Hello and welcome to the Wabtec’s Third Quarter 2009 Earnings Conference Call. All participants will be in a listen-only mode for today's event. (Operator Instructions). Please note that today's event is also being recorded. At this time, I would like to turn the conference call over to Mr. Tim Wesley. Mr. Wesley, please go ahead.

Thanks Jamie. Good morning everybody. Welcome to our third quarter earnings call today. Let me introduce the rest of the Wabtec team: as usual, our President and CEO, Al Neupaver; our CFO, Alvaro Garcia-Tunon; and our corporate Controller, Pat Dugan. We'll make our prepared remarks and then we'll be happy to take your questions. Please refer to today's press release for the appropriate disclaimers on our forward-looking statements. And with that, go ahead Al.

Okay. Thanks Tim. Good morning. I’ll cover the third quarter results and talk about our market conditions, and I’d like to also talk about out strategic growth initiatives, including our latest acquisition Unifin. Then Alvaro will cover the financials in a little more detail. Despite an economy that continues to be sluggish, Wabtec posted good results in the third quarter. Our third quarter EPS was $0.57, about the same as we did in the second quarter if you exclude some of the one-time items from that quarter. We had solid margin performance. We were up 60 basis points from a year ago quarter, as we continued to reduce costs. We generated $51 million of cash from operations. Keep in mind we achieved these numbers during a global recession and a very weak U.S. freight rail market. This shows the strength of our diversified business model that our strategic initiatives are paying off and that we continue to benefit from the Wabtec Performance System. Let’s look at our markets. First, the Transit market, we continue to see a stable Transit market, driven by Federal funding and passenger ridership. Current Federal spending bill, SAFETEA-LU expired September 30 of this year, but was extended through October and we expect it to be extended again for at least six months. The House strongly favors a new six-year bill with a substantial increase in funding, so that the transit agencies have the funding and the lead-time they need to plan future investments. Stimulus money is making its way into some transportation projects. Clearly, Wabtec is in a good position to take advantage of what is a strong commitment in the U.S. to expand the country’s mass transit capabilities. Remember, about $20 billion of stimulus money was directed toward transit. Ridership is still strong, but has…

Great. Thank you Al and good morning everyone. Welcome to the call. Financial results for this quarter were pretty straightforward. I think my job is pretty easy this call. We really didn't have any one-time items of any significant amount to comment on. Sales, as we said earlier, were about $330 million. This was down about 17% from the year ago quarter. A portion of this, about $7.5 million, was due to foreign exchange changes, the dollar strengthening. However, the effect on EBIT of this foreign exchange changes was negligible. Basically, our natural hedge continues to work, the increases or decreases in costs in our cost centers tend to offset the results coming in from abroad. The Transit Group, in terms of sales again, was basically flat. It was down slightly about 3%, where the decrease really occurred within the Freight Group for the conditions that we’ve talked about before. Higher sales from acquisitions, principally Standard Car and Truck, which was about $19 million, more than offset the negative effects of the lower rail traffic, reduced demand for new freight cars, and locomotives as well. In terms of margins, Al has talked about this, and we all continue to be focused on improving margins with particular attention to the consolidated operating margin line. Here you're going to have changes due to mix, but at operating margins where we really want to show the improvement. I think a concrete result of this emphasis can be seen this quarter. Compared to last year, sales were down about $65.6 million, but EBIT was only down about $6.3 million or about 10%. We consider a negative 10% contribution margin in this market to be relatively a good performance and it really reflects I think well on what our operations have done to reduce the…

Thanks Alvaro. Once again we had a good performance in a very difficult environment. Like most companies we continued to face some very challenging market conditions and uncertainty due to the economy, but we at Webtec, we have stayed focus on what we could control, cost reductions, future growth initiatives and cash generation. We are fortunate, that we have a diverse business model and that our transit business now more than half of our revenues remain stable at a high level. The Webtec performance system is what really provides the established culture of lean manufacturing and continuous improvement, and gives us the tools we need to reduce cost and generate cash as we have. We have a very experienced management team, that is committed to managing proactively and aggressively through this tough times and I must say that the whole team is really stepped up and is doing everything they can to run this business at the level it’s. And I couldn’t be more happy with the team that I have. With that, we will answer any questions that you have.

Jamie, you want to poll for questions?

(Operator Instructions). And our first question comes from Arthur Hatfield from Morgan, Keegan. Arthur Hatfield – Morgan, Keegan: Good morning guys.

Hi, Art.

Hi, Art. Arthur Hatfield – Morgan, Keegan: Hey, Al, I missed something when you were talking about the freight car statistics. I missed what your comment was with regards to your expectations for delivery this year.

This year, we think they're going to be rate around the 20,000 deliveries are probably going to slip further for the 4,000 that we had in the third quarter. So if you look at what's already been delivered this year, you've got, what 17,000 so it will be above 20 but not that far above it. Arthur Hatfield – Morgan, Keegan: And then you had followed that up by saying you expected it to be about half that next year, did I hear you right?

That’s correct, Art. Arthur Hatfield – Morgan, Keegan: Okay. Secondly, can you talk about any significant contracts on the transit side that may roll-off in the next couple of years and kind of what you are seeing is opportunities to replace those?

Yes, sure, Art. One large contract that will finish up in 2010, we are supplying the last set of options on the R-160 program, which is a New York city Transit, that total project was about $250 million and we shipped less than the third of that during 2009 and we’ll continue to ship well into 2010, but that project will come to completion. However, we have municipalities outside of New York that are major transit car orders that are in the queue here. BART in California, there's a number of them that we feel there is ample activity in the transit car area where we think that the transit cars delivered in 2010 will be very close to what was delivered in 2009. Arthur Hatfield – Morgan, Keegan: Okay. And then finally on the margins in the quarter, that was helpful Alvaro, what you had commented there on the decremental margin. Can you talk about what that would have been had you not been able to put in place the cost saving initiatives that you had, and how we can think about that level of degradation in the margin going forward relative to potential revenue decline?

If we look it from our revenue standpoint, one thing that if you look at these two different markets, we think that you'll still see some problem with the rail car delivery, so OEM freight car will go down. But we think the aftermarket, because of the sequential improvement in the ton miles, we think that portion of the market will come back. Now that said, what we’ve done in the freight area as you could see from our result year-to-date as we’ve been able to manage that to a very small contribution margin in the negative direction and we will be able to continue to do that. From a Transit standpoint, we're anticipating that this marketplace should remain high at a high level, stable at a high level is what we’re saying. If there is any degradation in that particular market again, we will manage using the Wabtec performance system and controlling what we can control. And our initiatives are very pointed in a number of areas. One is applying these lean principles across all the divisions; two, in our sourcing, moving activity from higher cost platforms to lower cost platforms, pricing initiative. So all those will continue to be put in place to minimize the impact of any revenue problems that we have or maybe Alvaro, you want to add anything to that?

I think, I don’t know if you caught it earlier, Art. And I'm not sure this was your question. But Al did mention earlier that he thought that we think the effect of the restructuring actions that we’ve taken will generate overall annual savings of about $35 million to $40 million and we expect, it wasn’t all done January 1, so we expect to get about half of that this year. I don’t know if that was part of your question. Arthur Hatfield – Morgan, Keegan: Well, it was. And what I was curious is how much when you talk about this year, half of it, is that meaning that by the end of the year, say fourth quarter, your quarterly run rate of savings would be a $5 million quarterly run rate, is that fair?

Yeah. It’s kind of hard. It all depends what you're comparing it to because again, these layoffs have occurred throughout the year. For the most part, though, we’re done. And that's why I mentioned you at least SG&A wise, once you get down the SG&A I think you can use this quarter, it's always going to vary by $1 million or $2 million. Arthur Hatfield – Morgan, Keegan: Right.

You're always going to have some unusual items and they are coming in there one way or the other. But I think you can use that this quarter's results as a reasonable run rate going forward. Arthur Hatfield – Morgan, Keegan: And then further on that strain of thinking, though, the commentary was that half of those savings would be permanent. How do we think about those - the other half coming back on? What kind of level of revenue growth do we need to see before we start to see some of those -- you needing to add costs?

That's what we're going to manage, Art.

Now that's what it's all about as we have paid to do. You've got to make sure that revenue is there and the growth is there before you add those costs. When you look at direct costs, it’s easy to deal with. And they're totally variable. But when you get into the burden area of costs, you have some costs that you would consider it fixed burden and variable burden. And what you're really talking about is that variable burden that you may need to make sure that you take full advantage of your growth opportunities. And we’re going to do that judiciously. Arthur Hatfield – Morgan, Keegan: Okay. And so it’s fair to say that that’s a rough estimate. You could come out a lot better.

You could do better. You could do worse. And it depends on our ability to manage. Arthur Hatfield – Morgan, Keegan: Okay, that’s very helpful. Thanks for your time.

But we can assure you - is that we will add costs very slowly. We’re – seriously, I mean - Arthur Hatfield – Morgan, Keegan: I’ve known you long enough, I know that.

It’s tough to do what we have to do, and you don’t like doing it. So you’re very reluctant to add costs, only to do this again. So we will be doing it very slowly. Arthur Hatfield – Morgan, Keegan: Sure. I just wanted to get a feel for how you are assessing that estimate of half being permanent. It really - it’s hard to say what that exactly is right now, but you’re going do your best to try and make it all permanent, I would say.

That, I think, is a very good summary. Arthur Hatfield – Morgan, Keegan: Okay. Thank you.

Thank you, Art.

Our next question comes from Paul Bodnar from Longbow Research. Paul Bodnar – Longbow Research: Hi, good morning guys.

Good morning, Paul. Paul Bodnar – Longbow Research: The question for you on, I guess, the European transit business and as well as, particularly, U.K. and just kind if you could just give us an outlook on what’s going on over there and what the outlook is for over the next 12 to 18-months?

Okay. In the market in the UK, that market really did decline, and we’ve seen the impacts of that. We have not seen an improvement but it is not getting worse. It’s probably comparable to how you see the things going on here in the States, from the economy standpoint. In Europe, there was really from the transit standpoint, there was a very little of any decline in the transit area in the European markets. It had some impacts in the economy but not a major those projects that they had on the table, they continued with. So the spending related to rolling stock and those areas that we’re involved in really continued, very similar, again, to the US economy. Paul Bodnar – Longbow Research: Is there still further like down in U.K. I mean, is a lot of your old businesses still trickling through, so we’re going to see a big dip 2010 revenues from the U.K., or is that already starting to take place and a lot of that’s going to kind of be, it will be sequentially flat, I guess?

Yeah. I think it’s already bottomed out there in the U.K. And remember, we’re on the repair side. That’s almost all after market business there, and not all of its transit. Some of it is straight. It was all freight at one point. And we moved a lot of that business into the transit area. Paul Bodnar – Longbow Research: Okay. What (inaudible) at this point, I mean, in 2010, what percent of revenue is the UK business right now?

Of our total revenue? Paul Bodnar – Longbow Research: Yes.

Probably around, maybe 7% to 8%. Paul Bodnar – Longbow Research: And then, I guess, also just along the term (inaudible) any kind of different thoughts now on what you’re looking for in acquisitions? Obviously, you made this one, which is a little bit off, I guess, recent pattern the transit acquisitions. Can you kind of shift it to what you're looking for?

No. We’ve been staying really focused on the same areas and we’re not changing our approach I mean we’re looking for strategic acquisitions first and foremost and we’re not afraid to look at adjacent acquisitions on an opportunistic basis when they come about and this truly was one that fits tremendously well with the Young Touchstone division, is and was a target area for growth for us. But we are still focused on those same areas but we were focused on three, four years ago. And we feel that the rail business whether it be transit or freight, is a compelling industry that we think there is a lot of opportunity for acquisitions and growth in from a Wabtec standpoint. Paul Bodnar – Longbow Research: Is that pipeline relatively full now or filling up or how is that?

It has – I must tell you, Paul, that it has improved, which was good to see. There was a period there where it was just trickling along. But the pipeline is starting to flow good. Paul Bodnar – Longbow Research: Okay. Thanks a lot.

Thank you.

Our next question comes from Jason Rogers from Great Lakes Review. Jason Rogers – Great Lakes Review: Hello. Did you provide the equity – shareholder’s equity balance for the quarter?

750

750 Jason Rogers – Great Lakes Review: Okay. And where do you expect CapEx to end up for the year and any early thoughts for 2010?

CapEx obviously again, we are not cutting it off. We’re trying to control it judiciously, but we're spending what we need. We'll probably spend, end up the year somewhere between 20 and 25, which considering our numbers. I think it’s below depreciation and it’s a very reasonable amount and I would say next year, you will see it probably in the same range. This year will probably be towards the lower end of that range and next year will probably be towards the upper end of that range. Jason Rogers – Great Lakes Review: Okay. And did you provide the, where you expect locomotive deliveries to be in 2009?

We didn't, but we can. We were estimating around 12,000. We think it's going to be right. 700. Jason Rogers – Great Lakes Review: Okay. Yeah, thank you.

Thank you.

Our next question comes from Kristine Kubacki – Avondale Partners. Kristine Kubacki – Avondale Partners: Good morning.

Good morning Kristine.

Good morning. Kristine Kubacki – Avondale Partners: The question on freight aftermarket. Sequentially, how did it get better?

It did get better in the quarter but that seasonality is there. There was a good chart that UP put out during their earnings presentation that shows and they actually showed the numbers. And it is an improvement sequentially, quarter-on-quarter. Now, whether that is sustained or whether is sustained its seasonality, they did indicate in their thoughts there was an increase in demand that did ply into that increased traffic. But if you look at the ton miles, quarter-on-quarter you will see that the first quarter was on a weekly basis, was somewhere around $28 billion ton miles and then it went down to $26 billion and then it’s back up to $29 billion in the third quarter. So $28 billion, $26 billion, $29 billion but the third quarter is traditionally a stronger quarter. Kristine Kubacki – Avondale Partners: Okay. I guess, moving on, on positive train control, I was wondering how that’s setting up for this year and then how you guys are looking at that going into 2010?

Positive train control; our development efforts continue. Right now we are, as our product safety plan was approved with the BNSF and we are commercializing. And they're extending what is called an overlay system on to various parts of their system. We are working very closely with a development program with CSX, NS, and UP, all three of them, where we have pilot programs going on and we’ll be working towards a product safety plan approval, which is a necessary step in order to commercialize the product that will happen late in the year in 2010. What you're seeing at the railroads, they have got together, they're working very hard on trying to work on the communication systems and the interoperability that is necessary. We are all pushing hard for a full implementation in December 31, 2015. We don’t think we are going to see a lot of revenues here. As we finish out 2009, it’ll start ramping-up late in 2010 and probably see more in 2011 and that’s primarily caused by some of the systems until the design has been really finalized, there is a reluctant to move ahead on. Two, because of the recession, people are little reluctant to move ahead and we still haven’t resolved the communication package in the interoperability using that communication device. So those things will occur and we look forward to, really, a good growth product here over the next four or five years. Kristine Kubacki – Avondale Partners: Well, there has been some pretty public pitches by some of the Class One’s out there to kind of ratchet down the scope of the project. Do you have any concerns that maybe and I am not sure if they are talking about just geographic footprint. Would they still have to convert the same amount of locomotives? Are you concerned in anyway that the scope of the project could be ratcheted down, and what impact that would have?

Yeah. First of all, as far as their discussion, I really think you got to get their ideas. I mean, I’m not sure exactly. It’s best to talk with them to get their views on what they are saying. I can tell you that we are totally focused on implementation in 2015, December 31. I think that this will move forward, my own personal opinion, at the pace that they've already dictated. It obviously is a very costly implementation and it would be tremendous if the government, who is mandating this, could put money so that to leave some of the burden that the rail roads are going to have to make sure that this is implemented properly and across the whole system. I do not anticipate much changes from what the program is now. Kristine Kubacki – Avondale Partners: Okay, thank you very much.

Our next question comes from Steve Barger from KeyBanc Capital Markets. Joe Box – KeyBanc Capital Markets: Hi, good morning. This is actually Joe Box, filling in for Steve.

Hey, Joe. How are you doing? Joe Box – KeyBanc Capital Markets: I’m pretty good, thanks. Now you had some superiorly positive commentary in the Transit side earlier, with respect to future orders. Given what's in the hopper right now, I mean, would you expect to see the transit backlog stabilize at these levels or, potentially, even increase?

I think that the market will be stable with the high level. So what does that mean, I think that as bigger projects come in and some finish, there is always the fluctuation quarter-to-quarter but the amount of activity that that’s out there right now is very encouraging and we expect that marketplace to remain strong. Joe Box – KeyBanc Capital Markets: Fair enough. Now, as you start thinking about developing your 2010 guidance with the domestic rail car market being down, locomotive likely being down and get into 2010. Can you highlight some of the areas where you might actually see some growth next year within your freight business?

Well. We do feel that what we’ve seen is the ton miles have shown some sequential improvement as we were talking earlier. We would hope that the after-market business will be the first sign of the recovery and we hope that would lead into 2010. We also have a lot of opportunity on the international front and we have seen where China is obviously, their economy has come back strong, Australia’s economy is back strong. We are seeing some pick-up in the Brazil area and other mining countries. So on a International front, we take this opportunity on the freight side that could really help or what is and what appears to be a continued very weak freight rail market in the U.S. Joe Box – KeyBanc Capital Markets: All right. And my last question is a followup to a Kristine’s question on PTC. In the past you’ve highlighted the Wabtec potential opportunity is being somewhere in the range of $200 million to $400 million in total. Given the Class One’s focus right now on interoperability taken in the context with your exposure at all the Class One’s, do you think that this could potentially create some upside to your initial estimate on PTC?

Yes. Our estimate, the $200 million to $400 million over the next four or five years is based on the fact that we would not have a 100% share and it’s only the onboard computer and there is other parts of the system. The onboard computer, which is RE, ETMS or positive train control, is only one part of what really needs to be done to make this whole system work. And if the fraction it’s probably only 20% to 30% of what’s going to be spent to implement positive train control and we think there’s opportunities in other areas. So there is some upside, and it’s not included in that number, we have not quantified it. Joe Box – KeyBanc Capital Markets: Do you care to expand at all on what those other opportunities might be?

Well, the other action – or the expenditures are really going to be from a communication standpoint, the system has an onboard computer. You have to have a handheld radio that communicates with the dispatch system. We have a capability and we are supplying and we have dispatched systems that are installed in various railroads around the country. It also has to communicate with the various signals and switches. So, it’s a very complex systems. It has lots of parts and we have opportunities to participate in that, we also have not included in that any installation or service aftermarket business that would we tied to it. Joe Box – KeyBanc Capital Markets: That’s very good. Thank you, guys.

Okay, thanks Joe.

(Operator Instructions). Ladies and gentlemen at this time, I'm showing no further questions. Would you like to make any final comments?

Yeah, we really, really appreciate the questions. And we like them short and sweet like this. So thank you very much and we’ll talk to you again soon.

Thanks everybody.

Bye, bye.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect your telephone lines.