Question-and-Answer Session
Operator
Thank you (Operator Instructions) We'll go first to Liam Burke, Ferris Baker Watts
Liam Burke - Ferris Baker Watts
Good morning Ernie
Ernie Schaub
Good morning Liam
Liam Burke - Ferris Baker Watts
Could you give us a little more detail on the step up on the Engine Products. I mean you had talked about maybe a 10%, 11% operating margin. Now they're up at 16%. Is there something significantly different in there now?
Ernie Schaub
16 was for the quarter, for the year.
Liam Burke - Ferris Baker Watts
Right, I am sorry, I am talking about the fourth quarter, forgive me.
Ernie Schaub
Yeah, we had a good mix, some good aftermarket sales. We shipped, we had good volume and volume always helps, as well is when we ship a lot of engines in the fourth quarter. Bill anything else in the fourth quarter? Typically we should at fair about 12.5 I would say.
Bill Dries
Liam I think we ended shipping half of our engines for the full year in the fourth quarter alone a difference. In the past we talked about the engine business and the margins being very little if any on the engine side, we make our money on the parts and service side.
Liam Burke - Ferris Baker Watts
Right.
Bill Dries
We had some, but we got some margin in the engines that were shipped. And we also had a very good parts and service quarter, and our margins on parts and service were up five points quarter-over-quarter.
Ernie Schaub
Liam, having said that, as I said in my prepared remarks we're expecting this business to continue to be strong in 2008, and there is no reason to a decline. It's done a great job us plus these guys have really worked hard.
Liam Burke - Ferris Baker Watts
Okay and on the free cash flow front even with your asbestos needs you generated on a roughly $2.50 per share, which is including asbestos. Are acquisitions going to be your primary use of cash going into 2008 or do you see any need to either to buyback shares or reduce your debt that you current convert.
Ernie Schaub
We continue to see acquisitions playing a role and the Board as we have said is always looking at buyback options and all the other options are using our capital resources. Acquisitions and capital spending to improve our facility and share back are all considerations as part of our strategy going forward.
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