Good morning, and welcome to the Wabtec Corporation's First Quarter 2011 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Tim Wesley. Please go ahead.

Thanks, Linda. Good morning, everybody, and welcome to Wabtec's first quarter earnings conference call this morning. Let me introduce the rest of our team who's here, our President and CEO, Al Neupaver: Alvaro Garcia-Tunon, our CFO; and our Corporate Controller, Pat Dugan. As always, we will make our prepared remarks and then we will be happy to take your questions. We'll, of course, make some forward-looking statements during the call so please review today's press release for the appropriate disclaimers. With that, I'll turn it over to Al Neupaver, our President and CEO.

Thanks, Tim. Good morning, everyone. Obviously, our first quarter performance was strong. We had record sales, record earnings and a record backlog. As we've discussed, this performance was driven mostly by growth in our Freight group. But our Transit group also showed some strength with sales increasing 10% compared to the fourth quarter of last year, and our Transit backlog also grew by about 14%. As a result of this first quarter performance and our outlook for the rest of the year, we raised our annual EPS guidance again. Our new guidance is $3.20 to $3.30. Clearly, Wabtec is performing very well, which demonstrates the strength of our diversified business model, the benefits of our strategic initiatives and the power of our Wabtec performance system. As I said, we have raised our 2011 EPS guidance based on our current backlog and our outlook. We are now expecting EPS between $3.20 and $3.30, with sales growth of about 15% for the year. Some of you may call this conservative, but I just want to remind you that it's still early in the year. Our guidance assumes the following: global economy continues to grow, freight rail traffic continues to improve with the economy, transit market continues to be stable and no major changes in foreign exchange rates. We will continue to stick to our long-held philosophy: Be disciplined when it comes to cost; focus on generating cash to invest in growth opportunities. Let's first take a look at the freight rail market. In North America, rail traffic continues to grow this year. Through mid-April, ton miles increased 6% and intermodal traffic was up 9%. The increase in traffic has led to a rebound in our North American aftermarket business, with aftermarket sales in the first quarter up 37% compared to a year-ago…

Great. Thanks, Alan. Good morning, everyone. I think you'll agree with me when I say that it's always nice to be able to report financial results like these. Sales for the quarter were a record $455 million, about 25% higher than last year. Of this increase, almost 2/3 was organic growth. As Al mentioned earlier, the growth was driven by Freight Group sales, which were up 61%, with more than 3/4 of that coming from organic growth. Growth in the aftermarket was very strong due to increase in rail traffic and more rolling stock coming out of storage. OEM sales were also strong. They almost doubled from the prior year. Transit sales were a little lower than the year-ago quarter, mainly due to the completion of major OEM programs in New York and locomotive contracts, but they were actually 11% higher than the fourth quarter of '10, showing the stability that we expected back then. In terms of margins, we continue our focus on driving margins higher with particular attention on the operating margin. For the quarter, operating margin was 14.6% compared to 14.1% in the year-ago quarter. In dollar terms, SG&A was higher than the year-ago quarter, mainly due to the acquisitions of various companies: G&B, Bach-Simpson, Swiger and Brush and in line with our expectations. As a percent of sales, it was actually slightly lower, 12% versus 12.3% last year. Also, this year's quarter included about $664,000 of purchase price accounting, or PPA, which are the near-term charges associated with acquisitions. This compares to the $393,000 in the year-ago quarter. Excluding PPA, operating margin was 14.7% in this year's quarter. And again, operating margin is the number we key on. Interest expense was lower due to lower net debt compared to the year-ago quarter but relatively modest. Other…

Thanks, Alvaro. In summary, once again, we've had a strong performance in the quarter with record sales, record earnings and a record backlog. Longer term, we could not be any more pleased than we are today with our strategic progress and the growth opportunities that we see ahead for Wabtec. We continue to benefit from our diverse business model and the Wabtec performance system, which gives us the tools we need to generate cash and reduce cost. We have an experienced management team that managed aggressively through the tough times and is now taking advantage of those growth opportunities. With that, we'll be happy to answer your questions.

[Operator Instructions] Our first question comes from Allison Poliniak of Wells Fargo.

Just a question on positive crane control, you talked about the railroads going sort of after more clarification, could that be delay any of the ramp-up cost as we head into 2015, do you think? I know with the PTC guys right now.

Yes, the thing -- what they've done is that the tracks that were covered or the route valves that were contained in the original FRA document was based on route miles of that were traveled in 2008. And what the railroads have done is they've gone to Congress and they said, "This doesn't make sense. It's going to be implemented in 2015, so it ought to be based on how we run our railroads in 2015." And by taking a look at those routes, they think they could reduce the traffic in certain areas with hazardous wastes by about 10%. And thus, they don't have to make that PTC ready in that area. And Senator Hutchison put a bill forward. It makes a lot of sense. We agree with her approach. And you don't want to see a program that's based on old data. So that's the one thing that is moving forward for the railroads. As far as the delay of the spending or the delay of PTC being implemented, there is really a lot of discussion around can the deadline be met? Decisions related to that are probably in 2012. But some time that year, they have to report back to the FRA on the status. We're moving full speed ahead. We don't anticipate any delays, especially related to our particular commitment on this program. Whether or not -- again, it's always good to hear a train whistle in the background while we're talking. That was special effects that I had paid for so just to let you know how busy things are here at Wabtec. But we at this point do not see those delays. And even if it was a delay, I don't think it's going to change much the spending pattern related to our products.

Great. I mean you had a nice sort of ramp in the overall operating margins sequentially. Are you guys seeing any input price issues right now that are pressuring out a little bit?

There's obviously a lot of inflation that we're seeing, and we've been very disciplined in trying to make sure that those escalations in raw material prices, labor costs and other areas are controlled. And we try to cover the fact, if we're going to have raw material either through a surcharge or some type of pricing increase, we must admit, we're not going to be 100% capable of doing that. But we think, in general, that we've got most of those escalations and costs covered.

Great. Thank you.

Our next question comes from Jim Lucas of Janney Capital Markets.

First, on the numbers side, just following up on that last theme. Very dynamic top line growth, the gross margins are still in that sub-30% range and was wondering if you could give any sort of color or clarity about the mix issue on the gross margins. And what is that gross margin potential as Freight becomes a more important part of the mix here?

One thing I'd tell you, Jim, we in Wabtec, we don't allow people to use mix as an excuse very often, okay? So I'll start out by saying that the mix impact, yes, there's better margins in Freight than there are in Transit so that really should have been a help in the quarter. We did have good top line growth. We were able to deliver about 17%, 18% after you adjust for PPA to the bottom line operating profit. We think that we can do a little better than that. But all in all, to deliver 18% contribution margin in this kind of rapid buildup in revenue, I think that the company performed pretty well.

One minor point, Jim, this is Alvaro, if you take a look at engineering expenses, this might be another one of your questions and I'll anticipate it, you'll see that it went down from last year and even a little bit in the fourth quarter. And this is mix, it's not an excuse, but it is mix. But what we do is we have some contracts where we're actually taking some of that engineering expenses and re-classifying it’s cost of sales because those engineering charges are in cost of sales. And you'll have some of those re-classes going back and forth depending on the mix of products and depending on how you do the accounting, which is another reason when we look at margins, to be honest, what we really focus on is operating margin because that does take the mix out of it and that reflects on how the overall company is doing.

Okay, that's helpful. And then on the strategic side, a lot of the focus on PTC has been domestically but very nice contract in Brazil. Could you talk about the PTC opportunities internationally since prior to that hadn't really been as much of a focus and just any color you could give there, please?

Yes. We had started working about 6 to 9 months prior to our announcement with MRS on that PTC opportunity. And we were really invited by them to participate. They had signed an agreement with ALSTOM to put in that type of system back in 2005, and they were unable to come to the point where they had an operating system. So they reached out and knew that we had made good progress in the United States on our program. So we were able to participate in that contract. We feel that there's other opportunities in countries like Brazil. One thing that's unique about this contract is they don't have the kind of signaling system that exist. They don't have a standard signaling system. So instead of putting in a normal signaling system, they could actually go to this electronic positive train control method, not only from safety standpoint but at the capacity play as well. So we think this really bodes well in a lot of other countries: Brazil, Australia, maybe some of the other mining countries as well. Keep in mind that we did implement PTC in Iraq. This was done probably about 3, 4 years ago. So yes, there is an international opportunity. And we'll continue to take a look at where our system, which is a unique system, could help us develop growth on a global basis.

Okay, and finally with regards to Europe, any update in terms of getting your systems over there up to the European standards?

Yes, we're making excellent progress, first, on the component technology side, as well as a system. We've had a couple of small system orders. The key to our approach there is that we've got to get our entire system, not just components, on some of the platforms that exist there. That's the model that you would use as you develop business, and our success has been good so far. It's just going to take time, and we understand that we're in for a long time. Long time, not going to be a next year type of item, but 4 or 5 years from now, I'll assure you that we'll be successful.

All right, Great. Thank you very much.

Our next question comes from Steve Barger of KeyBanc Capital Markets.

Al, you said that most forecasters expect a freight build of 35,000 cars. Do you see any issues with the supply chain supporting that, or where do you think the build rate can go to this year?

What I gave is a range, about 30,000 to 35,000. There are supply issues across the board, I think, with everyone building back up, which has created a concern. Although there's a couple of things that are driving some of the order rate right now is the rapid depreciation of investment in rail cars drops from 100% to 50% next year. So there's a lot of people looking at this. They're also looking at their own needs because they haven't bought any cars in the last 18 months to 24 months. So I think there's been a big push there. It has stressed the supply chain. We're, in general, in pretty good shape except for some of the large casting products, casted products. But I think the supply chain will work itself out. It may -- when you see an order intake of 26,000 in a quarter, I mean that's a huge amount of orders in one quarter. Now the question is, is that really filling up some buildup needs in the supply chain of the rail cars or not? We don't know. So I would expect 30,000 to 35,000 is probably the build that could be sustained with the current supply chain that we have.

Okay. And as that ramps up as you kind of take a look at 2012, would it be your expectation that you could get to a 40,000 or 50,000 number just as everybody comes back on line and starts to figure out production again?

I think most forecasters are suggesting that or even a little higher.

Okay. And can you talk about the order momentum you're seeing in Freight so far? We know that 1Q had huge numbers. Are there still good inquiries in 2Q? And can you talk about your inquiry, the order conversion so far this quarter?

Let's see. The first question is, is what do we anticipate in orders next quarter. I mean, obviously, we would hope that the economy continues to grow and that the freight rail continues to rebound. So we would expect that the incoming order rate would support that. As far as the projection, we really can't make that projection. I didn't understand the second part of your question.

Just in terms of the inquiry that you're seeing and how you're converting that to orders, has that changed? Is that increasing or decreasing? And just what are your sales guys telling you about what activity is like so far in Q2?

Yes. It depends. Obviously, a lot of activity and our hit rate is where it normally is.

Okay. You said you expect incrementals better than 18% as you start to benefit from the revenue ramp. Can you talk about any specific inefficiencies that you saw in the quarter, or was it material cost? And is there anything to stop you from getting in to the low 20% range?

Some of the issues we touched briefly on the supply chain and some of the inflationary is, in general, we feel that long term, we're covered real well on that. So I would hope that -- our goal has always been never to predict a certain level of gross margin or operating margin. But it's continuous improvement, and we want to improve month-on-month, quarter-on-quarter, year-on-year. And I think if you go back 6 years, you'll see that continuous improvement. And we would hope that we could continue that.

And last one, I'll get back in line. For the two PTC contracts that you signed, once you deliver against the combined $192 million from those contracts, can you tell us what the follow-on revenue opportunities look like from maintenance or upgrades? And how should we think about the future opportunity from that installed base?

Yes. We've done a number of scenarios trying to calculate the ongoing revenue that's generated by the installed base. And generally, electronics and software has a higher percentage because the need to update and upgrade. Without -- there's a range that could go from 20% to 40%. It depends on just how much of the maintenance contract you get and what components needs upgraded. But there is a certain annuity that's associated with installed base.

That is great. Thanks for the update and I'll get back in line.

The next question comes from Art Hatfield of Morgan Keegan. Arthur Hatfield - Morgan Keegan & Company, Inc.: Al, I want to follow up on your comments about guidance. And in your prepared remarks, you mentioned that some of us, that some may think that you're being conservative and pointed out a couple of things to think about. But on the other side of that, given where the freight markets are and how the OEM markets are ramping up and the rail traffic is stayed in pretty good consistent levels, which should drive the aftermarket, isn't it fair to say also that we should be thinking about Q1 2011 being the lowest earnings quarter of the year given directionally where your markets are headed?

One thing that we get a real big push in the first quarter in the aftermarket area because if the weather are -- that equipment does not work well in 0 degree temperatures and there's a lot more aftermarket. And some of that really, you could see in the numbers. So typically, our first quarter is a very strong quarter for us. I think that your point is, is a valid one and that you would expect that with the economy continued to recover that you would expect that maybe business is going to be a little different this year than it would be in a normal year. It's awful early in the year, and I wish I had the ability to really gauge that economy out there. I know there's a lot of people that feel good about it. There's also some naysayers out there that I thought I read something just today that indicated some, who knows? So we're being cautious. We're being conservative. Arthur Hatfield - Morgan Keegan & Company, Inc.: Okay. With that said, I mean can you quantify kind of what that typical impact is in the first quarter from when or whether on the aftermarket?

I would be just pulling something out of the air. I haven't really thought about that incremental amount. We can get that. But I'm assuming that knowing that business, I can only look at 1 business, but a lot of business units are covered by that and that's our global service business. And we normally see, maybe, it would equate to 4%, 5% type of gain overall and for that division to be higher in that, obviously. Arthur Hatfield - Morgan Keegan & Company, Inc.: Okay. Is that something you could look at down the road?

I think Tim could follow up with you, Art, on that because I'm pulling that right out of the air. Arthur Hatfield - Morgan Keegan & Company, Inc.: No, that's fine. I don't want to put you in that spot. But if I can get that later that would be helpful. The other -- couple of other things, just real quick, looking at engineering expense in the quarter, I didn't go back that far but it's the lowest level that I have seen. Are you doing something there where I would have thought over time with all the acquisitions that you've have made that, that would start to continue to trend up from a gross dollar standpoint as you look to develop new products in these businesses that you've developed. Is something going on there cyclically or is this -- or seasonally within the quarter? Or is this kind of just a level we need to think about going forward that maybe your ability to develop new products in some of your legacy businesses has kind of run its course.

Art, this is Alvaro, and I touched on that earlier as well when I was answering Jim's question. But a big chunk of that decrease basically relates to basically product mix in the sense that what we were doing is because of the nature of the products, say for example, locomotive contract, we're actually taking some of the engineering expense, which we normally could in SG&A, and we're actually allocating that to cost of sales. So it's just a request. It's not really a net decrease in the total number. It's just shown on a different line. And in terms of acquisitions, you also touched on that. And one of the things about the acquisition is to a certain or to a large extent, their engineering expenses go into cost of sales rather than in engineering expense as well. I think at the level it is right now, it should be pretty much stable going forward. So I think that, that will be -- until the mix changes again and maybe it'll go up again -- what's going up and I'll tell you re-class it from cost of sales. But that's one of the reasons, when we talk about margins, we really focus on the operating margin side because there can be a number of classification change back and forth between the different lines. And in the end, we focus on is operating margin. But that's why you see that decrease in engineering.

But there's no less focus on internal development.

Internal development or anything like that. Right. Arthur Hatfield - Morgan Keegan & Company, Inc.: I think, going back to like the way you're investing, changing the way you're capitalizing some of those expenses now and it's flowing through D&A?

It really doesn't flow through D&A because we're not capitalizing them. It's just in the cost of sales. It's just -- instead of being in the way it is released and the way it's classified in the press release, the way it's in engineering expense and it's just going from engineering expense to cost of sales, it’s not being capitalized, it’s not being depreciated. Arthur Hatfield - Morgan Keegan & Company, Inc.: Finally, Al, you had addressed this a little bit, some of the supply constraints, but one of the things that we're hearing for the car builders that was in short supply were side frames and bolsters and people trying to ramp up capacity. And one of the things we had heard through the downturn, I think rightfully so, standard contract had really worked their inventories down and you guys are trying to play catch up there as things ramped up. Can you tell us a little bit where you're at on that and if they're going to be able to supply product more readily as we move in the back half of the year?

Yes. The side frames and bolsters is one of those areas as bearings issues, which we don't supply, there's other issues in the supply chain. But side frame and bolsters, when I mentioned larger casting, that's exactly what I was referring to. The key there was not the inventory. The real issue is that you have these large foundries that exist, and we have a light asset model where we purchase using a supply chain to supply these larger castings. And those foundries took their capacity and put it in other areas. And you just can't start up a foundry overnight and get things going again. So that's really been the constraint, and we're working very diligently now to meet the needs of our customers by getting other foundries qualified and our foundries back up to speed. Arthur Hatfield - Morgan Keegan & Company, Inc.: Can you tell us quick where sources break down geographically where, historically, standard has gotten the source for their product?

We get them from a number of locations: Eastern Europe, China, India, U.S. So it's a global sourcing. This is not -- this problem is not unique to Wabtec. Arthur Hatfield - Morgan Keegan & Company, Inc.: I understand that, but is any one in those areas that you source from being particularly difficult in getting products from?

Well, the one during the downturn, the Eastern Europe business, ran into some financial troubles. And they're one that we're having to find other supply to offset that. Arthur Hatfield - Morgan Keegan & Company, Inc.: Got it. Thank you so much for your time.

The next question comes from Scott Blumenthal of Emerald Advisors.

Alvaro, I'm going to ask you one more question about engineering expense and hopefully, we'll put that to bed. Do you make the decision as to which -- where you're going to classify those or is that something that your audit firm is helping with?

Well, no, the audit firm would never want to be on the hook for making the decisions. They review our decisions. But basically, the decision is actually made at the unit level. And it really is -- I don't want to say it's automatic, but it's basically a function of the product. In other words, if we're doing more locomotives then some of that engineering is automatically going to go in there because we're building more locomotives rather than having the people work on, let's say, on new projects. So it's almost not a decision. I mean it's just a function of the way accounting works, and it's made at the unit. But obviously, the auditing firm will review all that and hopefully agree with our conclusion they have, so.

Okay, that's really helpful. Thank you. Can you tell us or give us an idea as to the degree of any PTC revenues that were in the current quarter and maybe compare those to the level in the same quarter last year?

We don't have the exact PTC revenue for the quarter but it was higher than previous quarters.

I'm going to take a swag at it, Scott, just in sense of answering your question. And maybe you know again, if it's all right, you can follow up with Tim, I would say that they were higher than last year but probably not more than say, $10 million to $15 million higher than last year. If I'd have to take a guess, I'd say it was somewhere around the $10 million, plus or minus.

Okay, that's helpful, too, Alvaro. Thank you. Can you tell us also maybe along the same lines, a general idea as to the degree of how the improvement in rail car build helped both the quarter and also the backlog?

We gave you the backlog build related to Freight and...

Yes, in terms of backlog, to take the second question first, Scott, most of the increase in the Freight backlog was because of MRS. And -- I'm sorry, that's the contract in Brazil that's got PTC, as well as a locomotive contract in Australia. And then we had a couple of other contracts that went into backlog as well. But the primary reason for the increase in the Freight backlog was not so much -- because either the freight car OE business, that turns over relatively quickly. That's basically done on POs. We've got a PO, we turn it over in about 30 days or so. So you don't see a whole lot of backlog effect to that. Most of the backlog effect on Freight was for those contracts.

Okay. And on the top line then, Alvaro, the freight car, I guess the improvement in orders, the improvement in builds, does that have a significant year-over-year effect on the top line?

Yes. I know OE sales doubled this quarter versus last year's -- let me dig out what the OE numbers. I'll tell you what, let me -- just give me one second, we'll dig out what the OE sales numbers were. In Freight, OE...

$126 million versus $64 million and the fourth quarter was $80 million in OE. Aftermarket went from $100 million first quarter 2010 to $140 million in 2011 first quarter, so very significant increases.

Okay, great. Thank you. And Al, could you just give us an idea as to how the activity is right now in maybe locomotive reconditioning?

There is a lot of activity in the reconditioning area. The number of railroads are taking a strong look at either doing a remanufacturing or what they call a repower of their locomotives. And we've been involved with those opportunities.

Does that mean you're still giving tours of motive power or have you stopped that, you're too busy?

No, we still give tours. You want to get the boys to see it? It's a great place to visit especially this time of the year and always giving tours there.

The next question comes from Kristine Kubacki of Avondale Partners.

Most of my questions have been answered so I'm having to dig deep a little bit here. I won't ask you about the penguins. But in terms of the aftermarket, the Freight aftermarket first. I guess you talked a little bit, it sounded a little bit like it was seasonality and then, I guess the other thing is we keep hearing from shippers now, I guess, is there a mix shift in terms of some of the aftermarket that's being done on rail cars and locomotives? And I guess what we've been hearing is that capacity is continuing to be so tight especially in a lot of car types that now shippers kind of went from the "I don't want to spend the money to do maybe aftermarket that I don't know I'm going to need" to "now that I don't want to take the car out of service." So I guess, is it that there was a seasonal component to it? And then also, kind of what are you seeing in terms of people taking cars out of service and what kinds of repairs to do on the cars?

I think it's two things. It's a good question because we just had an operational review with that division. And one is seasonality, which they emphasized. The second part is that -- I don't have the exact number that come out of -- it was over 20,000 that come out being part out of stowage. And their comment was these things are coming out with needing a lot more repair than it was a year ago when they come out. So these units have been cannibalized so there's a lot more repair being required to get some of these. And it's really caused what you said, Kristine, is there's certain types of cars that they're actually having shortages on and that's one of the reasons why we saw the order rate jump up. I think that there is, you know, they have the normal maintenance on them. But I think those are the 2 main factors for the pop in this particular quarter.

Okay. And then kind of flipping to the other side of the business, which I didn't think we've talked a lot. And I was looking back at my notes. It was the last half of last year on the Transit aftermarket side, and I didn't hear or maybe I missed it, but you guys really talk about it. I mean we still don't have a highway bill and we were worried there that was going to be a drop off in the level of aftermarket because of transit authorities. And I know there's some maybe some distraught in the inventory. But are you seeing now transit authorities more normal, they're seeing more inventory levels more normalized? And that behavior given that ridership levels have continued to grow here, are you seeing more normalized kinds of level in aftermarket on the Transit side?

Yes. The aftermarket really has bounced back very nicely. In the first quarter, aftermarket in Transit was $109 million. It was $90 million in the first quarter of 2010 and the fourth quarter was always down at $85 million. But driving that is exactly what you said, ridership's #1, again, weather. They have a lot more maintenance activities. And I think when you talk about the problems that some of these municipalities and transit authorities have, you can only run your inventory down so far and they have to start doing the maintenance so maybe a little bit of pick up from there is happening as well.

Okay. Thank you very much. I appreciate it.

The next question comes from Scott Group of Wolfe Trahan.

So just wanted to follow up on the guidance question and understand that maybe there was some weather-related strength in the first quarter. But if I take a look at the $455 million of revenue in the first quarter, the guidance implies about $425 million a quarter going forward. And I'm just wondering, are you starting to see any of that pressure or deceleration into April? Or is this something that you think is back-end loaded and maybe you are just being a little conservative? I'm just trying to get a better grip on the revenue guidance.

We really can't comment on April at this point. But as we said, as we look forward, we expect the economy -- we need the economy to continue to grow. We find the Transit business pretty stable, and we have an aggressive forecast that we've presented -- conservative, I mean.

Right. And with $455 million going for $425 million, give or take a quarter, which segment do you think feels that pressure at least within your conservative expectations?

Which one feels the conservatism or which one you feel is going to have pressure from a negative standpoint? What is your question?

Well, I guess, both. I mean if you're expecting revenue to fall off from first quarter, I guess, which segment do you expect to see that revenue fall off and where do you think you could be conservative?

Yes, I think we could be conservative definitely on the Freight side, a little less conservative on the Transit. I'll answer it that way.

Okay, that's helpful. And then just last question with Brush, how do you think that acquisition helps you drive further penetration of the European market? And maybe, what do think your market share is today there and where do you think it can go or be in a couple of years from now?

The Brush acquisition was an excellent acquisition, and it primarily gives us the opportunity now to offer in the U.K. not only refurbishment and overhaul and engineering capability on transit vehicles, but they're expertise is really on the locomotives side. They also have a contract for the high-speed locomotives used in the Euro train and the Euro tunnel. But we feel that it really gives us a broader product offering in the U.K. market and establishes us a little bit in the locomotive market, even on the continent a bit. So we think the opportunities there are going to be great. We still -- we have a good market share in the U.K. And our market share the continent. it's still very small and a big opportunity for us.

Okay. Thanks for the time, guys.

Our next question comes from Jason Rodgers of Great Lakes Review.

If you could comment on where we're at right now in the federal funding situation in the U.S. as far as the SAFETEA-LU Bill.

Yes, the SAFETEA-LU, at this point, I believe, it's been extended now to the end of the year along with the budget. And I think that it was really held at last year's level or very close to it. I know our government has a lot to do between now and the end of the year. And we feel this is 1 important area that they really need to come to grips and as how they fund the transportation area, not just transit, but our highways, our bridges. And I think that most politicians would tell you, it's pretty high in their priority to really grapple this. We would expect that it's still -- the biggest controversy we see is not related to Transit funding and trying to improve the Freight area, it really is around the high-speed rail where -- although some of the politicians in the states are saying, "Hey, you've got this $8 billion you put into high-speed rail, and you want to give me a few million of it but you're not going to tell me how we're going to get funding, is this ongoing. And are you going to be here for us 5 years from now when we have to spend more money?" And I think that's just been a little bit of a political football. I think you also see other states that's saying, "Hey, I'll take that and I'll find ways to not necessarily put in the super high-speed rail but maybe I can upgrade the rail systems we have to get the speeds up faster." I think the funding is going to be there. I think it's a must. When you really sit back and think about funding for our transit system, we don't have an alternative. If we expect this economy to continue to grow, if we expect the recovery to continue, we got to put money into the infrastructure. And that infrastructure is really mass transit and freight railroads, which is the backbone of that whole system. And when you look at what trains are able to do, whether it be freight or transit, the amount of cars that takes off the road and the amount of trucks, the environmental friendliness, the urbanization that I mentioned early. I think that, that funding is going to be there. I think there's going to be some political positioning related to some of the more issues that are kind of hot, but overall, that funding is going to be there.

Okay, that's helpful. And then just looking overseas, maybe too early to ask, but do you see any potential opportunities in Japan from the infrastructure rebuilding that has to take place there?

In Japan, though, we've had over 100-year relationship with two companies there. And as a matter fact, I'll be traveling there within the next month to meet with those 2 partners that we have. I think that it's going to have to be a lot of money put into the infrastructure there and in some opportunities there. But that opportunity would really be through those partners.

Okay. And then finally on the numbers side, do you have a shareholders' equity balance for the quarter?

Yes, we do. We have to dig it out. I think it's $970 million.

Close. Let's see, $969.6 million. I'll concede to $970 million, how’s that.

That's pretty good. Thanks a lot.

[Operator Instructions].

Linda, while we wait for that for a moment, I understand we did have some technical difficulties at the beginning of the webcast so we apologize for that. I want to give you the replay number for the phone call, the conference call here. The replay number -- this will be available for -- if you wait about an hour after this call. It's (412) 317-0088 and the passcode for that replay is 466#. So again, we apologize for any difficulties on the webcast. But if you can dial-in and listen to the reply, I'm sure you'll get everything you need. Linda?

At this time, we're showing no further questions. This would conclude our question-and-answer session. And I would like to turn the conference back over to Mr. Neupaver for any closing remarks.

Okay. Well, we're really, as I said earlier, pretty excited about the opportunity that we have during this recovery and our growth opportunities and look forward to talking to you soon. Thanks a lot.

Thanks, everybody.