Good morning, and welcome to Federal Signal's third quarter 2012 conference call. I'm Braden Waverley, Federal Signal's Interim Chief Financial Officer.

Joining me on the call today are Dennis Martin, President and Chief Executive Officer; and Jennifer Sherman, General Counsel and Chief Administrative Officer.

We'll be using some slides in the presentation. The slides can be found by going to our website, federalsignal.com, clicking on the Investor Call icon and selecting the webcast.

We'll also post the slide presentation to our website after the call.

Before we get to the business review, I'd like to remind you that some of today's comment -- some of the comments made during today's call may contain forward-looking statements that are subject to safe harbor language found in today's news release and in Federal Signal's filings with the Securities and Exchange Commission. These documents are available on our website.

We will file our Form 10-Q today. And now, I'd like to turn the call over to Dennis Martin.

Thanks, Braden, and thanks to those on the call for joining us today. Our third quarter results reflect continued progress toward our goals for financial and operating performance of the company.

For the quarter, sales, operating income and operating margin from continuing operations were all well above last year. We finished the third quarter with a healthy backlog and operating income and margin well above last year's levels.

Braden will go through our financial performance details in a few moments, but I'd like to highlight some important points from our continuing operations for the quarter.

In comparison to last year, revenue grew in all of our segments and at a rate of 10% for the entire company. Q3 operating income increased 46% versus last year and our operating margin increased from 5% to nearly 7%.

Excluding noncash debt settlements, earnings per share from continuing operations were $0.10 for the quarter compared to $0.05 last year.

On a year-to-date basis, our order volume were 4% higher than last year. We experienced a modest decline in orders for the third quarter due in part to a very strong comparison period last year and economic weakness in certain markets outside of the United States.

Our order backlog at the beginning of the quarter was $326 million, representing an increase of $72 million versus a year ago and a $31 million since the end of 2011.

With our expanded margins in the third quarter, we continue to make meaningful progress toward our operating margin goals for all 3 segments. On a year-to-date basis, our ESG business is within our target margin performance range and SSG segment has made good progress, operating at double-digit margin levels.

While Bronto requires improvement to achieve its stated margin target, investment in plants and efficiencies and improved product mix, both stemming from our 80/20 focus will continue to contribute in the future.

All businesses have made substantial gains in operating margin compared to the same period last year. And as previously communicated during the third quarter, we closed on the sale of our FSTech business to 3M.

$75 million of sales proceeds were used to pay down debt, significantly reducing our leverage ratio. This restructuring of our balance sheet has opened up a number of alternatives for reducing our interest payments in 2013.

During this refinancing process, which is well underway, we will remain committed to exploring all options and ultimately identifying the course that generates the most long-term value for our shareholders. I'll give you some additional perspective on our progress and plans for 2013, after Braden takes you through our financial performance in more detail.

Thanks, Dennis. I will provide a brief review of our financial results for the quarter, which are included in today's press release.

Please note that our financial results from continuing operations have been recast to reflect FSTech as a discontinued operation in all periods.

Looking at our P&L for the third quarter, sales of $185 million were up 10% versus last year. Currency had a negative impact of about 2.2 percentage points on our revenue growth in the quarter.

Gross margin increased nearly 3 percentage points to 24.6%, while our SG&A ratio increased versus last year from approximately 17% to 18%. The majority of this increase was due to higher expense levels at corporate compared to last year, attributable to higher incentive compensation expense in 2012 and a reduction in an insurance reserve during 2011.

Operating income for the quarter improved by $3.9 million versus last year which represented a 46% increase and our operating margin improved by 1.6 percentage points from 5.1% to 6.7%. Currency had no impact on our operating income versus last year.

Interest expense was $5.2 million for the quarter versus $4.5 million last year due to the higher cost of our term loan. The company recognized an income tax provision of $1 million during the quarter, primarily related to tax expense at non-U.S.

operations and our effective tax rate in the quarter was 19%.

Our reported earnings per share from continuing operations for the quarter was $0.07 compared to $0.05 last year.

Slide 5 outlines our pro forma earnings-per-share for continuing operations for each of the last 3 quarters. The corporation incurred noncash debt settlement charges of $0.03 per share in the first and third quarters of 2012.

In the first quarter, restructuring charges attributable to our SSG segment had a $0.01 per share impact.

On Slide 6, we show the results by segment for the third quarter. Our Environmental Solutions Group or ESG, had another strong quarter with continued growth in revenue and a significant increase in operating profit with an improved margin.

Revenue was up 9%, operating income increased by 21% while operating margin moved up to 9.2% versus 8.2% in the prior year.

ESG's order volumes were flat in total during the quarter compared to last year. U.S.

orders for sewer cleaners, sweepers and waterblasters increased, offset by declines in orders for vacuum trucks. Orders outside the U.S.

were up slightly compared to last year. ESG exited the quarter with a healthy backlog of $186 million, $56 million higher than in the same period last year.

Bronto's orders declined 17% compared to the same period last year due primarily to a decline in average order size for fire-lift products to our customers in Asia. On a year-to-date basis, Bronto's orders are 3% higher than 2011 and the backlog at the end of the third quarter remained high at $101 million.

Sales increased 15% compared to last year. Manufacturing efficiency and product mix improvements continued in the third quarter as Bronto achieved an operating margin of 7.4% compared to 1% last year.

Our Safety and Security Systems Group or SSG, had a slight decline in order volume during the quarter as weak demand in Europe and export markets was offset by improved municipal demand in the U.S. police, fire and outdoor warning markets.

The industrial markets served by SSG also improved in the quarter.

Revenue was up 11% and SSG's operating margin was up significantly compared to last year, increasing 5 percentage points to 13.5%. While still below our target range, SSG has made significant progress toward our stated objective of solid double-digit operating margins during 2012.

SSG exited the quarter with a backlog of $39 million, representing an $11 million increase over the third quarter of 2011. Corporate expenses in the quarter were $6.6 million compared to $3.8 million last year.

Turning to Slide 7, cash flow from continuing operations was $9.3 million for the quarter. This compares to $9.9 million during the same prior-year period.

Year-to-date, operating cash flows are $19 million, representing a 52% increase over last year. Net capital expenditures were $8 million due the third quarter, representing a $1.5 million reduction from last year.

As we fulfill orders in our backlog and reduce inventory through the end of the year, we expect to continue generating positive cash flow from continuing operations.

Slide 8 shows the company's balance sheet as of the end of the third quarter, along with a comparison to year end 2011. As a reminder, the balance sheet is recast to reflect FSTech as a discontinued operation.

Other current assets of $250 million at the end of the third quarter include a current inventory balance of $130 million. Inventory levels have increased through the course of the year in order to fulfill our order backlogs, primarily in our ESG and Bronto segments.

Net debt declined by $64 million since the end of the year, achieved through allocating $75 million of proceeds from the sale of FSTech toward paying down the company's term loan debt and debt drawn under the ABL facility. As a final point, the company will not pay a dividend in the third quarter.

The company will continue to review dividend policy each quarter. That concludes the financial summary.

I will now turn the call back over to Dennis.

Thanks, Braden. As I indicated at the beginning of the call, the third quarter marked continued progress in our goals for operating margin improvement in the business, strengthening the position of the company as we entered the fourth quarter.

In terms of our outlook, we are affirming our second half EPS estimate of $0.15 to $0.20. Given our strong backlog position on our ESG and Bronto segments and our improved production efficiencies, there is an opportunity for us to deliver at the high-end of our second half EPS range.

Again, this estimate excludes $0.03 per share noncash settlement charges we incurred during the third quarter as a result of paying down debt.

During the fourth quarter of 2012, we expect to see a decline in new orders compared to the fourth quarter of 2011. This is partially a function of a very high comparison period in 2011 when we booked $240 million in new orders, 60% of which came from our ESG segment.

We also believe we are seeing a slowing in the rate of demand recovery in our U.S. municipal markets.

I'd now like to take the opportunity to comment generally on our progress and how we see our capital structure and markets evolving in 2013. 2 years ago during this call, I addressed you for the first time as CEO.

The company had just undergone a third CEO transition and was struggling operationally. General business was a challenge and the performance and integration of FSTech business was not proceeding in a manner consistent with the expectation of our shareholders.

Our relationship with stakeholders, including our bankers and you, our investors, were strained. We were months away from a covenant breach and we had a challenging refinancing pending.

We needed to repair our capital structure and refocus our core business, regain credibility and re-energize our team. On that time in subsequent investor calls, we committed to increasing transparency while setting achievable and realistic goals.

Also we committed to using 80/20 processes to improve operating performance by 2012 and to focus on cash generation to enhance shareholder value. We began our process to review underperforming assets with a clear commitment to fix or divest them.

And while we've completed the divestiture of FSTech, we maintained this commitment today.

In February of 2012, we completed the first stage of our capital structure transition by refinancing with our business partners at TPG. While the note carried a 12% interest rate and placed considerable restrictions on the company, it also contained negotiated points of flexibility, ultimately enabling us the early repayment of a portion of our debt through the sale of assets and the ability to exit the facility in February of 2013.

With our improved leverage ratio and business performance, we will be able to obtain much more competitive interest rates upon financing early next year. And our efforts to improve the business have not been limited to financial restructuring and driving operational enhancements.

We have been very active identifying new areas for long-term growth. We commented on some of these opportunities during our last call.

Our teams have put plans in place to capture global opportunities in an industrial site security and develop new applications for our Jetstream business. We believe these and other parts of our portfolio will serve as strategic growth catalysts in the years ahead.

Since my first call with you, we've also been focusing on developing our organization. Julie Cook has rejoined as Vice President of Human Resources to manage our focus on talent acquisition and development.

We've made a number of important redeployments of key internal operating leaders in the business units as well. Jennifer Sherman, our General Counsel and CAO, has been working closely with me on operations and has responsibility for one of our business segments.

Our ESG President, Mark Webber, assumed direct responsibility for the Bronto operations. In the months and quarters ahead, we expect to be communicating additional positive news on both the development and the acquisition of new talent to build on our recent successes.

On the operating front, our teams' continued to deliver high-quality products on-time to the market. We have been working hard to re-staff both Bronto and Vactor following the 2000 -- 2009 market downturn and we have completed investments in flexible capacity expansion.

Volumes and backlogs in both businesses are up and we are converting the production to increase margins. We expect Bronto margins to return to low double-digit levels and Vactor has contributed meaningfully to the ESG segment margin improvement over the last year.

Our 80/20 initiatives have had a positive impact on our income statement, contributing to the progress toward our margin targets. Recall, we set targets of 14% to 16% for SSG; ESG, we were targeting 10% to 12%; and Bronto, in the 10% to 12% range as well.

segmentation of our businesses to identify and focus on profitable customers and products; decentralization of our corporate purchasing and human resources functions that reduce cost and improve services; discipline commercial changes in contract terms in pricing in all divisions; and a paced expansion into China, Brazil and the Middle East, saving significant expenses from forecast.

Improvements in manufacturing, product design and commercial operations at our SSG PSS business have also contributed; internal growth through expansion of project -- products to adjacent markets and applications; and finally, the decision to divest the FSTech business segment and focus on our core manufacturing businesses was our most impactful execution of the 80/20 disciplines.

As we move into 2013, the 80/20 activities will continue to strengthen margins at SSG, Vactor, Bronto and Jetstream.

Turning to 2013, I'd like to provide you with our current thoughts on capital structure in the market and the customers we serve. As we move toward year end, we expect our leverage ratio to be between to 2x to 2.5x on the debt-to-EBITDA basis.

We believe we can continue to make improvements to our balance sheet in 2013, primarily achieved through our debt refinancing, improved operations and continued use of cash to pay down debt or fund other activities accretive to shareholders.

At this juncture, we do not see acquisitions having material impact on our capital structure in the near future. While we may consider product line extensions, our primary source of growth will be organic in nature, leveraging our existing products and services into new markets that diversify our revenue base.

Additionally, the Board of Directors will continue to weigh the return from our internal activities against restoring dividend payments or initiating a stock buyback plan. Our focus in all aspects of our capital structure will be to return equity to our shareholders.

Turning to the markets for 2013, we see our served municipal markets are likely to be flat to down in terms of new order demand, with the highest potential risk being in our Street Sweeper business. To the extent that our municipal markets generate upside, we are, well positioned to capture the opportunity with our strong distribution network, production capacity and considerable brand strength.

And while the tax revenues to some of our cities and municipalities have improved, purchases are likely to remain cautious given the number of high demands on most funds.

We see growth opportunities in our industrial markets in 2013, a number of which we discussed during the second quarter call, including expanded applications for our Jetstream product line and opportunities in industrial security. The European missile market remains very weak, continuing to impact our VAMA and Bronto businesses.

VAMA has done a good job reducing its cost base to meet the lower demand while Bronto has diversified its customers globally to offset market declines in Europe. We do not see the uncertain market dynamics in Europe changing in 2013.

Over the long term, we believe there's a substantial demand for our products in Asia across all segments. In prior years, the region has diversified and grown our revenues, particularly for our Bronto segment.

However, for 2013 we see some economic uncertainty. The Vactor, Jetstream and Industrial Warning businesses will continue to offer growth opportunities in 2013, affording us the ability to diversify our revenue base further from growth in the industrial and the commercial markets.

This diversification is an important strategic initiative for the corporation as we see the municipal market facing long-term headwinds for meaningful growth.

We are aware of the changing global concerns so we are moving into 2013 with a sense of caution but also with the benefit of observable production backlogs. To the extent that the market dynamics impact demand in our served markets, we are prepared to act as the conditions warrant.

The coming year will be characterized by continued improvements in operating performance with our focus on 80/20, significant lower interest rate burden and a continued emphasis on profitable growth.

So thanks for your time this morning. And with that, I would like to open the phone line for questions.

So, Dennis, that was some helpful perspective. You're 2 years into your role as CEO and we're really starting to see some of the margin expansion that you talked about at that time.

So could you talk about where you've had maybe some of the low-hanging fruit from the 80/20 perspective? And then maybe where the best opportunities are ahead for the 80/20 process?

Sure, Matt. The best opportunity for low-hanging fruit was really in the number of product SKUs in the businesses and how we dealt with the specialized products in the businesses.

Each of the teams has done a good amount of work on trying to streamline both the process and the options. I'll give an example in our Police and Amber Fire business.

We've reduced 7,000 part numbers during this year and there's been some impact on the bottom line because of additional reserves for obsolete inventory. But what we're doing is trying to focus that business and the others down to the highest volume products and highest value products.

Now, we see that continuing as we move into next year so there's a good opportunity there. The big margin expansions from 80/20, really, along with FSTech sale, which obviously had a major impact instantly, but in both Bronto and in Vactor, where we've expanded the facilities during the last downturn and then implemented lean manufacturing strategies over the last 2 years and brought the workforce back up, is really probably where we've had the biggest cash-positive impact.

And we see that continuing as we move into the next year.

Okay, great. And that kind of relates to my follow-up, which is from covering ITW, we know that a willingness to kind of walk away from lower margin businesses are like, as you simplify, sometimes there's a revenue drag from 80/20 but you've -- I don't really think you've seen that in many of your businesses or...

We've seen some, Matt, but it's not been tremendous. We've been more diligent at improving the commercial terms of some of those products rather than to abandon the business.

But we can cite some examples this year where our international business is down significantly on our PSS business and the margins up. So some of that has occurred.

Okay, great. And can we go to Bronto where you reiterated the double-digit margin forecast?

And have seen very steady improvement but you're still on that mid to high single-digit range. So kind of what do you need to make that next step forward?

You have good volume and you're probably realizing a lot of the productivity improvements that we've been talking about in the past couple of quarters. So what's left to kind of get to that low double-digit range for Bronto?

Yes, I think the mix that's ahead of us immediately here is really probably going to have the biggest impact, Matt. And we're seeing that volume benefit occur now.

Early in the year, we were building up a lot of product that had not been reengineered because the market demand and product we had not modernized. And then during the mid part of the year, remodernized for manufacturing and assembly.

That portion of the product line which is now flowing through the plant. So I think the mix of that is pretty much -- I think we will see good operating results now and then, as I said, going into next year, it'll be strong.

I want to ask you about the guidance and just make sure that we've got this right, that in the back half, you were expecting $0.15 to $0.20. You did $0.07 this quarter so you're looking for range of $0.08 to $0.13 in the fourth?

We've committed that we would do up to $0.20 in the last half of the year, so I think that's probably more realistic than we could hit the top end of that range.

Okay, so you'll be closer to the $0.13 for the fourth quarter?

Walt, and please -- this is Braden. Please also note that the $0.15 to $0.20 guidance for the second half excludes the $0.03 charge from the noncash debt settlement.

Last year, you had a really nice fourth quarter shipment period. Can you help me understand how much of the backlog is going to be shipping in the fourth quarter and maybe connect that with some of the comments about inventory levels and what production might look like if inventories are coming down?

Yes, we've had a steady build of inventory to support the manufacturing. So we'll have a strong production quarter.

The key here at Bronto, especially in with some of the business in the ESG group, is to get those orders cleared and accepted by customers and out the door. So we expect it to be a strong quarter and then moving into next quarter and then the inventory should come down with it.

And we've kind of -- we baked that into our guidance.

Okay. And as you look into next year, it sounds like it's going to be volatile but maybe revenue flat, is anybody's best guess.

In that sort of an environment, given the 80/20 activities, can you help us understand what the margin improvement might look like maybe in basis points, 50, 100 basis points of operating margin improvement?

Well we talked about the Bronto margin improvement. That's the one that I think that I could tell you for sure.

We're going to see. We do have -- we still have good backlogs in all these businesses and some of our higher margin businesses are doing well.

We still feel optimistic about it but watching all of the alerts and all of the other industrial companies with their expertise and their concerns, we're just afraid to put a lot out there in terms of a lot of growth. And when the fourth quarter conference call, we will have our strategic plans done, we'll be a lot closer to where this year is ending up and we'll be able to give you more, probably, a better picture for next year.

Okay. Okay, good.

And any early idea on the refi? What kind of rates you might be looking at?

We're in the process -- and maybe Braden can chat a little bit here, but we've been in the process. We've met with a number of people and basically, if you look at all the different options that are out there, we're looking at them all.

So we should be much better off. Substantially lower, obviously, than we were during this period this year.

We were fortunate to have TPG work with us this year with the program we had and we know that, that the market dynamics are changing a little bit out there and certainly our performance has. So we would expect a substantial reduction.

But again, we're not to the point where we made a selection of a tool.

Walt, this is Braden. Just to follow on that comment, I mean is the -- the reality is that we're seeing considerable interest in our credit.

We're entertaining a broad range of options, any one of which will lead to the substantial decline in interest expense for the company that Dennis referenced. We're just not at a point in the process where we can be more specific.

I guess I'll try and nail you down on the interest rate one more time. Just looking at where comps are for companies like yours, are you thinking that when you refi, it's more high single-digit or is there possibility to get that to more mid-single, just broad strokes?

Yes, I don't thing -- I think you guys can see what's out there for companies like our credit. I think until we get it pinned down, it's really difficult.

I can say that we would prefer not get locked into a long-term, inflexible kind of a deal. We're looking at all the options.

Until we get it done, it's really difficult for us.

Steve, we can't tell you, though. I mean clearly, in terms of management, energy, focusing of resources, we're focusing considerably on what those lower rate options would look like.

Obviously, this goes hand-in-hand with our annual operating plan review for '13 and beyond. So there are a number of moving parts here and I certainly appreciate the direction of your question.

We just can't be more specific at this point.

Just philosophically, is there an interest rate level where you start to focus less on debt reduction and more on dividend or other things? Or do you expect that based on the spectrum of options that you have, debt reduction will remain the #1 use of nongrowth allocated cash in '13?

Our primary focus in 2013 will be directing that cash towards our internal growth opportunities. We've actually initiated a number of opportunities that are going to require some of that cash.

Example, hiring engineers and doing some things to really get after a few of these markets. We don't really anticipate acquisitions, heavy buyback of stock, dividend will always be a question that we deal with quarterly at the board level.

But I think it's -- I think primarily, what you see is cash going to reducing debt and/or financing those growth opportunities in some of our higher margin operations.

Okay. And you did talk a little bit about the slowing rate of demand recovery.

Where is that most pronounced, whether by product line or by region? And what specifically are the customers saying?

Are they focused on the fiscal cliff? Are they focused on their own municipal budgets?

What's kind of the issues that you're facing?

If you look at our business, it's really -- you have to segment everything we talk about. But I'll give you an example about the Street Sweeper business.

With the exception of a few orders that were in the pipe over the last few years that were absolutely necessary because people's equipment got so bad, we've been pretty much at a study run rate for 4 or 5 years on the heavy equipment going into muni's [ph] . So we think that will continue, we just don’t think it's going to continue to grow.

The Police business in Europe with the economies there, they just -- the municipalities and they just don't have any money to spend on that, although our team has done on a great job, as I said, managing our expenses but also bringing some pretty good products to the market. So I think it's just a city -- I don't think it's the cliff.

I think it's just they have so many demands, certainly along the East Coast, right? They've got so many demands on their revenues that it's just really hard to say that they're going to open up.

Now they could open up, but it's hard to predict.

Yes, I guess looking forward, you talked about hiring engineers and thinking about different product lines. It's a hard line to walk, right?

Because you have a tougher environment out there yet you want to finance growth. I know it's a hard question, but how do you kind of frame that up for investors?

Real specifically, we have certain businesses, including our Industrial Security business that has a huge global opportunity that's being driven by the fear from all the events. So both natural events, as well as war-type events.

So that's an area that's pretty easy for us to see that there is potential, especially when we get the response from our customers, that we provide a reliability source of security that they can't get somewhere else, so that's one example. Another example is our Jetstream business is a great business.

It serves the oil and refining business. It serves their maintenance and teardown of refineries.

They've been cranking the refineries to try to get oil out. So investing there for expanded products and/or customer activities, really, for us is really a no-brainer.

But we've been able to keep that going during the last 2 years while we've been refinancing. So it's -- I think it's things like that, Steve, we can point -- the big hydro-excavators market in both of North -- all of North America, I would say, is really in high gear right now.

So there's some very, very specific industrial areas that are not feeling it and they're not based on, say, production of autos or based on things that may have a little more consumer risk to them. They're really core utility driven demand areas.

And we've been quite successful in positioning there, so that's where we're hedging our bets.

So it sounds like this is existing opportunities, customer-driven where they're asking you to solve a problem versus you feeling like you have to go experiment to drive incremental growth, is that right?

That's exactly right. And in fact, our objective which I stated but didn't clearly state, which I will now, is that we intend to continue to have a good strong Municipal business, but we intend to really drive our Industrial business.

So that our ratio, our mix ratio over the next few years will support the much higher margins in some of the industrial products. And because they are high-demand areas, not related to consumer spending or whim, we think that they'll be more stable business areas for us to concentrate.

Right. And I know that there's a bunch of different product lines but just broad strokes, if you look at your Industrial businesses versus your Municipal, what's the order of magnitude difference in operating margin?

Is it hundreds of basis points?

It's substantial.

Okay. Two more and I'll get back in line.

Can you talk about how much cash you expect to generate from inventory reduction in 4Q and 1Q or from that $130 million level, where do you think that goes in the next quarter or 2?

We can really only comment on that directionally at this point. We do have, given the plant and manufacturing efficiencies that we referenced earlier in the current size of the backlogs, we do see very good progress happening in inventory reductions in both Bronto and ESG through the fourth quarter.

And as we said earlier, the ability of these operations to generate continuing positive cash flow is -- we feel pretty comfortable about that. So at this point, we can comment directionally that we do think we'll bend the curve and bring down inventories in the fourth quarter.

But beyond that, we really can't say, Steve.

And more looking forward, is there a target that you have for working cap as a percentage of sales?

We really apply it differently on each of the businesses. We could get back to you with a company average but every business is a little bit different.

But the big truck businesses really require a large expense and maintaining chassis. In some of the businesses, it's 50% or 60% of the cost of the product.

So some of that will remain the same. Our teams are working very diligently on payables and receivables and really right now, there's been an inventory build to get these big backlogs out.

Just, hopefully, a quick follow up. I might've missed it but what was that $2.1 million order cancellation in SSG?

Can you maybe talk about that? And then are there any penalties for an order cancellation like that?

And what...

It was real... Matt, that was an order going to an International country that just didn't firm up in the period.

It was acknowledged but then -- we think it could occur again. It was just timing.

And there were no penalties. I mean, it was -- we may have been a little bit ahead of the ball on that one.

Okay. Got it.

And so I can understand kind of the strengths and visibility of the backlog, if there are cancellations or push outs, do you typically have deposits on that or how does that work?

Yes, there's deposits on certain of the products and I'll just kind of remind you, I think you were involved there in the last downturn. We've had very few orders canceled, certainly since I've been here even before that.

So as we get some of the more expensive products as chassis come in then penalties start to occur and things like that. Our Bronto business has cancellation charges.

So where we have bigger ticket items and more risk, if it's the standard product like the police lights, we don’t generally have cancellation charges involved because they're more standard product. But we don't see a risk, I guess that's my answer to you.

Okay, great. That's very helpful.

And could you talk about the assumption for tax in the fourth quarter? I know a lot of it will depend on how much of the income comes from the U.S.

but do you have any kind of estimate for what the tax could be next quarter?

Yes, I mean we don't see it being materially different from where we stand in Q4 through the remainder of the back half of the year where I think you'd be safe with an assumption in the high teens.

I would like to thank everybody for joining us. We look forward to completing this year that's been exciting for us and we'll talk at the fourth quarter conference call.

Thanks again.