Good day everyone and welcome to today’s program. At this time, all participants are in a listen-only mode. Later you will have the opportunity to ask questions during our Q&A session. (Operator Instructions) Please note today’s call is being recorded. It is now my pleasure to turn the program over to Jim Burke. Please go ahead, sir.

Okay. Thank. Good morning and welcome to Standard Motor Products second quarter 2010 conference call. In attendance from the company are Larry Sills, Chief Executive Officer and myself Jim Burke, Chief Financial Officer. As a preliminary note, I would like to point out that some of the material we will be discussing today may include forward-looking statements, regarding our business and expected financial results. When we use words like anticipate, believe, estimate or expect these are generally forward-looking statements. Although, we believe that the expectations reflected in these forward-looking statements are reasonable, they are based on information currently available to us and certain assumptions made by us and we cannot assure you that they will prove correct. You should also read our filings with the Securities and Exchange Commission for a discussion of the risks and uncertainties that could cause our actual results to differ from our forward-looking statements. I will review the financial highlights and then turn it over to Larry followed by Q&A. Overall I am pleased to report another favorable consecutive quarter with very strong top-line revenues and also strong earnings. Our net sales in the second quarter were $231 million, up 33.6 million or 17%. Excluding $7.3 million sales from the divestiture of our European segment last year, net sales were up $40.9 million or 21.2%. By segment, engine management net sales were up $29.8 million or 24.3%, temperature control also experienced solid sales performance would revenues up 8.3 million or 12.6%. Consolidated gross margin dollars improved $12 million to 25.3%, up 1.8 points. By segment, engine management gross margin was up $6.4 million to 24.5% for the quarter. The 24.5% in Q2 is up sequentially from Q1 '10 at 24.2%, but off a 10th of a point from Q2 ‘09. Similar to the first quarter,…

Well, good morning. We’re obviously pleased with results to-date. I’d like to take a minute to put it in perspective and then we’ll open for questions. Over the last few years our people have worked extremely hard on reducing costs and reducing debt. To recapitulate we’ve moved over 50% of our production to low-cost countries. As Jim announced, we have two further plant consolidations which will take place later this year. We’ve reduced our salaried head count by roughly 10% and in 2009 we reduced our debt by over $100 million. If you now lay on top of this lower cost base, a healthy sales increase as Jim said 17% for the second quarter roughly 11% for the six months, the results are obviously going to be favorable and they were. I’d like to talk about sales for a minute. The aftermarket, the entire aftermarket as you’re seeing from reports that are coming out now from the distributors in the manufactures is doing quite well. The reasons have been documented, new car sales are down, the result is that the car population is the oldest; it’s been in probably 40 years in excess of ten years on average this is leading to increased replacement, to increase repairs. Car dealers are closing down, estimated as about 15% of the dealers are going to be closed; this means more business for the independent aftermarket. And I personally believe there was some pent-up demand from 2009 because many of these situations existed in 2009, we didn’t see the repair increase and in my personal belief is that people just weren’t spending money on anything. And now that’s catching up, so all these factors are true for the entire aftermarket. Now for our particular lines, we’ve been held further by the following. First in…

(Operator Instructions) We’ll take our first question from Tony Cristello with BB&T Capital Markets. Please go ahead. Tony Cristello – BB&T Capital Markets: Good morning.

Good morning, Tony. Tony Cristello – BB&T Capital Markets: First question, what is the timing and I think Jim you have this in your prepared remarks for in-house manufacturing or moving some of that production to low-cost sourcing for some of the newer products you’re introducing what sort of has been a little bit of headwind on some of the gross margin opportunity at least here in the near term.

Right. What we’re doing and we’re accelerating our efforts in this area and we’re measuring it for the hours in manufacturing and also from the purchasing. We are opening up a procurement office in Hong Kong staffing it with engineers to accelerate the ability to be able to resource many of these newer applications overseas and generate significant savings. With that also we are big beefing up our engineering talent because we have significant opportunity to be able to grow the manufactured part as we look at the hours. Now, trying to quantify that we’re in the 24.5%, we stay by our long-term goal that we think this effort will be able to bring us closer to 27% to 28% gross margin for engine management. The timing of it, I cannot put specific marks on it but we are very aggressive in 2010 trying to address this and we also think we have significant opportunity with our Polish operation also. Tony Cristello – BB&T Capital Markets: This is mostly in the Engine Management category?

It’s being strictly for Engine Management in this area. While we also have the same efforts going on in temperature control but this Poland and looking at Hong Kong in these efforts here, I’m addressing Engine Management, Tony. Tony Cristello – BB&T Capital Markets: Okay. Well, let’s not look at when you get this 27% or 28% but is there where you could quantify what you think the impact is added 24.5% or maybe saying, how much of that product coming in is representing on what percentage of that Engine Management product and I’m just trying to understand how much of it…

Yeah. The hard part is trying to quantify this even internally when we look at, as we were dealing with an excess of 30,000 SKUs and you’re always adding new part numbers in there. I think the key that we saw in the first half and with the improving margins is that we’ll get the benefit of the full price increase now coming into the second half. So with that we think our margins will improve nicely for the second half over the first half. And again, we continue to work on all these cost initiatives to lower our cost base. Tony Cristello – BB&T Capital Markets: Okay. And then another question on the margin, when you think about the initiatives you’ve put in place on the cost aside of the equation. How should we think about is as we move into 2011 and beyond and let’s just say assuming a more normalized operating environment trends are very good right now but more normalized. How should we think about the incremental margin in the shift in the changes you’ve done to your business is that is each dollar going to become more-and-more profitable and when sort of the inflection point start to see that flow through?

Very good question. Again I’ll remind as we attempt to grow our OE/OES business that will also impact gross margins but have a benefit on our operating margins. So, we have a number of area bulls working. What we have seen and what we believe will continue is that our pricing will be favorable to our inflation costs that we have significant opportunity to shift to low-cost sourcing and at the same thing with our manufacturing efforts to go to low-cost countries. And again we’re really looking at – it’s not that dramatic. When we look at it, we’re looking at anywhere from call it 24.5 or if I can round it to 25 going to 27 or 28. So we’re talking two or three points, we’re talking $15 million on 500 million based or more. And it’s the combination of price increases and cost reduction efforts. Tony Cristello – BB&T Capital Markets: Okay. And one last question and maybe, Larry when you look at this industry backdrop and just acceleration we see in trend businesses very strong right now. Outside of the tailwinds in the industry today, can you maybe discuss a little bit acquisition or the opportunities or just the environments today of your competitors in the competitive opportunity you see. And then, second, the OE/OES side of the business which few years ago we started to see more aggressive approach in the soft and at least given what was going on in the industry. Can you talk about how you look at that business today and what that might look like a year or two from now?

Okay. You’ve asked many questions. I’ll divide them into two pieces acquisitions and OE/OES. Okay? We are looking at acquisitions. As we told people, that was one of the reasons that we sold equity last year. We now have the wherewithal to do acquisitions. We are looking at some but we are going to be very prudent about it. We obviously don’t have unlimited resources. So we are going to pick those that we think will have the best long-term benefit for our company, combined with the least risk. So those are our obvious criteria. And we are looking and we are looking aggressively but nothing to report. OE/OES, yeah, we’re a little disappointed in the sales at this moment. However, we have very – we built up our sales organization. And we are seeing many, many prospects out there. We are pursuing them aggressively. And we still believe this is a good growth potential area for our company. So I trust that answers your questions, Tony. Tony Cristello – BB&T Capital Markets: You did. Thank you very much. I appreciate it.

Okay.

And we will take our next question from Aditya Oberoi with Goldman Sachs. Please go ahead. Aditya Oberoi – Goldman Sachs: Thanks. Hi, guys. Great quarter.

Okay. Thank you. Aditya Oberoi – Goldman Sachs: I just have a couple of housekeeping questions first. On the interest expense, you mentioned debt reduction actions that you are undertaking should be favorable. Can you quantify the run rate of interest expense savings that you are going to see?

I’m sorry. You’re going to have to repeat it. You faded out on the second half of the question. Aditya Oberoi – Goldman Sachs: I’m sorry. I was just asking on the run rate of interest expense savings that you are going to see because of the debt restructuring action they you took.

We will get the favorable cash flow benefits so as we reduce working capital because of the seasonal nature of the business which you would build into your model, I anticipate. But one of the benefits that you’ll see now over the second half of the year is that we were able to take a piece of the debt structure at $5 million and essentially it will be at our revolver rates just round the numbers less than 5% as opposed to 15%. So that will be 10% cost benefit there. And then we have a $12 million outstanding on the convertible which matures in April of next year. We have more than sufficient capacity under our revolver. Aditya Oberoi – Goldman Sachs: Right. Okay. Great. And on SG&A, did you guys had a pretty decent quarter in looking at SG&A as a percentage of sales? Is this the kind of run rate that we should be thinking about going forward or do you see some cost creeping back?

Well, I think what we had said previously – I think in ‘10 versus ‘09 and ‘09 we dramatically cut back, because we had to address the convertible bond that we had maturing. So we did have some cost in ‘10 related to inflation as we put re-implemented our salary increases for employees and some of our spending and marketing programs. But the run rate where we are in 2010 is basically constant. We don’t see creep – we are very prudent on watching our SG&A expenses. The one area that is in there that – and I did point it out was in the AR draft fees, which is a variable item that will move up and down with our sales volume. Aditya Oberoi – Goldman Sachs: Got you. And one last question, maybe probably for Lawrence is that, on the inventory builds, you have mentioned that it was – that inventory builds at the distributor level was a helpful factor for this year – our this quarter revenues numbers. And I would just like to know the status of that. Are we going to see some more benefits in the next few quarters or do you guys feel that distributors are at the right level of inventory now?

Well, that’s rather hard to speculate but my – our belief is that they are currently at the right levels. So that we are not anticipating further inventory buildup in the months ahead. We think they are back where they should be. Aditya Oberoi – Goldman Sachs: Okay. Great. Thanks a lot guys.

Okay. Thank you.

And we will take our next question from Walter Schenker [ph] with NAB Partners. Please go ahead. Walter Schenker – NAB Partners: Hi Larry.

Good morning. Walter Schenker – NAB Partners: Hi, Jim.

Good morning. Walter Schenker – NAB Partners: A series of question in no particular order. In looking at temp control, there are obviously, there is some pricing, there are some new accounts. If you were to look at a significant customer, sort of on an apples-to-apples basis, what sort of unit increases did you see, without picking a name like NAPA or somebody like that?

Okay. That’s a good question. See, excluding new accounts and stuff. Walter Schenker – NAB Partners: Right.

Correct? Walter Schenker – NAB Partners: Yes, that’s the question.

Yes. I’d say it’s a few points. Single digit and I will anticipate your next question. Walter Schenker – NAB Partners: Okay.

And as we move – maybe it ought be better. But I think we’re dealing with some quality improvements in this product line, so that compared to the product of six, seven years ago, it’s a better product today. So we are seeing improvement. We’re seeing solid improvement, balanced by definitely improved margins as we move more product to Mexico. So it’s a very, very healthy business, even though the product is a little better than it was before. Walter Schenker – NAB Partners: And as you are the – by far largest players in the industry, as people gone by the wayside. If the weather in the South anyway, remains warm, should that benefit you in the second half as some of the people who cherry pick items might not have inventory to supply?

Well, when you go into the second half of the year maybe in the Deep South, but certainly in this part of the world people are hesitant to replace a sale. So they sold a compressor in September say, which will happen, they will not necessarily replace that inventory buying from us with the logic that they probably have sit on for six months. So that’s why even though the sales continue at the field level into say September, October in the South, our sales to them start to drop off substantially. Walter Schenker – NAB Partners: Is it somewhat related – is too early to have any feel given how strong end-markets are and temperature in the Northeast was on what your returns are likely to be in the fourth quarter?

We reserve all year for fourth quarter returns. We believe we are adequately reserved. Walter Schenker – NAB Partners: I always believe you’re adequately reserved, however, you’ve come through a couple – the way you reserve is an averaging over historic periods, you’ve come through some pretty depressing periods for the industry and for the market, in which people were very concerned at not you, but everybody their balance sheets. And therefore, it would seem likely to me although we’ll find out in six months that you may have less than normal return levels given how hot it’s been on temp?

That’s not an unreasonable hypothesis. Walter Schenker – NAB Partners: Okay. Different question, dividend policy. I know, you’re paying pain one.

Yes. And we have stated our dividend policy of roughly one-third of earnings per share, which is coming – currently $0.05 a quarter. And we will just continue to look at that and our Board will look at it in the months and quarters ahead? Walter Schenker – NAB Partners: So if your earnings were to be meaningfully higher than let say $0.60, of which $0.20 is one-third than one might expect or should expect – might should expect the dividend increase, as well as your members of your Board would like to see it once the year is over?

Again it’s up to our Board and we’ll look at many issues not just what the earnings per share is, but what our capital means to allocated time et cetera. So the Board will look at many things when it comes time to make the decision. Walter Schenker – NAB Partners: So it may or may not be a one-third policy?

It must not be a rigid mathematical one-third policy. Walter Schenker – NAB Partners: Okay. And last question, you referred a couple of time to the full impact of pricing in the third quarter versus the second quarter, given the caveats of different accounts and many SKUs and everything else. Could you give us – is that 1%, 3%, 2% as you guesstimated?

Are you asking me to tell you what our price increases was for the year, is that the question? Walter Schenker – NAB Partners: No. I’m asking you to tell us, what the incremental effect, since I don’t know what the effect in the second quarter is as you’re not telling me, might be in the third quarter over the second quarter since you brought it up as a positive factor going forward?

Well, I can only say this, we are now – the price increases are not only fully implemented. As we go into the third quarter, our price increases are at least as good as inflation and that’s I would like to leave it at that if you don’t mind. Walter Schenker – NAB Partners: Okay. Thank you.

Thank you, Walter.

And we’ll take our next question from Brian Sponheimer with Gabelli and Company. Please go ahead. Brian Sponheimer – Gabelli & Company: Hi, good morning.

Good morning, Brian. Brian Sponheimer – Gabelli & Company: All right. One going back to two temp control, we have a bit geographic bias given where we are and how hot the summer has been in the Northeast. Can you comment on whether this summer in Texas, which is a lottery here for you and just the remainder of the deep shaft has been, any different than you’ve seen in the past quick.

You’re asking about the temperature. Brian Sponheimer – Gabelli & Company: Yeah.

The temperature – actually it was in the Saturday Times. So they showed the whole country. Texas, which is our biggest single market, was actually below average temperatures. Now below average temperatures in Texas in July is still pretty hot, but it is below average. The big surge is the one we see was in the Northeast, which is our smallest market. Brian Sponheimer – Gabelli & Company: So it’s reasonable to assume that the year-over-year increase that we saw in temp control can be replicated just not in a normal summer basis.

Yeah, again, our biggest market wasn’t particularly hot. Brian Sponheimer – Gabelli & Company: Right. All right. And going, just talking on OE/OES lines and opportunities that you see either now or over the first and the next 12 to 24 months, what have you seen as far as change in motivation by the OEMs regarding actually selling these lines at a price that you would find reasonable.

Well, again, we are talking to them and that’s really all I can say at this point, they move rather slowly. So we’re talking to them. Brian Sponheimer – Gabelli & Company: There are no license shift over there, of course, in the last three months.

They have factories, they have many, many issues they’re dealing with, but we are talking to them. Brian Sponheimer – Gabelli & Company: Okay. All right. Great. Thank you.

Okay.

And our next question comes any Annie Northrose [ph] of Taylor Advisors [ph]. Please go ahead. Annie Northrose – Taylor Advisors: Hi guys. Great quarter. Two questions, typically, see our quarter three is higher from an earnings perspective and that should be, I mean, do you feel that should still be the case because there was no pull in because of the weather?

Are you talking about temp or everything? Annie Northrose – Taylor Advisors: Everything business.

I don’t think you could be…

We’re not that specific to say one quarter third versus second quarter, it's really impacted, but obviously by large driver of the revenues. And some of our larger customers, I mean purchase orders could be the cutoff of a week between how the calendar falls in there and the temperature control sales. So I don’t think usually the second and third quarters are fairly close. Annie Northrose – Taylor Advisors: Okay. Very good and can you talk when you might bring the polling facility on or something to that effect.

Well, it’s on and growing and we have ambitious plans for future growth. Annie Northrose – Taylor Advisors: What do you think the future growth might start up? Is it something in the near term or we’re still working through it?

Well, it's a steady, steady increase. It’s not one big platform jump. So the biggest avenue for their growth – they basically have three customers. They sell our former European company Intermotor, that’s still their biggest business and that is growing slightly as the Intermotor business happens to be doing okay. The second is selling direct to some OEs, but the big growth area is producing products there that we will sell in the U.S. that some of the stuff, Jim, was talking about products that we’re currently not making money on and we will be making nice profit on once we start buying it from Poland. That is a slow and steady plan for growth, which is going on through the balance of this year and with more ambitious plans into next year. Annie Northrose – Taylor Advisors: Great. And can you highlight anything in engine management for us? Just talk a little bit about it to tell us some of the trends or what you’re seeing in it?

Well, I think we’ve covered that. Our customers tell us the business is good. Our customers tell us business is still healthy. So, as far as that goes, we are anticipating continuing that basic element of growth. Again, whatever there was in inventory appreciation in the second quarter, we do not think will be continued into the third quarter. Annie Northrose – Taylor Advisors: Okay. Great job, guys. Thanks so much.

Great. Thank you, Annie.

And it appears we have no further questions at this time.

Okay. I want to thank everyone for joining our conference call today. Goodbye.

This concludes today’s teleconference. You may disconnect at any time. Thank you and have a great day.