Good day, ladies and gentlemen, and welcome to the third quarter 2010 Stoneridge Conference Call. My name is Stephanie and I'll be your operator for today. At this time all participants are in listen-only mode, later we will conduct a question-and-answer session. (Operator Instructions) I will now like to turn the conference over to your host for today Mr. Ken Kure, Corporate Treasurer and Director of Finance. You may proceed.

Good morning everyone, and thank you for joining us on today's call. By now you should have received our third quarter earnings release. The release has been filed with the SEC and has been posted to our website at www.stoneridge.com. Joining me today on today's call are John Corey, our President and Chief Executive Officer and George Strickler our Chief Financial Officer. Before I begin, I need to inform you that certain statements today may be made forward-looking statements. Forward-looking statements include statements that are not historical in nature and include information concerning our future results or plans. Although we believe that such statements are based upon fact or reasonable assumptions, you should understand that these statements are subject to risk and uncertainties and actual results may differ materially. Additional information about such factors and uncertainties that could cause actual results to differ may be found in our 10-K filed with the Securities and Exchange Commission under the heading Forward-Looking Statements. During today's call, we’ll also be referring to certain non-GAAP financial measures. Please see the Investor Relations section of our website for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures. John will begin the call with an update on our growth strategy and business development and his thoughts on the market conditions. George will discuss the financial and operational details of the quarter and future outlook. After John and George have finished their formal remarks, we will then open up the call to questions. With that, I would like to turn the call over to John. John C. Corey: Good morning, although our net sales or net income increased in the third quarter versus the prior year period, our results were negatively impacted by the additional costs associated with the launch of a…

Thank you, John. We established as our number one priority this year to refinance our 11.5% high yield bonds that would have matured May 1, 2012 as the high yield market opened favorable rates. On October 4 of this year we successfully completed the refinancing of our $183 million 11.5% bonds. With $175 million, 9.5% bonds which extended our maturity to October 15, 2017. This will save the company approximately $4.4 million in interest expense annually. Even though our entire $183 million has been refinanced only $190.7 million will be redeemed early and remaining bonds will be called at par on November 4. This will cost us an additional $700,000 of interest expense in the fourth quarter until all the bonds are redeemed on November the fourth. In conjunction with the refinancing we have entered into a fixed rate or variable rate swap of $45 million of our $175 million total bond debt representing 20%, 25% of our total debt position. If interest rates remain at currently levels, we expect to save an additional $700 to $800 thousand in interest expense per year. We believe interest rates will stay low until at least the third quarter of 2012. Another area of importance that we are actively managing is our current cash tax position. Over the last five years we have not paid U.S. cash taxes due to our NOL position. The net operating loss has primarily been created by tax deductible good will related to our high debt acquisition in 1998 which has and will continue to generate a tax deduction of approximately $20 million per year through 2013. As a result, we do not expect to pay any cash taxes in the U.S. until approximately 2012 or 2013. Over the last five years PST has been remitting dividends to…

Thanks George. As many of you are aware, on October 7, 2010 Stoneridge filed an S-3 registration statement with the SEC indicating the Draime’s family intention to sell their shares. SEC regulations forebode us from commenting on the subject and as such we will not be providing any addition information beyond what is included in the S-3 filing. Operator, with that I would like to open up the call for questions.

Thank you. (Operator Instructions) Our first question comes from the line of Bob Nicholson with Pine Cobble Capital. You may proceed.

Hi guys. Just a couple of things I wanted to clarify. If I just walk through – it sounds like there is a lot of moving parts in this quarter. If I just walk through a couple of the big items and I start with the pre-tax number of $5 million and then add to that the one-time expenses associated with the expedited freight of $1.3 million for the quarter. So operating income plus $1.3 million for expedited freight; plus it sounds like there's $1.7 million of what are going to be unusual costs related to the program launch that gets me to $8 million pre-tax. Then it sounds like there are some costs associated with the fluctuation in copper that ultimately gets recovered. Which gets me to sort of $8.5 of operating income which would have been – I think a much more consistent number for operating income margin to what were you've talked about before in terms of the incremental margin. If I run all of that through and back out interest expense, the Brazilian equity income and then apply a normalized tax rate, not the catch-up provision for Brazil of say 30%, that gets me to a much different number in terms of the net income from the quarter. So my question is how should we think about the recurring nature of the one-time issues? How comfortable are you in your ability to keep fixed costs from creeping back as production begins to really ramp up next year?

What we are looking at right now is we look at electrical – part of it is supply disruption, so we look at this on electrical connectors, we are seeing that is not as severe as it used to be so we see some improvement on electrical components, chipsets and stuff. We are generally looking at an industry forecast that call for recovery in the second quarter of 2011, so we believe we will be managing component issues through the fourth and first and second quarter of the year but I think we have done a pretty good job in managing that because that has been a condition that has been in place for the first half of this year as well. When we see it – it’s improving. The situation is getting better. We are having less instances of premium freight shipment so I think that benefit will start to – I mean that will come into play and as I said in the fourth quarter we don’t see a severe shortage of these parts that we saw before, so I think that will comeback. In addition on our operations, the one factory that was causing us the problems with the product launches – George said we launched about 12 programs in the last 2 quarters, we had one that has been a (poor match). We worked aggressively at that factory, we will continue to have some work to do at the fourth quarter there but that is already reducing its overtime, we will reduce its headcount and we will see improved performance out of that business in the fourth quarter and going forward. And then to sort of relate those dollars that you rightfully highlighted, the $5 million is operating income and the pre-tax income is $2.6 million.…

So if I again – just going – trying to go through some of the one-time item, it sounds like after you get through these unusual items, the core earnings prior the business this quarter, if I just run through the simple math, it gets me to $0.18 or $0.20. So the core engine and the core cost structure you guys have put in place, it sounds like that is intact, you feel good about that and you're setting yourself up. It's going to take a couple of quarters until we get to the peak of the truck cycle ramping for that to shine through. Is that still a fair assessment of how you guys think about the margin potential?

Yeah, that is exactly right. We think what we just have to do now is execute. We got all the heavy works behind us in terms of the restructuring in the form of the cost take out. Those things will stay out and so we – if the market improves then with our new awards then we are going to benefit from that.

Okay, terrific. Thanks, guys.

I think the one thing that we tried to highlight, too is that we have not seen the commercial ramp that there has been a lot of reports about it, but it is out there and it appears and it is coming more in the first quarter and gets stronger in the second quarter and then the second half of next year so we are positioned for that and that is what our forward plan is really based on.

. :

Good morning George, John, Ken.

Hello, Matthew.

I just wanted to go back to the program launch costs. I believe, in the second quarter, you also had some one-time impacts of some slight disruptions, the Euro and the program launch cost. Is this the same program that you were having some issues with in the second quarter as well?

Yeah, the supply disruptions have been something that we have been confronted all this year. I think that each quarter we talked about disruptions in electrical components and connectors primarily on chipsets and some other things and that affects both of our business on both the control device business to the extent that we have some electrical content on our products there and also our electronics business. On the launch, a relatively complex launch that we started in the second quarter but we really did not see the full impact of that until the third quarter when we were really ramping up.

Okay. You're confident at this point, that the back orders have been filled. Is it – was there a bottleneck on your sales a little bit in the third quarter and are you going to catch up a little bit on that in the fourth quarter?

I think we got it all out in the third – well, we got about $2.5 million that we would say that carried over from the third quarter, but by in large because we pushed all this business out we got the – we made the commitment to our customers and that is really kind of a normal, I would say more normal carry over when you look at the month end so. You know with our customers you cannot keep them – you cannot keep a line shut down situations so we make sure we met those commitments.

Okay. And then, I also noticed the pace of the equity income definitely increased in 3Q. Is that a sustainable event going forward, or do you expect – or was that just seasonally high?

No, I think we see – they are bringing on new products. We talked about the car and audio and the PST and General Motors what they are selling. It was probably a little higher than we expected in the third quarter but it should run in that range. Historically, we have always said that around $3 million as you know is better this quarter at $3.9 but we see them now having a sustainable level of both – their margins have improved and we saw that in June and it ran of the whole third quarter so we feel good about where they are at.

Yeah, and our Indian joint venture is that continues to ramp, at the rate that it’s doing it should be able to improve and it has demonstrated it can improve its profitability as it gets more in line there, so we think both of those things are in positive trajectories.

Moving on to contribution margin, as you think about contribution margins going forward, given – I believe in the past, you've said between 25% and 30% would be your expected contribution margin on the increase in sales. Given some of the one-time issues you've seen in 2010, are you more confident that in 2011 you can hit that 25% to 30%, or can you actually exceed it, given some of the one-time issues you've seen in 2010?

Well, I think we have always said that we will run in that 25% to 30% range, Matt, and I think we will continue in that range if we have the opportunity to because of some of the new products that are coming on, but I would continue to use the 30% as a marginal contribution on sales growth.

And just lastly on interest expense, I think you mentioned that interest expense was going to pick up a little bit because we were we are beginning to be at par. Do you have a number you're thinking for the 4Q on interest expense at this point?

Well, all the chance on that one, Matt. I think if you just do some quick arithmetic we have a $175 million of the new issue we had $183 million. There is going to be a portion of the time which is going to be about $700,000 worth of interest, because we are not finished fully extinguishing the bonds until November 4 and the incremental interest is coming from about 70 – we did $109 million in principal balance on October 4, so there will be a month’s worth of interest on the $70 odd million dollars extra on the 11.5 before they retired on the November 1.

So it is coming down then in 4Q?

Yes, it will but there is a small – it is not going to be – it is not like on October 1. We also have $175 in interest only. There was a small period of double carry.

Then if I do the math correctly, I'm assuming, if you were to annualize it around – at around $22 million maybe $22.5 million in interest expense, you come down next year by about $4.5 million?

Yeah, $4.5 million plus as we mentioned we have done an interest rate swap and so depending on what (inaudible) is doing that can move it but we estimated the benefit of $600,000 to $700,000.

All right. Great. Thank you very much guys.

You are welcome, Matt.

Your next question comes from the line of Robert Kosowsky with Sidoti & Co. You may proceed. Robert Kosowsky - Sidoti & Co.: Hi, good morning guys. How are you doing?

Good. Yourself? Robert Kosowsky - Sidoti & Co.: I am doing pretty good. I was just wondering if you could give us a little bit more color as to what went wrong with the product launch. Looks like a new product you guys were coming up with or it had a hard time scaling up? Was it issues with quality or supply-chain or – more color on that would be great.

Sometimes when you get engineering specifications or drawing and that they are not accurate and that starts the problem off so when you – we had some issues with some incorrect engineering parameters on the product and that started the problem. This was really in our wiring business so it is complex wiring harnesses that have a lot of sub assemblies that go along with them and so we had to start, we had to learn from that, we had to build new board from that and when we started the -- We had a lot of training and development time that went into that and so I think it started from some poor engineering drawings and instructions to some poor development work on our side, to some issues we had with the efficiencies on our factory floor and getting parts to the floor on time. A variety of operational issues that we are now largely – we now largely addressed and continue to work to finalize so we can run very efficiently. Robert Kosowsky - Sidoti & Co.: Okay, that's helpful. How do we have more confidence that more issues like this will not sprout up, once like cyclical demand comes up? Kind of you changed some of the engineering processes that you have? How do you address that given the market might have a good year next year?

Yeah, that is really the question. As we said, we did 12 launches in the electronics. We have added these in this business over the last – in the last two quarters, although this one launch did not run well. If we go back and we do a lesson to learn on this things and unfortunately sometimes we don’t learn our lessons and we didn’t – we need to relearn them and so we engage with people, but we are putting in different metrics into the system. The head of that business is personally engaged putting in those metrics to make sure we got accountability and measurement criteria that come up and down the line. I would never say “never”, there are always possibilities that you have problems with the large programs because of timing of events. You know in the industry you get a program and what you would say would be – maybe you would have 12 months to develop and design that program and put it on the floor, by the time the customer finalizes their specifications that might drop down to 8 to 9, 6 months so you really got to scramble. So there is always that possibility. You just have to try to manage it more effectively. Robert Kosowsky - Sidoti & Co.: Okay. To what extent did your customer feel the impact on this bad product launch? Then also more broadly on the component supply issue, what extent did you guys bear the brunt for your customers so that kind of not passed on the chain?

The customer felt the problem because they were not – they had trucks in the yards so to speak that they couldn’t ship out until we got the parts to them. Now, we were not the only supplier that was causing them problems so I am not going to say that it was all of ours. As we have said, towards the end of the quarter, we worked with them very closely to develop a plan of how we were going to get out of this situation and in part of that plan was also discussing with them the component availability, making sure that we were setting the right priorities or what products to produce to ship to them to get their most urgent needs out. I think we did a good job, also a fair to good job of doing that. I mean anytime you disrupt a customer you can’t really say you did a great job, so I think we did a fair job of getting out that, executing on that. We still have some work to do there. Regarding the component shortages, that is also I think where our team actually has done a very good job in managing that possibility over the course of this year, so everybody from our purchasing to our operations people to our customer sales organization works with the customer in trying to identify what the issues are, trying to identify what their needs and requirements are and trying to satisfy them. I think for the most part, we did good job. We have done a good job in and managing that component shortage. Robert Kosowsky - Sidoti & Co.: Okay. How did you guys troubleshoot this? Did you guys get alternate suppliers, were components more expensive from the same supplies that you used or what?

Well, we buy components direct and then we went out to the distribution channel and bought components in the distribution channel where distributor has had components on hand and so we purchased some. We are looking at all sources of components. It becomes difficult to change a component, you can’t really change one in a product unless you get a deviation from the customer and so we have gone out and scavenged so to speak for – in the marketplace from distributors and others. Robert Kosowsky - Sidoti & Co.: Then also can you talk about some of the new business wins and where they kind of fall in the mix between heavy-duty, medium-duty and I guess US versus international on the Electronic side?

Yeah, well if you look at the, if you look at the $96 million, it is –I think we said about $23 million was on the control device side if I remember correctly the rest would be on the electronic side and electronics is almost all -- as George gave you the spread out of heavy duty and medium duty and (inaudible). We will get the specific number for you on that and in that I think the biggest news is that we were able to renew with our largest customer, a 5-year long term agreement with them which as George said gives us – puts in place a copper escalation cost, so we have been able to in the future protect us some of the vagaries of the copper commodity market. Robert Kosowsky - Sidoti & Co.: Okay. Then finally, how much cash do you want to keep on the balance sheet to remain comfortable?

Well, we have always said that we probably looked at about $25 to $30 million and the rest will be used for growth opportunities and that has always been one of the things that we done for the business. We have looked at – since 2008 have looked at some acquisitions that we -- but we never felt that they were valued correctly or that they were the right fit for us, so we will continue that as we go forward how to sell on both our geographic footprint our products footprint. We might have some smaller sized acquisitions in the future. Robert Kosowsky - Sidoti & Co.: Okay, thank you very much. Good luck with this next quarter.

Thanks, Rob.

(Operator Instructions) Your next question comes from the line of Tony Venturino with Federated Investors. You may proceed. Tony Venturino – Federated Investors, Inc.: Good morning gentlemen. Thanks for taking my call. Actually, most of my questions have been answered, but I just want to get some give some more color around the launch and some of these component shortages. I think you said that the customer was okay at the end with the product launch. Is that a fair assessment, or how would you –?

Oh, I wouldn’t say they were okay with it. They were never okay with it when you have problems with it. I think what we did is we got to a working agreement where we started to meet commitments and we started to demonstrate to them and that we were meeting our commitments and got on a sound footing. We are not – I am not saying we are out of the woods yet, but we are on a sound footing now. We are not having the same kind of problems we had before and as a result we were able to – the factories are running back down on more normal operations. Although we still have some problems on component shortages and we still have some other issues that we have to sort out but not at the magnitude that we faced in the third quarter. Tony Venturino – Federated Investors, Inc.: So was there any sort of long-term damage to this relationship or just kind of near-term?

Well, we are going to have to go and sit down and discuss with the customer the issues that we had and what we have done to put it in place I think overall our relationship with the customers have been good. We serviced them fairly well across the board but in this particular case, we did not do that so we want to get the problems fixed and demonstrate to them how we are doing that. We have done that for the last several – last month and going into this month and once we do that, then we will sit down and them and talk about what the opportunities are for the future. As we have this launch from we won two major awards with that customer in this past quarter and so they were (inaudible) and Global awards. Tony Venturino – Federated Investors, Inc.: Okay.

We had one hiccup and we continue to hit and very favorably we received some other contracts we were very significant with this customer. Tony Venturino – Federated Investors, Inc.: Okay. That's fair. Then yesterday, Freescale had commented on their issues, their supply issues and that they had kind of worked through all lot of the constraints that they had had. But when they had shipped out to their customers like you, you were seeing issues, not you specifically but customers like you were seeing issues with other components in the chain. Do you think we're getting close to the end here? It sounds like you're saying this is going to be another couple of quarters of issues. Where are specifically are kind of the main constraints?

Well, at some chipset we feel we will see another couple of quarters of those things and there are some problems and some of it actually when we start to dig in to it, some of it goes to path it has taken on line and they are not bringing back on capacity as rapidly as they would have in the past. The other thing is that we are at a record demand for chips worldwide, so even though the industry went down with all the advent of electronics and content of electronics chips and chips demand is going up so there needs to be more capacity brought on. And in some cases as simple as somebody as a supplier changing their ERC system and having problems with matching up orders and demand properly so you know this strengthens – we are managing that, too. But I think what we are hearing from all our customers on our group is telling us our electronic group and purchasing people are telling us it will continue to get better but it is going to probably be on a more normal state by the second quarter – before the end of the second quarter. Tony Venturino – Federated Investors, Inc.: Okay. And then just a couple of last quick questions, clarifications. D&A, you had said depreciation I think was $4.7 million. I didn't hear the amortization part. Could you give me a total number for them?

Our amortization is all right so $4.7 is the depreciation. Tony Venturino – Federated Investors, Inc.: Okay. $4.7 million and so and then, on the balance sheet, the debt level is $183 million and changed. Is that pre or post-refile?

That is pre. That is pre-refile. Tony Venturino – Federated Investors, Inc.: That is pre. Okay. Could you give me what the debt levels are now? You kind of talked around that, but –

That will be $175 million and then we have about $1 million of our subsidiary in North America and its been running around that level so I think you will see at about $176 million. Tony Venturino – Federated Investors, Inc.: $176 million. Then you had I believe it was $183 million minus $109 million that's left, that goes out in November though?

Right.

That will be – we will end up paying about a month of interest additonal 11.5% on those bonds that we have not redeemed. Tony Venturino – Federated Investors, Inc.: Okay. All right. That's it for me. Thanks.

You are welcome.

Your next question comes from the line of Robert Kosowsky with Sidoti. You may proceed. Robert Kosowsky - Sidoti & Co.: Just another couple of questions. Could you talk a little more in detail about the new PST products that are coming out, especially the one where you cross-sell I think with the Electronics division? Also, could you maybe talk about the margin profile of the new products relative to the 19% margin I guess we saw in the third quarter?

Well, we don’t really disclose margins but in a lot of the track and trace systems can use common components basically what it is with the telematic systems that a large customer wanted. They can track and trace trucks – the truckers and so we combine the ability. PST as we reported in the past has been a leader – has been one of the leaders in the Brazilian market of developing that tracking systems down there for vehicles because the insurance industry wanted that so they have that capability in there. In addition to our European capabilities we are able to design a system using the experience we have in Brazil and also using our experience we have with our taco graph system in Europe to come up and meet the customers’ expectations and beyond that not only the expectations for the design and the development but then the expectations for manufacturing, because we can manufacture our products in Brazil and we manufacture the products in Europe. Robert Kosowsky - Sidoti & Co.: You guys said that was like a $23 million project on an annualized basis?

Yeah, $22 million when it is fully ramped up and about half of that goes into Europe and half of that will go into Brazil and in addition, this system, wow. There are no laws mandating it for North American market. Overtime fleet to North America will probably migrate towards more of this type of system even if it is not legislated and we have a good opportunity because we designed this system for both Europe and Latin America, South America to bring that system with that customer into North America should it be needed. Robert Kosowsky - Sidoti & Co.: Okay. Thank you very much. I guess when does the (inaudible) distribution system start to land up? Is that a fourth-quarter event?

Well, they just signed it so it will start out slow here in the fourth quarter that will really start to come in 2011. Robert Kosowsky - Sidoti & Co.: Okay, thank you very much and good luck.

Thank you.

And with no further question in queue, I would now like to turn the call back over to Mr. John Corey for any closing remarks. You may proceed.

Well, thank you. We have said all along we have put a plan together. We have been executing on that plan our execution. Our execution in this quarter was not flawless as we have demonstrated in the past, but the overall fundamentals of the business still remain strong and still remain well-poised for the recovery that is happening and every indication of the trend of the recovery will show that both the automotive and commercial vehicle markets will recover in 2011 – continue to recover so we are going to get positive up-lifts from that. In addition, we are very encouraged as the relatively quick wins we have had in China, because if you think about it we have put resources on the ground really a lot of resources last year and in six to eight months we have won that $13 million worth of business and so we continue to see good growth opportunities there. So while the quarter did not come in as we expected because some of the reasons we had, most of those reasons that are completely issues that will be resolved and mitigated as we go forward and we see no reason to -- I said to modify the direction of the company or where we are going or what we are doing and we are very optimistic about the future. Well, thank you very much for joining us on the call.

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect and have a great day.