also frankly and are in always familiar with their ordering patterns and sometime the feedback we get indicates one picture for the near-future and sometimes it indicates something different. So with that longwinded non-answer maybe I'll turn it over to Mark for some clarity.

Yeah. I think with Panasonic quarter-to-quarter, our accuracy with them has been maybe mediocre, but over the whole year, I would say we've been fairly accurate. And there the time for their installation of their in-flight entertainment systems and they are planning is a lot longer than what you see in some of the retrofit programs that we do directly with the airlines, which is a little bit more, I don't know what those, schedule volatile, let's put it that way. So I would tend to agree with you, Pete. And then we are pursuing a lot of opportunities directly with the airlines. And as you mentioned, those can be tomorrow or eight months from now. And it's a positive opportunity that several of them are in the domestic US, we have got a lot of opportunities that we are pursuing. But the timing we just don't know right now. Michael Ciarmoli - Boenning & Scattergood: Okay. You guys have got any idea about, I guess how many in-flight entertainment systems Panasonic shipped last year and what they are kind of projecting this year?

I don't think we have that information.

No.

We're not involved in their full product line. And they tend to look at an opportunity at an airline and they want to custom-tailor their offering to that airline. Sometimes that offering includes our product; sometimes it doesn't. We are hopeful that in the future, we will be more and more involved in the broad range of their products, but today that's not necessarily the case. Michael Ciarmoli - Boenning & Scattergood: Okay. What was the percent of revenue for Panasonic in the quarter?

I will look at that. I have it for the year in front of me, but not for the quarter. I will get that and get back to you. Michael Ciarmoli - Boenning & Scattergood: Well, look it for the year.

27% Michael Ciarmoli - Boenning & Scattergood: One more question and I will jump back in to the queue here. Just looking at some of the other metrics, backlog looks like it was up, bookings were strong. How much of your '07 revenue from book and ship business, just to try and get a sense? I think you said roughly $90 million of the backlog at the end of '07 will be recognized in '08. I'm just trying to get a sense of how much book and ship business you did in '07? Michael Ciarmoli - Boenning & Scattergood: In other words, what was that comparable number for the entering backlog for 2007?

Yeah, so I think entering backlog for '07 was $99 million. Michael Ciarmoli - Boenning & Scattergood: So how much of that did you recognize in '07 and how much was all other business that happened to come in, go in and out, the same in and out in the quarter, I guess its kind of turns business?

Dave has got to -- I think you stunned him on that one. I think we know the answer to that. We'll have to do some digging to figure that one out. Michael Ciarmoli - Boenning & Scattergood: Okay.

But it's a good question. I would just a couple of notes on our backlog in general. Our backlog, if you go back to the beginning of 2007 and even the beginning of 2006, there were some pretty major chunks of business involved with some of these retrofit efforts, and also blanket orders on existing programs that we've been winding down. I know, we've, at the beginning of 2007, if you were to dissect that backlog, you will find a pretty big piece there for Panasonic, because they gave us a big blanket order, and they drove off that blanket order. Today that blanket order is pretty much gone or we're living on shorter term forecasts on a different kind of agreement with them. So their relative weight in our backlog is different, I know that Tactical Tomahawk is another program where we had a big, relatively big multiyear backlog that have been chewing off, and as new programs come out, and we haven't talked about Eclipse yet, I am assuming somebody is going to ask a question there. The Eclipse's volume is definitely increasing and their backlog continues to be pretty small, I think we go out a quarter or so with them also. I guess one of my point is that the backlog is getting to a different type of indicator of that our business volume is expected to be and that doesn't make it easier, I realize to look it up and understand what's going on. But generally we feel that the prospects in the market and our place in it continues to be really very positive, kind of even apart from what the specifics of our backlog might say. I think Dave has got an answer for the quarter for Panasonic.

Mike, for the quarter Panasonic was roughly 28% of our revenue. So it is pretty consistent with the year. Michael Ciarmoli - Boenning & Scattergood: Okay. Great, thank you. I will jump in the queue and come back on. Thanks, guys.

Our next question comes from the line of Scott Lewis with Lewis Capital Management.

Hey, good morning guys.

Hi, Scott.

Hey, Pete, I've got a question, couple of questions on the power distribution system win, which is fantastic. I assume that is kind of a new generation system like it is in Eclipse?

It's based on many of the same technologies, that's correct.

And then -- from what I think I understand, it's a pretty high ship-set level for something like that, right? Maybe 2 or 3X what you would normally get just for say cockpit and exterior lighting, correct?

Yes, however, the caveat is that our cockpit offerings are changing significantly also. So it's not unreasonable to think that on some of these newer airplanes, our cockpit content may actually rival the electrical distribution system in terms of value.

Okay, good.

But generally you are correct.

As I look at this non-capital electronics business of yours, historically, right it was the kind of 3,000 to 5,000 of content, then kind of generation II where you had the exterior lighting was maybe 10 to 15 and now with if you can start doing this power distribution systems and then you go up to what 50, 60, 70 right?

Yeah. We have some proposals out there that are well over $100,000.

Yes, so that's -- I mean that's really a quite a different kind of ball game than $2,000 to $5,000.

No doubt about it. Well that's why I think you're starting to see 50% growth in that business jet arena, and it's not just business jet. I picked that as an example, because the business jet market is the purest market in the sense that there's not retrofit business buried in that number, but on commercial transports or military jets it's kind of the same story. What we're putting on the Joint Strike Fighter is fundamentally different than what we put on the F-14. So I think it's a good point and I think your I don't know if you mean to, but your giving me an opportunity to reinforce something I talked about in my prepared comments, which is yes today we're largely driven by cabin electronics and commercial transports. We love that business don't get me wrong, but if you look at where we're investing and you look at the opportunities that are in front of us. We have great opportunities and we're pursing them pretty aggressively on the other side of the business too. So how that mix evolves overtime, I have no idea but we are where we are largely because of the market put us here. But in terms of potential, I think we have great potential on both the kind of new airplane side of the business and the retrofit side.

And for 2008 what do you think you should as far as the business jet side of it, what you are going to be delivering? There will be a lot of jets that are the older, CJ 1, 2, 3 where you have got kind of that small level of content and then you've got some mid-level and Eclipse is the higher content. But can you give any percentage kind of, this percent of the business jets being delivered are going to be are small content jets and this percent the higher content jets?

I don't know if we can do it that way. We could probably talk about what we expect growth in business jets to be in general. Dave is not nodding yes. But let me talk about it while he thinks about it. We have, I was just, this week at the (inaudible) and over the last couple of weeks I had quite a bit of contact with our various business jet customers, the major ones. And they are all incredibly bullish. And if you will at their production rates, generally they are going up 20%, 25%. So we are going to go with them, whether its low content airplanes or high content airplanes, on average, you would expect us to grow at that rate. Now, what's also happening is new, higher content airplanes are coming on to the market. And you haven't asked it but I guess I will use this opportunity to talk about Eclipse a little bit. They built 100 airplanes last year. That is not what they said they were going to build but 100 airplanes is a lot of airplanes. There are a lot of airplane companies out there that have never built 100 airplanes in a year. For those who follow Eclipse, they might be aware that they have recently got an infusion of capital and they have knocked down a couple of certification barriers. And I guess I am pretty relatively optimistic this year that they are actually going to be able to hit the forecast that they have expected. For sure, they're planning to be aggressive with their growth but they have brought their expectations down considerably compared to past years and we think they have got a good chance of doing what they say they want to do. And if they do they're are going to, with ship set content we have on that airplane, that they're are going to be a major customer at large for the first time. So the average ship set content on the business jet side will be positively impacted based on these new airplanes coming into the market.

And that is what I was trying to get at. I mean if the growth in units from your customers is 20% or 25% and mix of your content is getting better you should be able to grow more strongly another 20% or 25%?

Right. But if half of our business is made up of these retrofit programs and we happen to be in temporary low on those retrofit programs it gets hard to compensate for that overall.

Right. And then are you guys also -- do you see any more, kind of military retrofit, night vision, possibilities out there?

We do, we have a couple of programs that we are pursuing around the world, less so in the US. The US has pretty much done what they are going to do, between airplanes that are being decommissioned and upgrades that have already happened. I think the US is pretty saturated and around the world, we think there are some pretty good possibilities, nothing like what we experienced with the F-16 earlier on. Something goes [around] fleets of that size, anywhere else in the world. And but there will be pieces, you might remember we did a program for South Korea on the F-16 fleet, we did a program recently with Canada on their F-18 fleet and we think there are a handful of similar opportunities elsewhere around the world.

Okay, great. And then just last question on the balance sheet. On the other liabilities line, still that's primarily that Panasonic inventory that you've been paid for?

In the other liabilities, done in the non-current…

Yeah.

No, the prepayments or the deferred income for Panasonic or any of our customers, if we are getting advanced payments, its up in customer advances.

Is it on the short balance sheet you've included with your release?

It would be in the accounts payable and accrued expenses. Scott Lewis – Lewis Capital Management: Okay. All right, thank you very much.

Thank you.

(Operator Instructions) Our next question comes from the line of Michael Ciarmoli. Michael Ciarmoli - Boenning & Scattergood: Hey, guys, just few more follow-ups. I guess before I get into some of the financials. Pete, are you aware of the Open Skies Agreement?

I thought generally. Michael Ciarmoli - Boenning & Scattergood: A take on how that might impact some of the retrofit business as US carriers, it seems already they are at a competitive disadvantage with European carriers in terms I guess passengers amenities. Does that kind of spur them into action on some of these retrofit projects to get their cabins kind of upgraded to compete on global basis?

I don't think it's going to hurt. I think the US airlines have fallen significantly behind the rest of the world in terms of the quality of their fleet and the flying experience. I had the privilege of sleeping in the Chicago airport in the last two weeks. So, it's remarkably different experience flying around the US than it is flying around Europe for example. And I think as these airlines compete more-and-more head on that probably will help. However, there is really a strong dynamic where people flying for example from the US to Europe fly on US airlines and people in Europe who fly to the US fly on European Airlines, so I guess I don't feel real qualified to speak more than I already have on that type of topic. Michael Ciarmoli - Boenning & Scattergood: Okay, fair enough. On a lot of these new programs and you were just alluding to a lot of the business jet work with some proposals over a $100,000, for the EPSD systems, even this year you've talk about the engineering and development expenses is going over $20 million. How long does it take before you start to see some revenue from some of these programs?

Another good question, I was talking earlier this week with a customer who is launching a new program that they're going to fly for the first time in 2012. Michael Ciarmoli - Boenning & Scattergood: Okay.

And one of our big wins, I still remember getting the phone call, was winning Joint Strike Fighter. And they have now flown an airplane. That was 2002 I believe so the germination period can be a long time, but it can be relatively quick also. But this is one of those markets where a lot of times what we are excited about in terms of technology is stuff that just doesn't impact our balance sheet for a while that's kind of a reality of the business. Michael Ciarmoli - Boenning & Scattergood: Okay and then Dave some modeling questions here. I guess the press release said engineering developments spending in excess of $20 million, I know Pete that you just commented well over $20 million -- are we talking $21 million or are we talking $27 million? Do you have any sort of ballpark, and will it be a steady sort of $5 million a quarter, or is there going to be a ramp in a certain particular quarter?

It could be more. There is quite a range depending again on the opportunities that we get chosen to work on here. 20, I think our range is $20 million to $24 million, $25 million, again, depending on the timing. If some of these things don't start happening until the end of the year, it will be less and more into 2009. If they happen earlier in the year, they could ramp up pretty quickly.

Yeah. That's really true. And so I expect there will be a ramp as the year progresses. The first quarter will be lighter and the fourth quarter will be heavier. But there are a bunch of assumptions built in there about programs that we win, for example this business jet program we keep talking about. It is possible we stumble over the contract negotiations and all of a sudden, our anticipated development expense gets cut by 20%. Stranger things have happened. I don't think they will. I think we're past that. But certainly some of the other elements that make up that planned budget are not things that are in work yet today. Michael Ciarmoli - Boenning & Scattergood: Okay. And then just on the margin outlook. I know speaking of gross margins in the past, you have kind of talked about that 25% to 30% range. The most recent quarter here was 21%. What are the expectations, given this increased engineering and development spending? I mean, if we can get a sense as to what the range might be for 2008, maybe in to 2009?

Yeah. I expect in '08, in '09 the volatility may be significant from quarter to quarter, but we look at our operating margins over the long term to be between 10% and 15%. We have run earlier this year up a little over 15%. That's at the, what I would say is the high end of an expectation that is what, high shipping levels, and moderate engineering and development costs, our expectation, again in the long run going forward is somewhere between 10% and 15% and I realize that's a fairly wide range, but we are still, we have a wide range of moving parts in front of us too, and we are looking at our modeling going out two or three years. Michael Ciarmoli - Boenning & Scattergood: Okay, fair enough. And how about on the SG&A line, any significant ramp, expenses there, or just kind of.

No, I don't expect any, I think the usual kind of inflationary type of stuff with annual wage adjustments, that kind of stuff. In terms of personnel, for the most part we are at where we think will be, outside of may be a couple of folks but, nothing major. Michael Ciarmoli - Boenning & Scattergood: Okay. And then, just I don't know, I don't think you can comment on the revenue's from Eclipse I think you have said in the past depending on volumes, the price per ship set could be, from $30,000 to $50,000. So it seems like, I guess, most recent quarter here, a big jump in the business jet could have been attributed to Eclipse getting their act together and producing about 60 planes. What is the forecast, I think Dave said 400 planes and you have said, on the call, Pete, you have gotten fairly good at projecting some of the OEM's, production rates are better than they have, what are you guys think for Eclipse?

I just can't tell you about that. Our general approach to Eclipse and everyone else really in the business is we try as best we can to be prepared to do what they say they are going to do. When we turn around and make forecasts for the purpose of communicating to outside shareholders. We adjusted as we think is appropriate. So, I don't want to confuse the two, but Eclipse has said they're going to do 400 airplanes. I think that's probably going to drop a little bit from there. But it's going to be a lot more than what they did last year, a 100 airplanes last year I think is a good stuff. But the real question in a long term for Eclipse is their business model says they don't make any money until they get up to 500 or 600 airplanes. And can they actually do that? Can the market buy it or is there going to have to be some restructuring of their business model, but I really can't -- beyond that I just can't talk for Eclipse. Michael Ciarmoli - Boenning & Scattergood: Okay, fair enough. Then just in terms of, it sounds like you what the Business Jet segment coming on line, the Commercial segment timing issues, are there any major margin differences in the products being sold between the segments? Specifically I guess it sounds like you're pretty comfortable with some of your older products on Panasonic? They've got you doing some new stuff. But are there major differences in terms of profitability?

No, our generally approach is that the business offers consistent margins really across, no they can't vary depending on specific programs. Some may go better one way than others. So, we may experience that now. But as we look at the prospects going forward, we generally think of the business as having consistent margins across the product ranges. Michael Ciarmoli - Boenning & Scattergood: Okay, and then last question, I'll jump off. I think you guys have said in that power system product for the IFEs, you have had about 75% market share, if you can just elaborate on your market share, may the competitive position and I think you've said in the past what you see that annual business being kind of for the entire market?

Sure, we've been competing pretty successfully in that market for the last few years. I will maybe turn it over the Mark in a minute but our AES operation historically helped to develop that market from nothing and has largely competed in it over time with the company call KID which is an airbus company. Michael Ciarmoli - Boenning & Scattergood: Right.

Over in Germany and there have been wild, wild swings in market share. Over the last 10 or 15 years at some points, I think AES had close to a 100% market share at some points KID had closed to a 100% market share. We've clearly benefited over the last few years by having, I think done a really good job in terms of anticipating the technical trends in the market and properly focusing and executing and performing for major potential customers and it has incurred that KID has been caught up from our perspective, we don't know this for sure, but Airbus is going through a little bit of a tough time recently as most people know. While Airbus is getting its act together and based on history it's possible that there could be changes to the mix. But at this point we are wining, we estimate 75% of the market, the number I gave you. I think in our last call or may be two calls ago. Whereas we think that market is somewhere around $125 million market, so that's where we kind of think it is year-over-year. Mark do you want to add anything to that?

We don't, as you said, we have been at about 75% or around there. And we don't foresee, at this point, any change in that, for better or for worse. But I couldn't say anything more than that. Michael Ciarmoli - Boenning & Scattergood: How is your, I think you have said that you are trying to establish a relationship with [Talas], the number two player in the space. And it seems like they are really going hard at winning, I think it's the A350, they are trying to align themselves and get all the in-flight entertainment systems for the A350. Are you making any inroads and further deepening that relationship with [Talas], just to make sure, I guess you got all bases covered?

You want to hit that, Mark?

Yeah. We have done a pretty good job gaining some inroads to [Talas] and I think we will continue on that path. Michael Ciarmoli - Boenning & Scattergood: Okay, great. Thanks, guys.

In between questions here, I might say something else, so Debbie just reminded me. I kind of neglected to talk about. And that's 2008 first quarter, we have had a little bit of a trend here recently where our early quarters have been pretty strong and that could be the case relative to what our expectations for the year are. We are halfway through that year, but based on where we expect the year to go and looks like the first quarter is going to be a pretty strong quarter.

Our next question is from Joe Giamichael with Rodman and Renshaw.

Thank you, gentlemen. Just a follow-up on one of the previous callers' questions, your SG&A increased modestly from '06 to '07. And given investment phase in front of you, is there an ability to ratchet down SG&A to help reduce the impact on the operating line?

I would say there is no plans to do that. Each year, we always look at where we are spending our money. How our costs are and at this point I don anticipate SG&A to drop down at all. You need some those costs around your business as well.

Okay, just one last question. Your guidance and everything we are hearing on this call implies that your earnings are likely (inaudible) materially year-over-year. What are some of the potential variables that you believe to offset some of that? I guess, is there a silver lining in the cloud for '08? That people can get excited on the story again, in the near term, or are we supposed to be focused on the '09 opportunity?

I think our focus is long term, building a business and I don't know that I would call it a silver lining but if didn't win a bunch of the work that we hoped to win, and in the short-term you might call that a silver lining, but I don't think I would think of it as that.

The nature of our business is such that we can make it really, really profitable, really, really fast, if we wanted to, but there is a trade-off between what we are doing in the short-term and what we are doing in the long term and, we think that we are, where we are today, based on decisions that we made and sacrifices that we made in the past, and I don't view 2008 as a year that is inconsistent with how we have managed the business forever, we are seeing some great opportunities, we are going to go after them, we think they are going to pay off in the future and now it just so happens that in 2008 due to timing more than anything else, that retrofit side of the business is going to drop off a little bit over what it has been in 2007. Silver lining, I guess, we could see an unexpected acceleration in some of the retrofit things that we are pursuing, but our experience suggests that that's not likely to happen at this point. It could if its going to, its going to happen in the next question, because we've got to get that stuff booked in order to have a chance to ship it yet this year.

Joe one of the things that has happened we've talked a little bit in the past about it is the decreasing visibility looking out past say two quarters in our business. A lot of it is relying on, what we are hearing in the market or what our customers are telling us, which is subject to quite a bit of change as we've learned over the last year. But I give you an example of our $92 million backlog, about two thirds of that is scheduled for the first half of this year. And that gives you some idea of when we look into third and fourth quarter, not that we're looking at a soft market, but that our bookings patterns have changed from our customers versus year or two years ago. And the result is less long-term visibility into that backlog and better visibility into the one quarter to two quarter period.

Got it. Thank you.

(Operator Instructions) Seeing as there are no further questions, I would like to turn the call back to management for concluding remarks.

Very good, thanks again everybody for tuning in. We think 2008 is going to be a very good year. We think 2007 was a phenomenal year. And we look forward to reporting back to you after our first quarter is complete. Thanks much.

Ladies and gentlemen, this concludes today's teleconference. Thank you all for your participation.