Good day, ladies and gentlemen, and welcome to the First Quarter 2012 TransDigm Group Incorporated Earnings Conference Call. My name is Juanita and I will 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). As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today Ms. Liza Sabol, Investor Relations. Please proceed.

Thank you. I would like to thank all of you that have called in today, and welcome you to TransDigm's fiscal 2012 first quarter earnings conference call. With me on the call this morning are TransDigm's Chairman and Chief Executive Officer, Nick Howley; President and Chief Operating Officer, Ray Laubenthal; and our Executive Vice President and Chief Financial Officer, Greg Rufus. A replay of today's broadcast will be available for the next two weeks. Replay information is contained in this morning's press release and our website at transdigm.com. Before we begin, the Company would like to remind you that statements made during this call, which are not historical in fact, are forward-looking statements. For further information about important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, please refer to the Company's latest filings with the Securities and Exchange Commission. These filings are available in the Investor section of our website or through the Securities Exchange Commission's website at sec.gov. The Company would also like to advise you that during the course of the call, we will be referring to EBITDA, specifically EBITDA as defined, adjusted net income, and adjusted earnings per share, all of which are non-GAAP financial measures. Please see the tables and related footnotes in the earnings release for a presentation of the most directly comparable GAAP measures and a reconciliation of EBITDA and EBITDA as defined, adjusted net income, and adjusted earnings per share to those measures. Also please note that the slides that accompany today's release, can be found on our website, but will not be advanced automatically. You will need to manually advance them. We apologize for any inconvenience. With that, let me now turn the call over to Nick.

Good morning and thanks again for calling in to hear about our company. As usual, I’d like to start with some comments about our consistent strategy. I’ll also talk a little bit about the pending acquisition of AmSafe and our current status in the aerospace market, particularly how it applies to TransDigm. To reiterate, we believe our business model is unique in the industry, both in its consistency and its ability to sustain and create intrinsic shareholder value through all phases of the aerospace cycle. To summarize some of the reasons why we believe this and this is on Page 4 of the slide, about 90% of more of our net sales are generated by proprietary products, and around three-quarters of our sales come from products for which we are the sole source provider. About 55% of our revenue and a much higher percent of our EBITDA comes from aftermarket sales. Aftermarket revenues have historically produced a higher gross margin and provided relative stability in the downtimes. Because of our uniquely high EBITDA margins, typically approaching 50%, and relatively low capital expenditure requirements, about 2% or less of revenue, TransDigm has year in and year out generated strong free cash flow. We pay close attention to our capital structure and view it as another means to create shareholder value. As you know, we have been in the past and continue to be willing to lever up when we either see good opportunity or view our leverage as sub-optimum for value creation. We typically begin to deleverage pretty quickly. We have a well-proven, value-based operating strategy, focused around what we refer to as our three value drivers; new business development, continual cost improvement and value-based pricing. We stick to these concepts as the core of our operating management methodology. This consistent…

Thanks, Nick. As Nick mentioned, in total, we had a good first quarter. We were quite busy with acquisitions due diligence, completing transactions and transitioning acquired businesses. At our operating unit, we are also diligently working our guiding drivers and we continue to create shareholder value. Let me explain our 2012 first quarter operation value creation a little more in detail. Four weeks before our fiscal Q1 started, we purchased Schneller. During Q1, we restructured Schneller's product pricing to better reflect the value they provide, and we organized this business unit into our proven product line operational structure. We are also working to shut down the Schneller Florida facility and consolidate these operations these operations with the main Kent, Ohio manufacturing site. To date, the design of the Kent building expansion has been completed and we are set to break ground on the new addition this spring. We expect to complete construction this summer and physically move the Schneller Florida operations this fall. Overall, the Schneller transition activities are well underway and we expect this acquisition to meet or beat our value creation expectations. On December 9th, we acquired Harco Labs Incorporated. To-date, we have restructured the Harco's spares pricing and tightened up the cost structure with an 18% headcount reduction. We are now working to organize this business into our proven product line operational structure. So far the transition activities are progressing well and this looks to be another good acquisition. Now let me turn the discussion to our other operating units and their recent value generation activities. Overall, the TransDigm operating units are performing well. They have diligently controlled their cost structure and have added resources sparingly as the commercial market recovers. Our value generation activities continue to be effective across our businesses and they also contributed to…

Thanks, Ray, and good morning, everyone. I hope everyone had an opportunity to read our press release which was issued this morning. As you compare our quarterly performance versus the first quarter of last year, the impact of acquisitions, financings, and operations are all significant in the first quarter comps. Hopefully, I'll keep it simple for you today. Before I begin, please reference Slide 7 for our quarterly financial results. Quarter one net sales were $352.5 million, up $118.9 million or 50.9% from the prior year. There are two significant explanations for this very large increase. The first is the collective impact of the acquisitions of the McKechnie, Talley and Schneller businesses, which were acquired in fiscal '11 and Harco, which we just acquired in the first quarter. These acquisitions contributed $75.9 million of additional sales versus the prior period. Not to be overshadowed by the impact of recent acquisitions, our organic growth was very strong at 18.4% over the prior year. All market channels contributed to this growth as follows. An additional $18.2 million was from the commercial aftermarket sales, $16.6 million came from the commercial OEM and $5.6 million from defense sales driven primarily by the aftermarket. Reported gross profit was $199.6 million or 56.6% of sales. The reported gross profit margin increased by approximately 2 percentage points, versus the prior year due to the following. It's the strength of our proprietary products, continued productivity improvement, and favorable product mix, all made favorable contributions. Also, a little favorable retroactive contract adjustment contributed approximately three quarters of a percentage point as well as positive leverage on our fixed overhead costs spread over the higher production volume. Collectively, these items increased our gross profit percentage on our businesses by approximately 3 margin points, which more than offset the dilutive impact…

Thank you, Greg. In order to give everyone the opportunity to ask questions, I'd ask that you limit your questions to two per caller. If you have further questions, I'd ask that you reinsert yourself into the queue and we will answer those questions if time permits. Operator, we are now ready to open the lines.

Thank you. (Operator instructions). Your first question comes from the line of David Strauss with UBS. Please proceed. David Strauss – UBS: Morning. Nick, on the aftermarket, you did close to 20% in the quarter year-over-year, your guidance 10% for the full year. I understand the comps get more difficult, but can you give us idea sequentially, as we go through the year, what your 19%, 20% – sorry, your 10% guidance assumes sequentially as we go throughout the year?

Well, as you know, David, we don't give quarterly guidance. And I don't want to back into it that way, but you can back into the math, right? If you take whatever the first quarter is and divide the rest of it with the rest of the year, you get about 6% or 7% a quarter. David Strauss – UBS: Right. I was just trying to get an idea sequentially what you were looking at?

No, we're not smart enough for that. David Strauss – UBS: No, you guys are pretty smart.

I would say it is – as you know, when the comps get significantly harder, and we are mostly reflecting there some – no company-specific concern, but frankly just a little bit of discomfort still with where the economy goes and where the airline industry goes around the world. That's all what we are reflecting there. David Strauss – UBS: But did you see – you had mentioned last quarter that you had seen some softening in the aftermarket bookings. Did that – it seems like that recovered in the first quarter. Is that correct?

Well, the bookings and shipments were about the same and they were up significantly off of the – they were significantly up in the previous year. I would say, sequentially, the bookings didn't change a whole lot.

Particularly if you adjusted it for days from the prior quarter. David Strauss – UBS: Okay. And last one for me. AmSafe. I know you're somewhat limited in what you can say, but you made the comment that you might not be able to get AmSafe margins up to kind of TransDigm average. Could you maybe just compare the opportunity at AmSafe relative to the opportunity that you saw at McKechnie when you started there?

Yeah, I think the way we look at this, as you know, is we’re not – we don't make any money by percents, we make the money by dollars. When we look at that, we see the same kind of – we think this is an EBITDA that over time as we always say four years or so, we think we can double this EBITDA which is the same kind of thing we saw at McKechnie. And that's a combination of the usual suspects. It's cost reduction. It's pricing. It's some new business and a little market tailwinds. David Strauss – UBS: Okay. But over four years, because it looked like with McKechnie, you are going to get there a lot quicker than four years?

Well, hopefully maybe we will do that here too. You know how we look at this. We look at this on a four to five year cash to cash kind of basis and we are looking to get the returns up in the high-teens to 20s on our equity. And this passes that test or better, we wouldn't here. David Strauss – UBS: Yes, got it. Okay, thanks a lot.

Your next question comes from the line of Eric Hugel with Stephens Inc. Please proceed. Eric Hugel – Stephens Inc: Hey, good morning guys. Hey, can you talk about in defense side? You talked about some – the strength in there is really aftermarket driven. Can you talk about maybe any specifics the types of products, helicopters, six lane, ground vehicles?

Well, as you may know, about 60% of our defense business roughly evenly split comes from helicopters and freighters. So that's always going to be the primary driver as is helicopters and freighters. I would say if you look across our operating units and product lines, it's I would say not all, but the high percentage of them were up this quarter. Each one has a little bit of a different story, but the spending at least for our products was a little bit than we anticipated and I really can't zero it in on one big thing. Eric Hugel – Stephens Inc: Okay. Fair enough.

I’d like to give you a more satisfying answer than that, but looks like we’re unsettled about the future. It’s frankly hanging in better than we thought.

I guess that's good if it's not any one particular thing, it's broad based. That’s a positive. Also when you look – in your guidance, can you give us a range of what you are looking for in terms of the adjustments for EBITDA and net income?

With AmSafe, it's going to change a lot obviously because it's a large acquisition. We have on the table what our current adjustments are, but I'd ask you to be patient when we give out the AmSafe guidance, because the amortization and things like that – the dividend payment stays the same. That only happens in the first quarter. You could annualize the comp costs. That will probably go up because we’ll issue more options with the acquisition, and then we’ll have the various acquisition related expenses. So it won't be any different subjects. But again, what you see now will be updated and changed with AmSafe.

Would you plan to update the guidance when you closed AmSafe, or just at the next conference call?

No. At our next conference call because we will in the middle of our operating, our base business that quarter. So our intention right now is to do it at the next conference call.

Let me just add to that, Greg. I think between the public information that we’ve put out, I think you have the basis for making some judgments there.

Great. Thanks a lot guys. Good quarter.

Your next question comes from the line of Robert Spingarn with Credit Suisse. Please proceed.

Good morning. Nick, just to go back to spares growth for a minute. Would you characterize the 19% in the quarter as what you were looking for or did that come in ahead?

I can't find how to say. I don't – I can't say it's materially different, Rob. We were thinking 10% in the year. We are still somewhere around 10% for the year. So I don't know. Maybe a little better, maybe a little worse, but I can't say there is a material difference.

I only asked the question because you actually adjusted your annual outlook on defense growth, but not here. So I'm wondering if this just actually came in you really expected a front ended year?

I would say I guess I maybe front-ended, Rob, if you compare as a percent. But remember the comps get a lot harder as you go forward.

True. Fair enough. Okay. And then could you give us the latest on pricing?

Pricing of what?

Just pricing in general, the customers’ acceptance of pricing and how prices are fairing in this environment, perhaps compared to previous periods?

There has been no significant change in the pricing dynamics in the industry for our products, Rob. We haven't seen any change this quarter in this period as we did in previous up and down cycles. I mean, our process and our activities remain the same and our results remain the same.

Okay. And then just for Greg, you mentioned the contract adjustment. Are there any others embedded in the guidance going forward? Should we see any more adjustments like that?

No. Right now that happened in this quarter. So we wanted to carve it out for you.

Let me just add to that. We have some number of these negotiations going on in any one-time. Sometimes they stretch out forever and never get resolved and sometimes they all of a sudden pop overnight and get resolved. So it's doesn't mean there is no possibility of it anymore, but there is none in guidance.

Okay. Thanks so much.

But, it's not in the guidance.

Your next question comes from the line of Myles Walton with Deutsche Bank. Please proceed.

Oh, hi there. Good morning. It's Amit Mehrotra here for Myles. Just looking at the guidance, the $0.32 increase at the midpoint, it looks like maybe $0.10 is from Harco, another $0.05 from tax. So that leaves about $0.15 to $0.20 from improved operations. Can you just give us some color on where specifically you're seeing the better performance?

It's better to look at it almost a third, a third, a third by the subjects you mentioned. I don't know what you read but those improvements really closed out in that way. Tax, a third; Harco, a third and ops a third.

Okay. And then the third that's from better performance, can you just point to specifically where in the business you're seeing that?

We're just generally being pretty excited with the headcount and as the market recovers and we're also enjoying the benefits of some of the reductions we've had with acquisitions over the last 12 months. We are seeing a full year of that.

Okay. And then just the commercial aftermarket performance, up at 19% was quite strong and I think the comp was up 20% the same quarter a year ago. So just considering global capacity was up 5% in the quarter, can you just help us bridge the gap between the up 19% and the up 5% for capacity growth?

Well, obviously somebody was buying more than the capacity growth was. This is the same issue we saw all of last year and we're continuing some of it here in the beginning. The quarter-to-quarter – first quarter to first quarter is the easiest comp. It gets tougher from here on in. So the answer is generally the same answer we had last year. We are aware the people who are buying, they’re buying ahead of the – I would say the consumption and the pricing, and there's a little extra buying we suspect for inventory and some deferred maintenance. We don't know if these comps get tougher. We don't know that that can continue.

Okay. And just last question and just a quick clarification. On the pro forma growth by end market that you provide in the deck, does pro forma mean you include acquisition related revenue in both periods or does it excluding acquisition related revenue in both periods?

It includes it. It presumes we own the same mix of businesses the prior year that we own this year.

Got it. Okay, thanks. Great quarter.

Your next question comes from the line of J. B. Groh with D. A. Davidson. Please proceed. J. B. Groh – D. A. Davidson & Co: Hey guys. Thanks for taking my call. I just want to clarify. I think you mentioned some pricing action on Harco and Schneller, but from the other questions it sounds like you didn't make – take any other pricing action with the core business this quarter?

We mentioned Harco and Schneller just because after we acquire a business, we quickly go to work on that stuff. But in our base businesses, our pricing actions have been same as they’ve been every year and every quarter. J. B. Groh - D. A. Davidson & Co: So was there a general price increase in Q1?

We don't have a general price increase necessarily. The product line is handled differently. But I mean as I’ll try to track back on the question that Rob asked. Our pricing pattern, our pricing methodology has not changed.

We just don't talk about it every quarter. Ray talks a little bit about the new acquisitions. J. B. Groh - D. A. Davidson & Co: Right. Now I understand why don't want to give too much away there. And then maybe playing up the last question, maybe give us the thought on the level of inventory customers. How are you seeing that? Obviously, there is a little bit of inventory build here, but do you have a sense in what those inventory levels are relative to historic level?

I don't have a good sense of it. I think the best way to think about that is look at our guidance for the balance of the year. J. B. Groh - D. A. Davidson & Co: Okay. Thanks for your help.

Your next question comes from the line of Carter Leake with BB&T Capital Markets. Please proceed. Carter Leake - BB&T Capital Markets: Thanks for taking my question. Defense last quarter, we had down low single digits and now it's flat to modestly down. Is that an improvement in the Defense outlook, just because your handing is flat, or is there no change?

It will probably be a little. I think our previous guidance was modestly down. We changed from flat to modestly down. Primarily, of course we had a good first quarter than we expected. There is nothing I would say there is – I can't tell you there is anything about the Defense world or the outlook that makes me feel a whole lot different than I did 90 days ago, other than we got 90 days under the belt that was a little better than we expected. Carter Leake - BB&T Capital Markets: Okay. And then, this is really splitting hairs, but I’ll ask it. Last quarter for OEM it was mid-teens, now it's 15%. That's the same. Your outlook hasn't really changed?

Yes. No, the outlook hasn't changed. Carter Leake - BB&T Capital Markets: Last quarter also we had 787 commentary as one of the assumptions, 15 and 12, 15 and 13. That’s been dropped. Does that matter anymore or do you have a more favorable outlook?

No. I think when I said about the 787 is the – it's unclear to me exactly what the shipment rates are going to be this year. As you probably know, the number seems to sort of move around. But I would say, it didn’t want to make a lot of – it's not a material impact on TransDigm's performance this year. Surely not on the profitability.

Your next question comes from the line of Carter Copeland with Barclays Capital. Please proceed.

Hi. Good morning guys. This is Mayur in for Carter. First, let me just congratulate you on a good quarter. Nick, can you talk a little bit about the deal pipeline? Specifically can you talk about any changes that you're seeing with regards to seller expectations?

I don't know that we're seeing any changes. As I think I've told you, if I look at it today, probably the pipeline is a little light. I don't know that I can attribute that to anything other than normal fluctuations. And as you probably know that you've been following our calls, the relationship between what I say about our pipeline and the timing of closing seems to have almost no relationship to each other. So take it for what it's worth.

This is hard to predict?

This is hard to predict. I mean, we are out there slugging away every day, looking for things and sometimes they have a slow bubble and a boil and they start to go to a pipeline and we contract them and sometimes they just come up fast and we have to hit quick.

And in terms of the seller expectations, any changes there in terms of the pricing?

I don't think so. I can't say that the pricing expectations have changed materially.

Okay, great. Thank you very much and good quarter.

Your next question comes from the line of Joe Nadol with JPMorgan. Please proceed. Joe Nadol – JPMorgan: Thanks. Good morning guys and good quarter. The EBITDA as defined margin guidance for the rest of the year is flat to a little down from Q1. Is that just mix as you think OE will grow faster, or is there anything else to consider in there?

It's the acquisition mix mostly. Joe Nadol – JPMorgan: But AmSafe is not in there?

There is nothing there for AmSafe.

That's correct. Joe Nadol – JPMorgan: So why would there be acquisition mix?

We have Harco. We just acquired Schneller. Typically when we buy something, it's mathematically we’ll mix down in that first year. Joe Nadol – JPMorgan: Right. But you've got a lot of that in the first quarter and I would have thought there would have been upside from those as you pulled some cost out?

Harco was bought in the first week of December.

We did tell you we had that unusual favorable pricing adjustment in our first quarter too, which distorts the first quarter in your analysis. Joe Nadol – JPMorgan: Right. Okay. On AmSafe, it's maybe too early for you to talk about this before you close, but is there potentially a non-core piece to it as there was with McKechnie? And obviously looking at the ground vehicle piece in particular, is that separable in theory maybe would be the right question. And then also on AmSafe, just to get this in, on Slide 39 of the deck for the lenders that you put out a few days ago, you have $25 million of amortization in there. Is that intangibles and is that going to change once you have readjusted the balance sheet?

No. That won't change. That will go with us forward. Joe Nadol – JPMorgan: Okay. And the separability of the business?

Yes. It's reasonably severable. We're undecided yet what we'll do with that. We're going to have to look at it and see what the market is for and see what we – how we feel about the prospects when we get right into the middle of it. It's a relatively small part of the value of the business. So we're not as intimately familiar with it as we are with the aerospace and military portion. Joe Nadol – JPMorgan: Okay.

But it is – the answer is yes, it's separable. Joe Nadol – JPMorgan: Perfect. Thank you.

Not to get technical on the amortization. That’s part of that tax savings with the (inaudible) selection if you follow that other presentation.

Your next question comes from the line of Ken Herbert with Wedbush. Please proceed. Kenneth Herbert – Wedbush: Hi. Good morning. Just wanted to revisit McKechnie. Could you provide an update on where you stand? I know obviously you are – with the facilities and the reorganizations you are doing there and the broader progress relative to where you expect it to be at this point?

Yes, the unit of McKechnie that saw the most facility closures and moves was the Electromech division and the Tyee move up in the – with Avtech. Both of those pretty much are completed. They are in the last call, I reported on that. The Avtech facility – our existing Avtech facility moves into the Tyee plant and that's all consolidated and we are marketing the Avtech property that hasn't sold yet. And then Electromech, we consolidated a bunch of units into their Mexico facility, but we had to move across town in Matamoros, Mexico because we outgrew the facility and all that work was done in the prior three quarters and completed last quarter, and that's running smoothly. We are happy with that.

By and large I would say on the McKechnie business, it continues to meet or exceed our expectations when we bought it. Kenneth Herbert – Wedbush: But it sounds like from the commentary you just gave that you would still characterize it as ahead of plan in terms of the actions and the improvements?

Yeah, I would say it meets or exceeds our expectations, where we felt we’d be today. Kenneth Herbert – Wedbush: Got it. And then if I could on the aftermarket. Your book to bill this quarter of about one, does the guidance assume that that sort of holds at around the one rate for the rest of the year? Or does the guidance assume that you maybe see a point later on in the year where bookings maybe start to trail billings a little bit in any particular quarters. Is there any commentary you can make around that?

Yeah, I can't say that. I mean we forecast the revenues, not the bookings. Generally they are way disconnected in the aftermarket because the turns aren't that long. Kenneth Herbert – Wedbush: Okay, great. Thank you very much and great quarter.

Your next question comes from the line of Michael Callahan with Auriga Securities. Please proceed.

Thanks guys and a great quarter. I guess just a couple of questions about the organic growth rate here in the first quarter and I guess the delta between general market growth. You guys always seem to outpace that in general. I was curious, could you give us any insight as to I guess volume versus price on that 18% of price, like maybe a little bit bigger share than usual, just because you have so many acquired businesses that are all going through that, the price adjustment process?

Well, we don't comment on our pricing. We just don't comment on that.

Okay. Well, I’ll take a stab in a different way. Is it greater magnitude than other quarters?

It is. We just don't comment on the pricing. You’re welcome to try again if you want.

No, I’ll take two strikes. I guess another thing I was curious about, on the SG&A line, it seems like SG&A is drifting higher a little bit. I would presume there is a lot of acquisition related expenses that you are going through, and what not, pushing it higher. But as a normalized run rate, I guess how should we think about SG&A? Have some of the acquisitions may be added permanent costs to that or should we expect it to come back down a little bit?

Well, your first assumption in the first quarter is exactly right. There was some severance costs and some transaction costs, I think it totaled about $3 million. You’ll see that in the Q when we file that tomorrow. When you say what the normal run rate, it depends how you place it with the acquisition cost and accounting cost, because now you have to expense all those things, where a couple two years ago you could put them on the balance sheet. But if you took that out, you're just a little north, I think right around 11% or just south of 11% if you took out the acquisitions for the first quarter, and that's not terribly off from how we've been reporting for several years.

Okay. Fair enough. Thank you.

Your next question comes from the line of Michael Ciarmoli with KeyBanc Capital Markets. Please proceed. Michael Ciarmoli – KeyBanc: Good morning guys. Thanks for taking my questions. Nick, I guess you detailed a lot here about the aftermarket and maybe what the trajectory is for the next couple of quarters. Can you comment on maybe how the order activity has been for sparing on sort of the 787, 747-8? If that's had an impact and maybe what you are expecting on that side going forward?

I haven't seen anything significant on the 787. I don't know if we've seen anything Greg.

The big initial provisioning, in fact we haven't seen that.

We haven't seen that yet. Well, the 747. I don't…

747-8.

Yeah. It's not been significant. I can't say we didn't get anything. Frankly, it's a little hard to sort out from existing 747 orders. The answer to that one is I don't know whether we've got any, but I know it's not been significant. Michael Ciarmoli – KeyBanc: Okay. Fair enough. And then just on the deal side, given AmSafe, is it fair to say you might be opening up the aperture a little bit looking for larger transactions? I mean even maybe expanding the margin profile given that AmSafe didn't quite have maybe EBITDA margins that you are historically used to. Just kind of how should we look at the deal pipeline? I mean, I guess, are we going to be seeing deals of a larger size going forward?

The real answer to that is I don't know. Our criteria stays the same. We're looking for proprietary aerospace businesses with significant aftermarket content. I would tell you AmSafe, if you separate out the ground vehicle business, is pretty well right down the pike on that. The size – Michael, we deal with the sizes we see. The market, there are many more small businesses – there's many more businesses or many more transactions in the $50 million, $100 million range than there are in the $700 million, $800 million range. We deal with the ones we’ve got.

Yeah. I mean, Harco came up, it was small.

Yeah, we're not systematically changing what we're looking for. Michael Ciarmoli – KeyBanc: Okay, that’s fair. And then just structurally, I mean, it seems like EBITDA margins might be under pressure given this deal, given maybe OE revenues growing faster than aftermarket. So '13 we might see adjusted EBITDA margins be down a little bit from '12. Is that a fair assumption?

We're not going to give guidance for '13 yet. But you can do the – the base businesses, I would say, we gave guidance where we kind of look like we are for the year and we gave you some rough numbers on AmSafe. So you can do some math there, right? When you add 25% to 50%, you get an average.

Again, we don't manage to a margin. We manage to absolute dollars and value. So if the market mix changes, so be it. We're not going to do anything to manage our margin. We're doing it to manage the value. Michael Ciarmoli – KeyBanc: Okay. Fair enough. Thanks a lot guys.

Your next question comes from the line of Robert Stallard with Royal Bank of Canada. Please proceed.

Morning. Nick, how do we kick off with the slide on the guidance rate? You said you expect after market to be normal going forward.

To be what?

Normal going forward. Are you referring to this sort of mathematical 6% to 7% or more like this 10% number for the full year?

I'm not sure I follow the question. So let me repeat what we said. We said 10% for the full year, which if you do the math, if it was 18% or 19% for the first quarter, that solves the 7 percentage for the next three quarters, assuming they are all weighted equally and all that.

Do you see 7% as normal in inverted colors? Or is that just really impacted by the tough comps? Because that would seem to be the low versus what the…

I think more impacted by the tough comps. I would say what we're basically doing is we're sticking with our 10% for the year.

Okay. And then secondly…

Let me back up on that. I don't mean to imply that we think there is any structural change. The mix aftermarket go forward growth reflects 6% or 7% forever, rather than 5% plus price or something.

Yeah. And then on the capital front, obviously AmSafe a relatively large acquisition for you. Have you seen any change in your lenders in terms of their willingness and ability to lend you the amounts you’re after or the rates you like given the capital constraints of banks?

No, we have not. We have a very – I don't want to say easy, but ready access to the capital markets. So we could raise more than we need right now.

Is that something that worries you going forward or are you pretty comfortable with this still?

Worries what, our need or ability to get it?

Generally the situation the banks have there in these tougher capital requirements of the rest.

I mean, obviously we – tougher capital requirements ultimately could squeeze down the market. I would tell you, we have so far have not frankly ever had difficulty accessing the capital markets, and we don't see any right now.

Great. Okay, thanks.

Your next question comes from the line of Yair Reiner with Oppenheimer. Please proceed. Yair Reiner – Oppenheimer: Good morning. Thanks for taking my call. I want to ask you about the AmSafe acquisition. Can you give us a little more color about how the tax benefits layer in and how those impact reported earnings?

Well, you won't see it in our effective tax rates. Those benefits will lower our cash taxes paid. We said the net present values right around $70 million. About $30 million, $35 million of that we’ll recognize in the first two years. That might stretch over two of our reporting years, maybe three because we're going to buy it in the middle of our year. But over the first 24 months, I anticipate our cash taxes to be reduced by $35 million. But again you won't see that in any change to our effective tax rate. Yair Reiner – Oppenheimer: Got it. Thank you. And then the question about the guidance for OEM growth. You've mentioned the 787 or the 747 are going to be major drivers. Maybe you can discuss which platforms will be responsible for the bulk of that growth? Thank you.

I think the way to do that is we're pretty well spread across the platform. So if you look at the growth rates, the Boeing Airbus are projecting in a different platform. That roughly is reflective of the growth rate we're seeing in the platforms. The 787, frankly we don't know how many we’re going to ship this year or anybody does, but it won't make a big impact on the business. It's not a material impact. Anything in the range that’s being talked about is an impact this year for us. Yair Reiner – Oppenheimer: Thank you.

Your next question is a follow up from the line of Robert Spingarn with Credit Suisse. Please proceed.

Yeah, I wanted to ask you Nick, I don't know if this is you or Greg, but especially I think Ray made a comment on the new acquisitions and the pricing there. But is it fair to say that you get the greatest increase from pricing in the first anniversary of an acquisition because of the initial price increases?

I would say, Rob, as a general statement, though I think you have to be a little careful business by business, because it's somewhat of a function of whether they’ve contracted for fixed periods of time. In general, that's right, but it's not right in every specific.

The reason I'm asking, I'm not sure exactly how you calculate it. You’ve talked about organic, reflects the same mix of businesses in the prior year quarter, I guess to true things up. So is what we're seeing here in Q1 some benefit of the price increases coming through from McKechnie and maybe for the other two? I know you bought McKechnie or you had closed in the first week of December.

Yes, some.

So is that a more significant contribution than it might be in a normalized quarter or you didn't have some large acquisitions in the prior year?

You mean you're talking specifically about the aftermarket now, Rob.

I’m talking about the aftermarket and the fact that maybe what we're doing here in Q1 this year versus Q1 last year is comparing McKechnie on a pre-price increase and a post-price increase basis?

In the prior quarter, we only effectively owned McKechnie for about two weeks.

Well, I know you bought it on December 6. But do you – in calculating your organic growth do you push it back at the beginning of the quarter?

Yeah, there's probably some. I don't think it's a whole lot just in that period. But yeah, there's some.

Okay. Wanted to check on that. Thank you.

Yeah, just by the math there is, Rob. There has to be, obviously.

Okay. Appreciate it. Thank you.

Your next question comes from the line of [Yumar Habib] with JPMorgan. Please proceed. Yumar Habib – JPMorgan: Thank you. One financial policy capital structure question. Can you walk us through your thought process in deciding in finance and acquisitions via the bank market versus the high yield market?

This time it was – we wanted to do something relatively quickly. We had just restructured both our bank and high yield just a year ago, so the agreements were pretty fresh. And at the end of the day, the bank interest rate is quite a bit cheaper than the high yield. So at this stage, we elected to just go with the bank debt to go quick and we had agreements that were pretty fresh and it was pretty easy for us to execute. Yumar Habib – JPMorgan: Thank you. That’s all I had.

At this time, we have no further questions. I would now like to turn the call back over to Liza Sabol for any closing remarks.

Thank you. I would like to thank everyone for participating on this morning's call and we expect to file our first quarter 10-K tomorrow.

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