Ken Kure - Corporate Treasurer and Director of Finance John Corey - President and CEO George Strickler - EVP, CFO and Treasurer

Brett Hoselton - KeyBanc Capital Mkts. Analyst for David Leiker – Robert W.

Baird & Co., Inc.

Good morning, everyone, and thank you for joining us on today's call. By now you should have received our third quarter earnings release.

The release has been filed with the SEC and has been posted on our Web site at www.stoneridge.com. Joining me at today's call are John Corey, our President and Chief Executive Officer, and George Strickler, our Chief Financial Officer.

Before we begin, I need to inform you that certain statements may be forward-looking statements. Forward-looking statements are those statements that are not historical in nature and include information concerning our future results or plans.

Although we believe that such statements are based upon reasonable assumptions, you should understand that these statements are subject to risks and uncertainties and actual results may differ materially. Additionally, additional information about such factors and uncertainties could cause actual results to differ and may be found in our 10-K filed under the Securities and Exchange Commission under the heading "Forward-looking Statements.”

During today's call, we will also be referring to certain non-GAAP financial measures. Please see the Investor Relations section of our website for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.

John will begin the call with an update on our results and his thoughts on the remainder of the 2008 outlook and market conditions. George will discuss the financial details of the quarter, along with our guidance for the rest of the year.

After John and George have finished their formal remarks, we will then open up the call to questions. With that, I would like to turn the call over to John.

Good morning and thank you for joining us on today's call. Since our last conference call, the outlook for the markets has changed rapidly and dramatically both in North America and Europe driven by the impact of the credit shut down.

Binds[2:16] in the North American light vehicle segment continue to hit new low projections and now Europe is also showing signs of decline. In commercial vehicles, both Europe and North America markets are being impacted with Europe’s forecast in declines in the 10% to 15% range in new truck orders.

North America’s commercial market has dropped nearly 35% in 2007, experienced a slight improvement in 2008 and is forecasted to be flat in 2009. There are several reasons for these significant changes, which you are all aware of.

So I will not recount them here. However, it is fair to say that we are in a period of time when these forces are having a dramatic impact on our industry.

Times of crisis are when the challenge to management only use highest.[2:58] So, what are we doing about the change we have seen? Starting in the third quarter of 2007 and continuing unto 2008, the team of Stoneridge has taken actions to improve our top line, leverage our global manufacturing footprint, improve our cost structure, secure our assets, generate cash, manage our liquidity, reduce our debt and take advantage of opportunities in the battles of commodities and foreign exchange markets.

We are continuing on our plan of operational and financial improvements in market and customer diversification that we started in 2007. We continue to modify our plans in response to the market challenges we were facing in 2008, a positive highlight of that plan is our revenue growth compared to 2007, in the first half of this year and now in the third quarter in face of a significant down turn in the automotive North American market.

In the third quarter, net sales increased by $5.6 million or 3.2%, reaching a $178.4 million. Our sales increase occurred despite a 23% decrease in production lines of the traditional domestic light vehicle manufactures, which were driven in part by the dramatic shift away from light trucks and SUVs due to fuel prices.

Our growth in the third quarter continued to reflect the growth in our military business which was started in third quarter of 2007, launches of our EGT business in North America and improvements in our wire business and sales in Europe. Our strategy of targeting cornerstone customers has begun to yield results.

Gains in the agricultural business segment primarily at John Deere combined with additional military sales provided the basis for the increase in our third quarter revenue. Our European commercial vehicle OEM core customers continue to perform well compared to the prior year.

Although, our after market business was relatively flat with a lower margin than planned because of the delayed product launch. We are planning for a down turn in Europe commercial vehicle sales in 2009 as the industry adjusts to the slower economy.

Our new business awards in the third quarter included important strategic plans[4:59] that our cornerstone customers such as John Deere, Navistar and Sensata[5:03] as well as the new Asian OE customers, particularly [5:07] in our mission sensing business. These awards represent important progressions of our customers in geographic diversification initiatives.

Our PST joint venture continues to perform well and has launched new alarm systems with the largest motorcycle assembler in Brazil. Beginning in November 2007, we outlined our restructuring plan for the Sarasota, Florida and Mitcheldean, UK facilities.

Early on, we recognized the need to adjust our manufacturing overhead cost centers to enhance profitability, not only on robust economic times but also protect profitability when market adversity occurs. We are in the final phases of executing the shutdown of these two facilities and expect these initiatives to be completed before the end of this year.

Gross margins for the third quarter had maintained a similar level to the prior year after excluding the restructuring cost. In the third quarter, our gross margins excluding the restructuring cost were 21% compared to 21.9% in the third quarter of last year.

The gross margin benefited from our new business wins, increased volumes in our commercial vehicle segment in a better mix of products in North America, continued efforts to recover commodity cost increases in the design and redesign of some of our products in North America and benefits from hedging approximately 20% of our copper. Our gross margin was negatively affected by approximately $1.6 million in lost overhead recoveries due to lower volumes which were results of the restructuring bank [6:32]builds of inventories produced in the first half of 2008.

We continue to manage our raw material cost and the percentage of sales has been flat over the year. Our Asian sources of many of our electronic parts; connectors, board assemblies and electronic components continue to lower our acquisition cost.

Due to the current financial turmoil and the strength in the US dollar, we have started to see significant reductions and some of our commodities such as copper and zinc. This can provide opportunities to lock into favorable prices compared to those experienced over the last few years.

Operationally, we continue to show improvement in our cost to poor quality. In the third quarter of 2008, our cost to poor quality improved by $1.3 million on a similar sales level compared to last year.

We have improved by $2.3 million through the first nine months of the year compared to last year. While we are making progress in these areas, there is more that we can achieve in the future.

We are also working through our early initiatives to make our improvement permanent and on going. Our operating income for the third quarter of 2008[7:37] was $900,000 compared with $5.2 million on 2007.

Our third quarter 2008 results were negatively impacted by $4.8 million in restructuring charges and approximately $1.6 million in lost overhead recoveries due to lower volumes which would resolve[7:55] the bank builds for inventories required under our restructuring plans that were produced in the first half of 2008. We continue to pursue the sales of the Sarasota facility.

Prior earnings guidance includes the gain of Sarasota facility between $4 million and $5 million or nearly $0.10 a share. We have eliminated the gain on the sale of the Sarasota facility from our current guidance.

We believe that sale of the facility will be delayed until 2009 because of the difficult commercial real-estate market and the more stringent financial requirements. Our joint venture in Brazil continues to perform well with another strong quarter.

Local currency revenues increased 15% in the quarter and our share of equity earnings increase from $3.4 million on 2007 to $4.2 million in the third quarter of this year, an increase of $800,000 or approximately 24%. PST continues to report strong results in its after-market businesses, particularly in the Security Products area, a new business with OEMs in Brazil.

Given PST's pipeline of new products, we continue to expect growth from this venture, although we are cautious about the potential impact of an economic slowdown as much of Brazil’s growth and success has been built on strong exports, growing agricultural markets and higher prices related to the global commodity markets, one changing factor is the Brazilian Real compared to the US dollar. In the third quarter this year, Brazilian Real has appreciated approximately 14.6% against the US dollar compared to the third quarter of 2007.

However, the Real has devalued in the last two months from 1.85 to 2.05 Real to the Dollar which will impact reported earnings going forward if the rates stays in this range. Our diluted earnings per share with a loss of $0.02 in the third quarter, excluding restructuring expenses our earnings per share would have been $0.15 per share which compares favorably to last year’s $0.11 per share.

Earnings per share for the nine months ended September 30, 2008 were $0.46 per diluted share which included $0.37 per share in restructuring charges. Earnings per share excluding restructuring charges for the nine months ended September 30, 2008 were $0.83 compared to $0.43 for the nine months ended September 30, 2007, an increase of $0.40 or 93%.

Going forward, we face a challenging environment particularly in the North American commercial or light vehicle business. Given the almost weekly adjustment to build plans from our OE customers, forecasting for material and production planning has become more difficult.

In the fourth quarter of 2008, the traditional domestic light vehicle OEMs were forecasted to be down 20% to 22%, compared with the fourth quarter of 2007. The North American commercial vehicle market appears to be tracking towards a modest recovery although at the lower end of our previous expectations.

Given the market’s volatility, we remain extremely cautious. We are facing these challenges with the same fundamental focus that has resulted on our progress today.

Working on the aspects of our business which are under our control in the short term and adjusting our market strategies longer term to reflect the new realities. Short term, we are managing our cost structures by adjusting our direct labor and variable overhead cost to match reduced production level in control of discretionary spending.

Pursuing world class operating backtracks[11:07] and driving cash flow from forecasted working capital management and improved profitability. In addition to the two restructuring initiatives we have discussed, we are implementing additional restructuring initiative on our Canton, Massachusetts’s location.

We have announced the closing of our second facility in Canton, Massachusetts, plus additional lay offs to match the production schedule reductions. [11:29] expected the cost about $900,000 of which $300,000 was expensed to the third quarter and the remainder will be recognized in the fourth quarter.

These additional measures are also expected to be substantially completed by the end of 2008 with the 2009 benefits estimated to be approximately $2.1 million. The environment for the remainder of 2008 will be challenging.

We are providing our new expectations for the full year earnings to be in the range of $0.40 to $0.46 per diluted share which includes restructuring expenses in the range of $13 million to $15 million or $0.48 to $0.52 per share. I am pleased with the results for the quarter even though they have been impacted by the negative market declines, mixed shifts, and charges associated with our restructuring efforts.

We are taking the appropriate actions to improve Stoneridge on a long term basis. We are growing our top line even in the face of significant drops on the market.

During 2008, we have established a global manufacturing footprint that provides us with the opportunity to provide the lowest landing cost from anyone of our facilities that serves our customer requirement. Our restructuring plans are well into act to be completed by the end of the year.

We enhanced our restructuring plans to adjust to the downturn we are experiencing in the North America light vehicle market and we continue to monitor our cost structures with market forecast. The restructuring, once completed this year, will benefit future performance of our company.

While we are faced with a difficult environment and the vehicle mix has an impact on us, we will continue to work on our plan of improving operations, improving financials, and increasing market penetration, leading to improved shareholder value. With that, I would like to turn the call over to George.

Thank you, John. Before we review the third quarter, I would like to share a few financial highlights in the quarter that applies to the original plan we shared with you previously into which we are executing or will execute once the equity in capital markets are more stable.

Our restructuring programs announced in November 2007 continue to track the plan. As John mentioned, we have announced additional majors in the third quarter just for market downturns in North America.

We are focused on cash flow, maintaining our liquidity and improving our return on invested capital. Compared to the third quarter of 2007, we have improved our gross debt to debt plus equity from 57% to 44.8%, the net debt to equity from 45% to 24.9%.

We have strengthened our balance sheet to manage in the difficult market conditions. With the uncertainty in the financial markets, we have repositioned our North American and European cash investments to protect their assets.

Our liquidity remains very strong. We have nearly $90 million in cash at September 30, 2008 after repurchasing nearly $17 million of our 11.5% long term bonds to the end of May of this year.

Our assets backed revolving credit facility of $100 million remains un-drawn and have no restrictive performance covenants. The 11.5% long term bonds have long term maturities through May 1, of 2012.

We have established hedging programs to reduce our exposure to commodity and foreign exchange rate volatility. With the continued volatility and drop in the commodity market, we are executing hedge contracts that minimize the volatility and improve the results for 2009.

The cost of our manufacturing inefficiency, though still too high has continued to improve. The cost for quality in the third quarter of this year improved by $1.3 million compared to similar sales level in 2007 and $2.3 million through the year.

We are targeting to continue to improve it in 2009 by $5 million. We continue to monitor the capital markets and we will pursue recapitalization opportunities when the capital markets recover.

[15:09] you have an interest in pursuing an equity transaction with our PST Brazilian joint venture. That transaction is on hold until the equity market is more receptive.

During the third quarter, we needed to enhance our restructuring plans based on the changes that were being forecast and those were experienced in the light vehicle market in North America, the third quarter and those projected to the fourth quarter. We continue to evaluate the impact of the announced production decreases for light truck and SUV market announced by our traditional North American customers.

We will continue to manage our cost structures as a way to offset the lower production levels in North America to improve our financial results. We are adjusting our direct labor staffing levels and variable costs to match the reduced production levels.

I would now like to cover the third quarter results in more detail and then we will open up the call for questions. Revenue of $178.4 million in the third quarter represents an increase of $5.6 million, or 3.2%.

Our year-over-year improvement in revenue was primarily attributable to new programs sales, strong production in our European commercial vehicle businesses, borrowing business for the agricultural market, and favorable foreign currency exchange. These factors more than offset substantial declines in our North America light vehicle revenues due to production declines.

In the third quarter, light vehicle revenue declined from $70.5 million to $49.6 million, a decrease of $20.9 million, or 29.6%. The decline was primarily attributable to the 23% decline in traditional domestic production and the previously announced business losses of pressure sensors and fluid level sensors at our Sarasota, Florida, facility.

Medium and heavy-duty truck sales totaled $102 million in the quarter, an increase of $19.2 million, or 23.1% over the prior year. The significant revenue increase was driven by new government business, strong European commercial vehicle production, and favorable foreign currency exchange rates; more than offset the decline in North America light vehicle production.

Sales to agriculture and other markets totaled $26.8 million, an increase of $7.3 million, or 37.4% above last year. The increase in our agricultural sales was predominantly due to strong build rates at John Deere.

North America revenue accounted for a 74% share of third quarter revenue, compared to 73.4% for the same period last year. The percentage increase of our North America revenue reflects the growth of new business in our North American commercial markets.

In the third quarter, Electronics revenues were $126.6 million, compared to $103 million last year, an increase of $26.3million or 22.9%. Positive factors in the quarter were strong revenue from our North American commercial vehicle operations, due in part to new government business, strength in our European markets, and currency exchange rates.

Another favorable factor affecting the third quarter performance was the 2% increase in North American commercial vehicle production. Revenues for Control Devices of $51.8 million declined from $69.8 million last year a decrease of $18 million, or 25.8%.

The 16.4% decline in production in North America light vehicles with the traditional domestic manufacturing and loss of revenue from pressure sensors and fluid level sensors at Sarasota facility were the main drivers behind the decrease. Our third quarter gross profit was $35.3 million, resulting in a gross margin of 19.8% which included $2.1 million of restructuring charges and yield on the gross margin of 21% excluding the restructuring charges.

Cost of goods sold was also negatively impacted by lost overhead recovery of $1.6 million. The inventory bank fills produced in the first half of this year is a result of out restructuring efforts, including these two factors, our gross margin was consistent with the third quarter of last year.

Our gross margin was positively impacted by new business sales and favorable sales mix relative to the prior year. Our commodity hedging programs resulted in a slightly favorable offset to the third quarter of copper price variances.

We have been developing a low landed cost manufacturing footprint. Our target is to develop low landed cost facilities that could serve us our customer requirements, searching from locations such as China, Estonia, and Mexico.

Sales from low-cost manufacturing locations accounted for 40% of total sales in the third quarter, compared to 39% in the prior year. With our China operation ramping up and our announced production line moves from our Mitcheldean, UK, operations to China and Estonia, and our corporate wide initiatives, we expect our sales from low-cost locations to grow as we relocate labor-intensive manufacturing over time.

We will continue to expand our presence in the three low-cost manufacturing locations in Mexico, Estonia, and China. Our new facility in Estonia has opened in October this year and will be fully operational by year end.

Selling, general and administrative expenses totaled $31.9 million in the third quarter, compared to $32.4 million the previous year. The decrease in SG&A is primarily due to increased design and development customer related reimbursement activities related to new product launches, and our European commercial vehicle units.

Third quarter income tax expense totaled $900,000, resulting in an effective tax rate of 174%. The higher effective tax rate is primarily attributable to restructuring costs associated with our UK operations, which provided no tax benefit an unfavorable impact due to the expiration of the federal research and development tax credit.

The federal research and development tax credit was approved as part of $700 billion congressional bill on October of this year. We expect our 2008 effective tax rate to be in the range of 40% and 42% which is [seemingly20:59] higher than the last two years due to restructuring charges in Mitcheldean, UK, will receive no tax deduction.

We expect our 2009 effective tax rate will return in a more normal level between 30% to 32% Stoneridge recognizes third quarter net loss of $400,000 or $0.02 per share, which included approximately $0.17 per share of restructuring charges. Our net income per share excluding restructuring compares favorably in last year’s net income of $0.11 per share.

Depreciation expense for the third quarter was $7 million, and amortization expense totaled $100,000. For the full year, we expect depreciation and amortization of approximately $29 million.

Earnings before interest, other income, taxes, depreciation, and amortization was $17.8 million in the third quarter, compared to $14.3 million the previous year, an increase of $3.5 million, or 24.5%. The primary working capital totaled $116.4 million at quarter-end, which increased $600,000 from the end of the year.

As a percentage of sales, our working capital decreased from 16% to sales in the prior year to 14.7% sales in the third quarter of this year. Primary reason for the decrease was a reduction in account’s receivable balances partially offset by inventory increases.

Part of our inventory increase was $7 million of bank builds to support our restructuring efforts. While we made some progress towards improving our working capital levels, our working capital balances remain above our targeted range of 12% to 13% of sales.

We see significant opportunity to reduce our inventory balances in 2008 and made this a focus area for operations. Our new director of lean operations is working with our businesses to enhance manufacturing efficiencies by chain management to support our global operations.

Operating cash flow was the source of $18.1 million on the third quarter compared to source of $3.9 million in the previous year. Our cash flow in the third quarter was positively driven by reduction of our accounts receivable balances was partially offset by increased inventory to support bank builds for restructuring initiatives.

Cash flow, particularly in the area of working capital management, will remain a focus for the remainder of the year. We continue to target primary working capital balance in the range of $0.12 to $0.13 per dollar sales.

Capital investment totaled $6.3 million in the third quarter, mainly reflecting investment in new products. Some significant areas of our investment were in emission, sensor products, and instrumentation business.

For the full year, we expect our capital spending to be approximately $27 million. We currently have $67.8 million of availability under our $100 million asset-based lending facility.

We have no borrowings drawn against our revolving credit facilities. Our credit facility has no restrictive performance covenants.

Our quarter-end cash balance totaled $90 million, compared with $68 million at the end of the third quarter 2007. In going forward, we expect we will continue to fund our operational growth initiatives for free cash flow generation and available cash balances.

Now I'd like to take a moment to discuss our outlook for the remainder of 2008. As mentioned by John for the full year, based upon the current industry outlook, we adjusted our previous annual guidance from $0.75 to $0.85 per share to $0.40 to $0.46 per share.

The annual guidance includes restructuring expenses of $13 million to $15 million or $0.48 to $0.52 per share. Due to the difficult commercial real estate market and stringent financing requirement the sales of Sarasota facility will not be completed until 2009, has been eliminated from our current guidance for 2008.

This year has not played out as we had originally expected. We did not forecast the significant drops we are now experiencing in the light vehicle market in North America.

We were expecting the medium and heavy-duty truck market to come back stronger by the end of the third and fourth quarters. However, our original plans to which we are executing, anticipated that we needed to grow the top line with new business wins, needed to lower our costs and improve our margins.

We needed to restructure on manufacturing overhead centers, and streamline our organization to reduce our SG&A expense. We wanted to refinance our long-term debt and we wanted to pursue an IPO for our Brazilian joint venture.

Some of these efforts are contributing to our improved performance in 2008. Just as importantly, these initiatives will benefit us significantly in 2009 and beyond.

Earnings per share excluding restructuring expenses in 2008 are forecasted to be higher than last years as we are absorbing approximately $13 million to $15 million in restructuring expense. We continue to monitor the capital markets so we are positioned to refinance our long-term bonds when the capital markets are more receptive.

We are planning to continue the IPO process with our Brazilian joint venture once we determine the global equity markets have stabilized. As our markets have become more difficult, we continue to readjust our plans to address the changes by growing our top-line, managing our cost structures, and driving our cash flow to address the market challenges that we are experiencing.

We have taken steps to ensure that Stoneridge is well positioned to manage through the market downturn that we are experiencing, dealing with the financial uncertainty that we have to operate under of positioning the company to take advantage of the future upturn in economic and financial markets. We work to improve our operating performance by reducing waste, scrap, [26.31]warning charges and premium freight.

The third quarter 2008 cost of portfolio improved by $1.3 million compared to last year and our nine months year-to-date CLTQ[26.41] improved by $2.3 million over last year. We are targeting to improve our cost of poor-quality by $5 million in 2009.

We initiated the restructuring program last year to reduce our manufacturing overhead centers and flatten SG&A structures. Sarasota, Florida and Mitcheldean, UK facilities will be closed by the end of this year.

We flattened our SG&A structures and the two business groups to lower SG&A excluding designer development to be 110% by 2010. We have set a target to grow the top line by 6% on an annual basis.

As you remember, top-line sales have not grown in Stoneridge from the period of 2000 and 2005. Our top-line growth is drawn by 4.1% compounded from 2005 to 2007.

Our sales were up 12% on the first half 2008 and 3.2% in the third quarter even with the significant drop in vehicle production. North America commercial vehicles were down 35% in 2006, North America light vehicles was down 15% in 2008, and forecast to be off 9% in 2009.

We have continued to generate positive cash flows since 2006 after the company experienced its first negative cash flow in 2005, first time in the history of the company. We have refocused our management on our return to invested capital and cash flow as primary targets.

Since 2006, we have sold $14.6 million in non-strategic assets. We have built our cash position from $40.8 million in 2005 to $90 million of September of this year.

We have extended our $100 million asset-based lending facility to 2011, which has no restrictive performance covenants. We have maintained our 11.5% long-term bonds to mature in May 1, 2012 even though we are refinancing to lower rates when the capital markets reopen.

In the face of a difficult global market in economic condition, we still believe our plans are correct to weather the problems as we position Stoneridge to prosper when the global economy improves. Operator, I would now like to open up the call for questions.

Restructuring, is this going to take you the additional and incremental restructuring, is this going to take you where you need to be? Or do you think there is more to go in 2009?

No, I think when we finish with this footprint that we will have then three plants in the north; we will have a one plant facility up in Canton, We will have one in Lexington which is a consolidated of Sarasota and then we will have our Portland facility which does not, and that is the kind of footprint that we envisioned going forward. Certainly, if market conditions change dramatically we might look at something different, but right now I do not see that and then the rest of our facilities in North America, of course are in all of our Mexican operations except for cross border warehouse facility in El Paso.

In Europe, the opening of the Estonian facility will allow us to transfer more products into that facility and we continue to look to expanding in China. So, I think, pretty much in terms of physical relocation of products right now I think we are finished once we get through that.

On your business backlog, I believe it is $200 million over the next three or four years? As you guys have said in the past.

Has that changed due to this environment, or is it still growing?

Well, our order book, we have forecasted our order book, but, when we win new awards the issue is of course, when the volume goes down despite the expected amount of those awards will go down too. But it will also come back up when the market goes through that down cycle and then up cycle.

For instance, if you are to look at awards that are coming on screen in Europe last year based on the outlook for the European market, I think, those awards, the dollar amount of those awards would be higher just on a pure volume basis. Now, I think because of what is going in Europe it will be somewhat lower.

The real question for us though is to make sure we are still winning the awards, still supporting the business because as the markets turn and come back, then we will reap the benefits of that.

And last, did you guys say that you expect North American commercial vehicle to be moderately up next year?

Well, I think that changes all the time. But, I mean I have been looking at the forecast that we have seen; we expect there to be a slight improvement in our internal projection and that is what we are looking at.

But, we are not structuring our business for that. We want to make sure our business stays lean and looks it until we actually do see the improvement.

Because, as you will recall in 2008, this year, we thought there would be an improvement over 2007 and that has not happened. Our businesses were smart enough to stay lean and stay focused, and so we did not have a significant impact from that lack of volume going through.

But beyond the forecast, speaking to your customers, you are still seeing it steady enough and moderately higher. You still expect that?

Well, I would tell you but the only problem with that is that the customers forecast change rather quickly. If you looked at what was for instance, if you look at Europe three months ago and Europe in the commercial vehicle market, I do not think anybody who is really staying there would be as dramatic as they have seen it now.

Now, we are seeing in the last three months rapid shifts. If you look in North American market, I think the same thing can happen here or has happened.

Strictly on the automotive side, look at our October sales result, they were well down, I think 25 year low and commercial vehicle also if we do not get some kind of economics stimulus past in this country moving forward, we are going to have some, when they have issues in that segment.

Thank you.

A couple of quick questions here, if we look at revenue, it is probably going to fall over the next several quarters, what are some of the actions that you have been taking? What is your downside contribution margin at right now?

What is some guidance there?

Well, it varies by business group Keith but on average, we tend to look at somewhere on the range of 20% to 30% per product line. It will vary by the different businesses and product lines.

If we look at SG&A going forward after some of the restructuring actions we were at about 18% run rate in the quarter that is including the design and development. And what kind of changes can we expect in that level going forward after we have implemented a lot of the restructuring actions?

Well, I think as we have said before, is that our SG&A to get under 10% by 2010. About a half of that was going to come from sales increase.

The other half is going to come through reduction. So, we intend to spend at the same level of D&D or reduced, but we would have an improvement on percent of sales based on the volume and then the cost side on the non – I would call the discretionary SG&A – half of that would be sales growth, the other half would be the actual reductions of cost.

And we talked a little bit about the outlook for PST. Is there any reason to expect that that business would not slow down in 2009?

Well, it will really – it depends, I would say that if you wanted to be prudent that is where we are looking at to say that that business will slow because I do not think anything is not linked in this global economy. However, the markets down there continue to be fairly strong.

That business would get immediate outlook because they sell right into the aftermarket so they can monitor almost on a daily basis. Their sales have started to spot the decline and they just appropriately do it.

But I think it is prudent for our forecasting that we look at some impact from a slower economy.

I think I missed the earlier call that you were just talking about the new business backlogs. What was the numbers there?

I think we were talking about, we had announced previously that we had that $200 million order booking which is the largest in the company’s history and if that spreads out over the next three to four years, the question was that, how was that going to be impacted, are you seeing any cancellations of that. I said, we are not seeing any cancellation to those orders yet, but what we will see is that, depending on what the volume forecasts are that amount could be less than $200 million because it was based on projections from last year or current projections for early this year.

However, if the cycle improves again, it will go back up, so, the important thing is that you won the business and that the business still that we continue to make sure that the business is profitable, profitable contribution to our overall company.

Then, can you quantify what sort of volume of business might be launching next year?

I would hesitate to do that, we believe that it would make one last pass to our budget reviews that are coming up and also go back and assess from our customers their look at it. Certainly, as you saw, one of these we have done, though and this is kind of contrary, we told our organization to try to stay ahead of where they think the customer is going to be in terms of their design and development expense.

By that we mean, let us make sure that if we were working on programs that the customer is also working on those programs and not just saying they are working on a program and have no intention of launching it. As we look at things, we are seeing customers push out some of their program timing and development.

So, we have already started to adjust our spending to adapt to that. So, what we are trying to do is just stay ahead of this and I think as we almost on a monthly basis, you will see customers adjusting their development efforts.

You might recall that GM recently announced about two weeks ago that they were reducing some of their D&D spending in certain areas, well, we were already talking about, what the implications of that would be on our business and what we have to do. So, what we are trying to get our organization focused on is this, customers shift their priorities.

Let us focus on what we can do to drive the near term revenue opportunities back into our businesses by taking those resources that were formally working on a longer lead item, put them on our shorter lead item.

And then the last question. Clearly your electronics program with the military has been a pretty strong driver of results here in 2008.

Is this some thing that completely goes away in 2009 or do we expect to up feel an offset that would new business at launching.

Well, I think that when we look at some impact from the military business in 2009, we continue to see some we have won some awards as international and others that won some awards, so, we will continue to have some benefit of that in 2008 and actually impart in the international, they believe that their military business contributed about $3.5 billion to their company this year. They expect that they, and as major initial to them, they expect that next year, if the wind down in Iraq happens though, they will still be in Afghanistan, they still see continued needs for some of the vehicles that they are producing.

And so, we would expect to be supporting them in that.

Are you guys are on number of different military products with Navistar?

I would not say a number, I do not want to; that is always subject to debate. We are on the most significant ones.

Let us put it that way.

I would want to thank everybody. These are very difficult times.

I think the turmoil that everybody is seeing – it is just spreading out. What turned out be initial start with few high fuel prices and then the credit markets etcetera has really expanded from a North American issue to a global issue.

The encouraging news here and the things that I want to talk about is we have adapted our organization, and the key now is to be fast and flexible and to be prudent and we are sitting on $90 million of cash. We have engaged our organization on a variety of dialogs, of how we look for opportunities and how we continue to generate cash and how we continue to reposition our business.

I am not sure, anybody today can tell you where our markets will end up, or what will happen in the transportation sectors. What they should be telling you is how they are attempting to respond to these stuffs, I think that is what we tried to demonstrate throughout these year and going in the next that we got a mind set that allows us to quickly go after opportunities and hopefully quickly resolve the problems we have.

So, I think, the company is fairly positioned in this difficult market environment and as the upturn comes, we should see a continuing improvement and I think that a tribute to the team and the employees of Stoneridge. With that I would like to thank you all for joining us on the call, and we look forward to improvements in our markets.