Michele Volpi – President, Chief Executive Officer James C. McCreary, Jr. – Vice President, Interim Chief Financial Officer, Controller Steven Brazones – Director, Investor Relations

David Begleiter – Deutsche Bank Rosemarie Morbelli – Ingalls & Snyder Jeff Zekauskas – J. P. Morgan Christopher Butler – Sidoti and Company Douglas Chudy – Keybanc Capital Markets Tutra Sudrum – Cardinal Capital Elizabeth M. Lilly – Gabelli Funds Dmitry Silversteyn – Longbow Research Steven Schwartz – First Analysis Corp.

Good morning and welcome to the H. B. Fuller fourth quarter 2007 investor conference call. At the request of the company this conference is being recorded for instant replay purposes. This event has been scheduled for one hour. Following today’s presentation there will be a formal question and answer session. Instructions will be given at that time should you wish to ask a question. Management in attendance on today’s call includes Mr. Michele Volpi, President and Chief Executive Officer, Mr. Jim McCreary, Interim Chief Financial Officer and Corporate Controller, and Mr. Steven Brazones, Director of Investor Relations. At this time I would like to turn the meeting over to Mr. Steven Brazones. Sir, you may begin.

Thank you, Francis. Welcome, everyone. Today’s conference call is being webcast and will therefore be archived on our website for future listenings. In addition, this call will be available for replay approximately one hour after we are finished with the question-and-answer portion of our call. Before beginning I would like to inform everyone that certain matters discussed during this call will include forward-looking statements as that term is defined under the Private Securities Litigation Reform Act of 1995. Such statements reflect our current expectations. Actual results may differ. In addition, during today’s conference call we will be discussing certain non-GAAP financial measures, specifically, operating income, earnings before interest expense, taxes, depreciation expense and amortization expense – or EBIDTA, pro-forma net income per share, and free cash flow. Operating income is defined as gross profit less SG&A expense. EBIDTA is defined as gross profit less SG&A expense plus depreciation expense and amortization expense. Pro-forma net income per share definitions vary and will therefore be defined as discussed. And free cash flow is defined as cash provided by operations less dividends paid less capital expenditures. These measures should not be construed as an alternative to the reported results determined in accordance with GAAP. Management believes that a discussion of these measures is useful to investors because it assists in understanding the operating performance of the company and its operating segments, as well as the comparability of results, and it provides insight into the ability of the company to fund such things as debt reduction and acquisitions. The non-GAAP information discussed today may not be consistent with the methodologies used by other companies. All non-GAAP information is reconciled with reported GAAP results on the last page of the presentation. The results discussed today for all periods are for continuing operations, except when noted, and do not include the divested automotive joint venture. Lastly, I would like to inform everyone that next quarter’s earnings release and conference call will be one week later than usual to accommodate certain internal scheduling conflicts. For more information please refer to our recent press release, quarterly reports on Form 10Q, and end report on Form 10K filed with the Securities Exchange Commission, all of which are available on our website at www.hbfuller.com under the investor relations section. I will now turn it over to Michele.

Thank you, Steven. Good morning, everyone, and thank you for joining us. We are very pleased to report sustained strong quarterly performance and we celebrate this very solid finish to another successful year. This is particularly rewarding given the fact that it was accomplished in a challenging environment and in a year in which we transitioned to a new executive management team and completed a broad regional realignment. Fourth quarter 2007 pro-forma net income per diluted share was $0.53 – at the high end of our previously provided earnings guidance range of $0.50 to $0.53 for the quarter. The fourth quarter performance ended a year in which we drew income from continuing operations before cumulative effect of accounting change that diluted share 24% over last year’s pro-forma income from continuing operations before cumulative effect of accounting change per diluted share of $1.34 to $1.66. Return on gross investment also continued to improve, up 70 basis points, sequentially to 9.6%. The divestiture of the automotive joint venture contributed 50 basis points of improvement while productivity gains of the base business contributed the remaining 20 basis points. On an annual basis EBIDTA margin increased 160 basis points year over year despite the aforementioned difficult macro-economic environment. This was driven by both improvements in gross margin and tight expense controls. Excluding last year’s $12.3 million charge related to the separation agreement with the company’s former chief executive officer, this year’s SG&A expense dollar was still down nearly $9 million year over year or slightly more than 3%. Our focus on the controllable item has enabled us to deliver strong financial performance in light of the economic challenges we have faced. Fourth quarter gross margin again improved on a year-over-year basis increasing 60 basis points to 29.7%. This was the result of the discipline implementation of (inaudible) actions, continued mix improvements, and regional raw material procurement. During the quarter we completed as well our stock repurchase program, buying back an additional $75 million of stock equating to approximately 2.6 million shares. Lastly, we completed the sale of the automotive joint venture in the fourth quarter. This divestiture as previously announced is another step in our transformation. It will enable us to concentrate our efforts more fully on providing integrated solutions and value-added offerings to our segment (inaudible) and to capitalize on more strategic growth opportunities in the future. Significant foundational changes are under way with respect to the top line as we begin to execute on our five year strategic plan. While the trend (inaudible) selling organic sales did not materialize this quarter, we are seeing encouraging signs and at this time we are cautiously optimistic that we will be able to return to positive organic growth sometime in the second half of 2008. In our recent five-year plan we laid out several drivers for that top-line growth. One is innovation and new product development. On this front we continue to make progress and we are excited about the products we currently have under development. Our long-term goal is to increase new product sales to 25% of total sales. This quarter we again made progress towards that goal, building momentum as new products competed at 22.4% of total revenue. In the future this initiative will ensure greater degrees of innovation within each region closer to the customer. An additional driver is represented by focusing our resources and investment in fast growing regions to drive geographic expansion, both organically and through acquisitions and joint ventures. We are targeting regions that have a high growth profile driven by expanding economies in an emerging consumer class. We have made significant progress in identifying and building our pipeline of potential opportunities ranging from acquisition targets to joint venture partners to (inaudible). We believe that our actions will allow us to execute on some of these opportunities already in 2008. One more driver is sales force effectiveness and aligning the sales effort around our core value-added market segment, plus moving consumer goods and construction. As we have organized our efforts to concentrate on global accounts we will benefit from the counter-cyclical nature of the fast moving consumer goods sector. On the construction side, while the United States housing market continues to languish, we are confident in the long-term prospects of this market and we intend to continue to invest in this area. Another driver of our plan for growth is to build customer (inaudible) and to continue to build up on our solutions-selling approach to the marketplace to become an integrated solutions provider. We are already laying the groundwork and developing partnerships with (inaudible) a business dispensing key manufacturers and manufacturers of confidential products (sic). We’re building a differentiated business model that will allow us to leverage our cost trends and to drive organic growth. We are excited about the potential we see ahead of us in 2008 and beyond. This is just a brief update of a few of the many growth drivers we have lined for you at our investor day three months ago. Also, in conjunction with our five-year plan, we’re continuing to execute on core competencies like pricing. On this front the non-conducive pricing environment continues during the fourth quarter with several industry participants reverting to their go-for-volume strategies. Recently we have seen some of our larger competitors taking (inaudible) actions to offset rising raw material costs, but not to the degree that we believe is warranted. Lastly, the weakening US dollar continued to benefit the top line driven principally by the strong Euro. Foreign currency translation contributed approximately $15 million to net revenue. Current economic forecasts do not bode well for the dollar, leading us to believe the currency translation could continue to benefit the top line in 2008. Raw material costs in the fourth quarter were up, as our tools and processes predicted. In aggregate, raw material costs increased approximately 3% sequentially and 6% on a year-over-year basis. Nevertheless, with our improved average selling price and business mix raw materials again declined as a percentage of net revenue. In 2008 we expect upward pressures to continue despite the eagerly anticipated capacity editions of some industry observers. Key areas of pressure include vinylosopy (sic) driven principally by methanol, as well as waxes, refined oils, and tachyfined (sic) resins driven primarily by the rising cost of crude oil and derivatives. We anticipate that these pressures will be more concentrated in the first half of the year. In aggregates we expect raw material costs to increase between 2% and 4% in 2008. Actions are under way to effectively deal with this situation at H. B. Fuller. In the fourth quarter we began executing on our new five-year plan to re-align our portfolio around hydromargins (sic) more strategic business lines in which we have the most threatened (sic) core competencies, as well as we started building our pipeline of acquisition targets to drive geographical expansion. The divestiture of the automotive joint venture and known cause, no strategic asset for the company, will enable us to focus our attention on our core areas more effectively. With less than 20% gross margin and the minimum operating margin this venture was not meeting our return on invested capital requirements. Its removal from the portfolio was a credit to (inaudible) and to both our overall growth and margin (inaudible). While not a strategic focus for us, it will be a core holding for our forward joint venture partner and better position for long-term success. We thank our former North American automotive associates, as well as our partner and Timmy (sic) for the many years of collaboration and support in a very difficult environment. Our focus on acquisitions and alliances as we align in October is three fold and targets geographic expansion, product and technology extension, and building economies of scale. We have re-aligned our corporate development team internally around the chief strategy office and we are encouraged about the opportunities we have entering the pipeline. Here too we believe we are in a good position to execute on some of the opportunities currently under review already in 2008. Regarding our capital position, it continues to be exceptionally strong. This stems from the significant and robust free cash flow generation of the business. Together with the proceeds of the automotive joint venture divestiture our strong capital position enables us to complete the $100 million stock repurchase program in less than five months. In the future we plan to continue our commitment to maintaining a balanced approach to returning capital to shareholders while maintaining flexibility to find us growth through acquisition and organic investment. Now let me provide a brief regional review of the business. In North America, as we had anticipated, the residential construction related end markets continued to deteriorate as a function of the housing and credit related difficulties. On a broader economic perspective liquidations are worsening. We are taking the appropriate actions to effectively deal with this situation at H. B. Fuller. We are committed to execute on the controllable items while investing for growth to position ourselves to continued financial improvement and top-line expansion. Operating income for our North American segment for the fourth quarter declined by $1.7 million year over year. However, due to an improved mix of business, our operating margin increased 30 basis points. The largest factor driving the decline in operating income for the segment was the performance of the Roanoke business. Excluding the results of the Roanoke business operating income would have been relatively flat year over year and margin improvement would have been even higher. In Europe industrial production is still positive although recent economic forecasts are calling for slower growth in 2008. Europe is also experiencing a slowdown in construction in the western part of the region. Our European segment operating profits increased 27% in the fourth quarter from $10.5 million to $15.3 million. As a result, operating margin in the fourth quarter improved 230 basis points year over year. The increase was driven by continued mixed improvement, better productivity, and favourable foreign currency translation. In Latin America the economic outlook is closely linked with that of the United States. However, the region is buffered somewhat by the weaker dollar. The region is increasingly improving its fiscal performance specifically with regard to inflation and this is leading to more stability and improved credibility, which helps reduce the risk of investment in the region. Our Latin American region experienced a setback in the fourth quarter with operating income down $2.6 million year over year and operating margin down 410 basis points year over year. The decline in operating profit was primarily driven by lower sales and an environmental charge of approximately $800,000. Lastly, in Asia-Pacific economic growth continues to outpace the rest of the world. Although we believe 2008 will slow somewhat, Asia will continue to be the growth agent in the global economy for quite some time. Our Asian operations continue to invest prudently in additional resources to focus on long-term organic growth. As a result, operating margin declined by 90 basis points year over year. This is a direct result of the actions we’re taking to better position ourselves in the region for the long term. We clearly anticipate that these actions will augment growth for the region and will be leveraged as the revenue grows. With that I will now turn it over to Jim for a more detailed review of the consolidated financials. James C. McCreary, Jr.: Thank you, Michele. Good morning, everyone. For the fourth quarter consolidated net revenue was $360.9 million, down 3.7% from last year’s fourth quarter. Foreign currency translation favourably contributed 3.9 percentage points to net revenue growth, our average selling prices contributed 1.4 percentage points and volume declines reduced growth by 9 percentage points year over year. Gross profit was $107.3 million for the quarter compared to $109.2 million in the fourth quarter of 2006. Gross margin for the fourth quarter was 29.7%, up 50 basis points on a year over year basis. The improvement was primarily driven by improved mix, disciplined implementation and execution of pricing actions, regional raw material procurement strategies, and continued productivity improvements driven through (inaudible). SG&A expense was $67.8 million versus last year’s fourth quarter of $80.4 million. Last year’s fourth quarter SG&A expense included a $12.3 million charge resulting from the separation agreement with our former CEO. Excluding this charge from the prior year, SG&A expense was $68.1 million. Operating income for the fourth quarter was $39.5 million versus $41.1 million in last year’s fourth quarter, excluding the impact from the aforementioned separation agreement. Correspondingly, operating margin was steady at 11% year over year. EBIDTA for the fourth quarter was $51.7 million versus $53.7 million in last year’s fourth quarter, excluding the impact from the aforementioned separation agreement. Correspondingly, EBIDTA margin was steady at 14.3% year over year. Included in both operating income and EBIDTA, in the fourth quarter of this year was a $2.9 million net charge from certain product liability claims. The effective tax rate for continuing operations in the fourth quarter was 24.3% compared to 12.5% in last year’s fourth quarter. Last year’s tax rate was also impacted by the aforementioned separation agreement. Adjusting for this item, last year’s fourth quarter tax rate was 21.3%. Discrete items and the reclassification of the automotive joint venture to discontinued operations resulted in a lower-than-expected tax rate in the fourth quarter of this year from the expected 29%. For fiscal year 2008 we expect an effective tax rate of 29% for the year. For the fourth quarter of 2007 reported net income was $25.7 million or $0.43 per diluted share. This year’s net income includes a $6.2 million loss from the sale of the automotive joint venture or $0.10 per diluted share. The after-tax loss was incurred because a portion of the transaction was structured as a stock disposition without distribution of excess earnings. Our tax basis for this portion had not changed between the formation of the joint venture and the sale. However, our book basis increased as these portions of the joint venture generated profit. Consequently, this resulted in higher tax and ultimately the after-tax loss on sale. Adjusting for this impact, net income would have been $31.9 million or $0.53 per diluted share. This is comparable to the company’s previously issued earnings expectations for the fourth quarter to earn between $0.50 and $0.53 per diluted share and was at the high end of the range. Prior to discussing the balance sheet I would like to remind everyone that the following figures are subject to minor changes prior to filing our 10K. Cash at the end of the quarter totalled $246 million, down $9 million year over year. Total debt at the end of the fourth quarter was $173 million compared to $259 million at the end of the fourth quarter of 2006 and was essentially flat on a sequential basis. In 2008 we will make a $25 million repayment of our 6.6% fixed rate private placement debt. That working capital defined as the net amount of trade accounts receivable, inventory, and trade accounts payable amounted to $193.8 million. As a percentage of annualized net revenue, net working capital was 13.4% for the fourth quarter, up 130 basis points over the fourth quarter of last year. Higher levels of inventory and lower payables more than offset the decline in accounts receivable. Capital expenditures for the fourth quarter were $5.3 million, down $3.1 million versus last year’s fourth quarter spend of $8.4 million. For fiscal year 2008 we expect capital expenditures to be in the range of $30 million to $35 million. Depreciation expense in the fourth quarter was $9.1 million, down $500,000 from the prior period, from the prior year’s level. The amortization expense was $3 million in this year’s fourth quarter, flat with last year. For 2008 we expect depreciation expense to be approximately $45 million and amortization expense to be approximately $12 million. Finally, free cash flow for the quarter was $26.6 million. The components for the fourth quarter were as follows: cash provided by operating activities was $35.7 million, dividends paid were $3.9 million, and capital expenditures were $5.3 million. I will now turn it back to Michele for some brief closing comments.

Thank you, Jim. As we look ahead to 2008 we are cautiously optimistic. Although we believe the macro-economic environment will worsen further globally, particularly in the United States, we remain committed to delivering solid financial results. We have a robust five-year plan that positions us well for the future and we are already executing on it. From a top line perspective we currently envision gradual improvement with momentum gaining in the second half of the year. These expectations take into account our cautious view of the broader economic conditions that we expect to encounter in 2008 and the progress we anticipate in our new products, innovation, customer (inaudible), and the other areas I mentioned earlier. From an earnings perspective, we expect to continue to improve in 2008 as we execute our five-year plan. We expect to grow diluted earnings per share by between 2% and 8% from $1.73 to between $1.76 and $1.86. Our commitment to our new five-year strategic plan and corresponding financial goals is steadfast. We have already made a key strategic (inaudible) move through divesting our automotive joint venture. We have also addressed our capital structure through implementing and maintaining a balanced approach to returning capital to shareholders and we have begun accelerating the building of our pipeline of potential acquisition targets and organic investment options. We have much more ahead of us in 2008. Thank you for your continued support. I will now open up the call for your questions.

The company would like to provide everyone the opportunity to ask a question, so if you could please limit yourselves to two questions at a time it would be greatly appreciated. You may recue as often as you would like, time permitting. (Operator Instructions). Your first question comes from the line of Douglas Chudy with Keybanc. Douglas Chudy – Keybanc Capital Markets: Good morning. A couple of quick questions. It appeared during the quarter that volume declines accelerated following a couple of quarters of improvement. I wondered if product rationalization had any impact on that and, if so, to what extent?

Good morning, Douglas. Well, first of all, if you remember, when we discussed about the third quarter we were very, very cautious in calling it the beginning of a trend reversal. What has happened in the fourth quarter has been clearly the US construction market going farther down, clearly reflected by the sales of our tech business, our window business. That has also been overall generally (inaudible) activity that has affected also our (inaudible) business. In spite of very positive successes in terms of developing and closing new business. Clearly specifically North America, the biggest driver – as outlined before in our comments – the biggest driver of this decline has been the (inaudible) business, which has been posting revenue year over year of less than 55% net to the negative. Douglas Chudy – Keybanc Capital Markets: Okay. So, I mean, is product rationalization a small component of that or pretty much it’s all on the demand front?

It’s a small component of that. Douglas Chudy – Keybanc Capital Markets: Okay.

That clearly doesn’t mean that we are not continuing to requisition, but the vast majority was demand driven and strongly linked to the Roanoke results. Douglas Chudy – Keybanc Capital Markets: Thanks. And secondly, at the investor day back in October you provided the long-term EPS goal of 10% to 15% annual growth. I understand that’s the long-term goal. Certainly the guidance for 2008 on an EPS basis is quite a bit below that. Do you feel that you’re being relatively cautious at this time due to the current environment and, secondly, do you still feel that that long-term target remains realistic?

For sure we believe in the long-term target. But also if you remember back when we discussed in October at the investor conference we said that it was going to be a gradual ramp up. Not only because changing amidst this model takes time, but also because of our view of the economy, which we have been very clear and consistent all along the last five quarters. Clearly when we have to give forecast, which for us as usual is a commitment to our shareholders, we need to make sure that we are cautious and that we incorporate in our guidance the status of the economy. Douglas Chudy – Keybanc Capital Markets: Okay. Thank you.

Thank you, Doug.

Your next question comes from the line of Tutra Sudrum (sic) with Cardinal Capital. Tutra Sudrum – Cardinal Capital: Hi, how are you? Congratulations on a great quarter, actually, despite everything. I’m just a little curious. Roanoke must have anniversary probably around August of ’07, I believe, and it had already been weakening very significantly right through Q1 of ’07. So surely I would have thought by this stage it would be such a small part of the business that, you know, even negative growth of large numbers in that business would have minimal impact. I guess I’m just trying to understand how it continues to shift the revenue line the way it is.

Well, fortunately you’re right, it is a small part of the business, but it’s become a smaller part of the business and it has really not been performing. So at the beginning of the year it was a positive compatible because it was still a year over year positive, but during the year Roanoke performance has declined. And basically when you look at our comments that we made before on the North American segment fourth quarter performance Roanoke impacted that by $1.7 million. Tutra Sudrum – Cardinal Capital: Okay. And I was curious about the product liability charges at $2.9 million. That was the charge that occurred in Q4. Could you give some context? And where perhaps that is accounted for, cost of goods sold, naturally.

I will ask Jim to take that question. James C. McCreary, Jr.: Yeah, that is accounted for down in the SG&A area. Tutra Sudrum – Cardinal Capital: M-hm. And could you give some context? Because it’s a fairly decent sized number. James C. McCreary, Jr.: This relates to, is an asbestos related settlement. We feel it was a very good settlement that we’re working on and if you want to find more information around our asbestos related exposures you can see those in our SEC filings. Tutra Sudrum – Cardinal Capital: Sure. Sure. I mean, is this going to be a couple of quarters of these sort of charges that you’ll work through a settlement or was this just something that closes, so it’s a fairly one-time thing that popped up in this quarter? James C. McCreary, Jr.: Yeah, this represents a settlement that will cover a number of years. But it was all taken in the fourth quarter. Tutra Sudrum – Cardinal Capital: Gotcha. Thank you, Sir.

Your next question comes from the line of Jeff Zekauskas with J. P. Morgan. Jeff Zekauskas – J. P. Morgan: Good morning.

Good morning, Jeff. Jeff Zekauskas – J. P. Morgan: Hi. You had a chance to see December volumes and half of January’s. Are you tracking in volume terms above or below where you were in the fourth quarter? Is it the case that your first quarter earnings will be up or down? What’s the trend?

Well, Jeff, you know that we don’t provide quarterly guidance. What I can tell you is that the economic situation in the fourth quarter, as it is seen by everybody, has actually (inaudible) farther in December. It’s not just been the retail sales; it’s been the general industrial activity further accentuated by trimming down of inventories. So that’s what I can tell you right now. As for us, the trend within the year as we have outlined, there is going to be a gradual ramp up within the year because clearly we believe that if there is going to be an infection point in the economy it’s for sure not going to be in the first half of the year. And also our efforts of repositioning and executing on the long-term plan take time. Jeff Zekauskas – J. P. Morgan: And can you discuss in a little bit more detail some of the issues in Latin America in that even with the $800,000 Invarmel (sic) charge you were still down almost a couple of million dollars. Is this something that you can fix quickly? Was this a one-time problem? How do you assess the South American opportunity?

Well, a lot of actions are taking place there already since several months, Jeff, is not the surprise. A lot of focus is on (inaudible) effectiveness, is on really repositioning the portfolio. And in really getting more profitable volume. It is clear that in that market that also is somehow having some ripple effects from the North American downturn. There have been lots of imports coming in from several parts of the world, both from Asia-Pacific and from North America to try to offset some of the drawbacks that are being seen in North America and that is having an impact. I am comforted by the actions that I see in the region. Our leadership is strong, it is doing all the right things, and that is why we are cautiously optimistic and we think that there is going to be a trend reversal in 2008 also in that region. Jeff Zekauskas – J. P. Morgan: And then lastly, what’s your head count now? How many people work at H. B. Fuller?

Let me research that exactly. Give me one second. Jim, do you want to? James C. McCreary, Jr.: Hi, Jeff. This is Jim. Jeff Zekauskas – J. P. Morgan: Hi, Jim. James C. McCreary, Jr.: The head count is 3,200 as of the end of the quarter. Jeff Zekauskas – J. P. Morgan: Thirty-two hundred. Okay. Thank you very much. James C. McCreary, Jr.: Thank you, Jeff.

Your next question comes from the line of Christopher Butler with Sidoti Capital. Christopher Butler – Sidoti and Company: Hi, good morning, gentlemen.

Good morning. James C. McCreary, Jr.: Good morning. Christopher Butler – Sidoti and Company: The first question I wanted to ask was can you give us some detail on the $0.05 solution that you have in your guidance for fiscal 2008? What exactly are we looking at there and...? Yeah, just what exactly are we looking at there? James C. McCreary, Jr.: Hi, Christopher. This is Jim McCreary again. Yeah, that dilution represents a net number of taking the operations for the automotive joint venture and then reducing that by the positive impact of the stock buyback related to the proceeds that we received from the sale of the automotive joint venture. Christopher Butler – Sidoti and Company: All right. So, I mean, simply stated is this, I’m trying to get an idea of exactly what this nickel is. Is this sort of a one-time item that I can look at as far as the auto joint venture or is this, it sort of sounds like some sort of shared dilution as a result of the transaction. James C. McCreary, Jr.: Yeah, what we’re saying is that the automotive joint venture had an operational profit in 2007. Okay? And that of course will go away with the sale. We’re then having some offsets with ongoing transition service arrangements to that operational profit that goes away. We also have a benefit of the buyback of shares from the proceeds of that sale. So that creates the net dilution. Christopher Butler – Sidoti and Company: All right. And then also looking at the guidance, you know, I think it’s fairly apparent that housing in North America is under difficult conditions. What are the assumptions baked in as far as the housing market through 2008? Are you expecting a bottom at some point in the second half of the year, something of that nature?

What we hear from customers, distributors, and what we hear from the marketplace is right now we are not going to see any trend reversal until the fourth quarter of 2008 as far as housing is related. Christopher Butler – Sidoti and Company: All right. Thank you. I’ll go back in the cue.

Thank you.

Your next question comes from the line of Beth Lilly with Gabelli. Elizabeth M. Lilly – Gabelli Funds: Good morning.

Good morning, Beth. James C. McCreary, Jr.: Good morning, Beth. Elizabeth M. Lilly – Gabelli Funds: I wanted to explore ROGE (sic) a little bit. Can you talk about, you gave us the annual figure. Can you give us your ROGE on a quarterly basis over the last year and then can you talk about what it was a year ago? James C. McCreary, Jr.: Yeah, Beth, this is Jim McCreary again. When we talked about the ROGE for the end of the quarter we had a 9.6% number. At the end of the third quarter it was 8.9%. At the end of last year the number was 7.5%. Elizabeth M. Lilly – Gabelli Funds: Okay. So for the full year 2006 it was 7.5%? James C. McCreary, Jr.: That’s correct. It’s done on a trailing 12-month basis and so for the full year 2006 that’s what it was. Elizabeth M. Lilly – Gabelli Funds: Okay. And then, I’m sorry, what was it in the fourth quarter? James C. McCreary, Jr.: Fourth quarter was 9.6%. Elizabeth M. Lilly – Gabelli Funds: Nine-point-six. Okay. James C. McCreary, Jr.: And then we saw a 70 basis point improvement sequentially over the third quarter. Elizabeth M. Lilly – Gabelli Funds: Yup. Okay. And that’s a 210 improvement year over year, correct? James C. McCreary, Jr.: Correct. Elizabeth M. Lilly – Gabelli Funds: Okay. Great. Perfect. That’s all I have. Thank you. James C. McCreary, Jr.: Thank you.

Your next question comes from the line of Dmitry Silversteyn with Longbow Research. Dmitry Silversteyn – Longbow Research: Good morning. A couple of questions, if I may. When you talked about pricing and volume components where do you account for mix? Is it part of pricing or is it part of volume?

Part of volume. Dmitry Silversteyn – Longbow Research: Part of volume. Okay. So when volume declined 9% that’s volume mix declined 9%. You talked about actually mix benefiting a little bit, so it sounds like fewer volume decline was actually more like double digits?

Jim, do you want to take that? Dmitry Silversteyn – Longbow Research: Okay. Very good. James C. McCreary, Jr.: Let me just answer that. The pure volume piece was 10%. Dmitry Silversteyn – Longbow Research: Okay. James C. McCreary, Jr.: We said the combined was 9%. Dmitry Silversteyn – Longbow Research: Right. So you had a little bit of a positive mix benefit there. That’s great. Now, you’ve, because of when your fiscal year ended in November, typically on raw material products what we’re hearing is that there was a pretty big increase announced in December and then people telling us that they expect another one maybe as early as this month or early next month. When you talk about your 2% to 4% raw material increase for 2008 do you, my understanding is there will be somewhat of a higher increase in the first half of the year and then hopefully with all this capacity that’s supposed to come on stream and petrochemical prices declining as a result may be a benefit in the second half of the year. Is that the right way of looking at it or do you expect the 2% to 4% to be pretty steady throughout the year?

Well, as we said, we expect that 2% to 4% and we said, yes, Dmitry, that is going to be more accentuated that increase in the first half of the year than in the second half. Really that’s our expectation as the situation is right now. Clearly the deterioration of the economy may play a role there as well. Dmitry Silversteyn – Longbow Research: Okay. In your growth outlook for next year you mentioned that the competitive environment is getting somewhat softer and there’s several manufacturers that are seen to be chasing volume again so the pricing increase hasn’t been as great as you hoped it would be to offset the raw material cost increases. What’s your outlook for pricing in 2008? Do you think that there’s still enough demand out there and enough discipline out there to maybe push through another 1% to 2% price increase or should we be starting to think about actually pricing coming down in 2008?

We expect pricing to go up between 2% to 4%. Dmitry Silversteyn – Longbow Research: Okay. So enough to offset the raw material cost and then some, it sounds like.

Yes. Dmitry Silversteyn – Longbow Research: Okay. Excellent. And then finally, in Latin America, you bolstered a negative growth throughout the year. I understand that every quarter there was a little bit something different that accounted for it. What’s your outlook like in 2008? I was just a little confused about your comment. You talked about things getting better, but that the fourth quarter really didn’t show it. What’s your outlook for Latin America in 2008?

We see a clear trend reversal in 2008. We see (inaudible) indicators in terms of pipeline moving up. The right discipline in place. And that is in spite of what is happening with competition and with the economy. Dmitry Silversteyn – Longbow Research: Okay. So you think their internal efforts as far as salesmen training and product line differentiation will lead to positive results there regardless of what happens economically?

Well, that’s why we outlined a long-term plan and I can tell you that we are resourcing already fast growing regions. We are under way in our MNA efforts in those fast growing regions. We are already refocusing our (inaudible) towards the markets in (inaudible) that we outlined in October. The ROGE introduction has started and is already impacting commercial decisions, as well as re-evaluation of unproductive assets. Customer relationships are being built and in some cases being rebuilt. And investment decisions as we speak are being taken to strengthen labs, to strengthen IT, HR systems, enhance talents, and relooking at our manufacturing footprint. So a lot of momentum is being generated right now. Dmitry Silversteyn – Longbow Research: Okay. It sounds like what you’re saying is we’re going to see the impact on the margin maybe a little bit faster than the top line. Is that the right way of looking at it?

I wouldn’t say that. Dmitry Silversteyn – Longbow Research: Okay.

Take into account we’re speaking of ranges and we’re at the beginning of the year, so we still have wide ranges and we have to see exactly how the economy shakes out. Dmitry Silversteyn – Longbow Research: Okay. Very good. And then, I’m sorry, one final question. Since you’re in a net cash position at the end of the year despite completing a $100 million share repurchase program during the quarter I’m sure you have an acquisition pipeline which commands or will command some of the cash. But given your borrowing capacity and given the strength of your balance sheet is the board talking about another share repurchase authorization, maybe somewhat of an accelerated type, given where the stock price is currently?

As outlined in October we are evaluating all options. We have already executed $100 million buyback. Clearly the cash position I would say makes us, puts us in a much better position than several companies in this down turn. We have options that several others don’t have and we are judiciously looking at all of them. I think in the past we have never been showing ourselves as a company with poor execution or slow. But we are going to do what is right for the business long term. Dmitry Silversteyn – Longbow Research: I understand. Thank you very much.

Thank you.

Your next question comes from the line of Steve Schwartz with First Analysis. Steven Schwartz – First Analysis Corp.: Jim, when you walked through the adjustment for 2008 guidance relative to the auto J. V. you did not mention the unsold SG&A that would be absorbed. Does that still exist as an impact? James C. McCreary, Jr.: Yeah, that would be an area that we would continue to work to utilize in other businesses and bring down. So that is a factor out there that would have to be addressed. Steven Schwartz – First Analysis Corp.: Okay. It used to be $0.03 to $0.05. Is that still the level you’re expecting for ’08? James C. McCreary, Jr.: Say that again. Steven Schwartz – First Analysis Corp.: It was at the announcement about $0.03 to $0.05. Is that still the level you’re expecting? James C. McCreary, Jr.: Yeah. We said we’re at the higher end of that at $0.05. Steven Schwartz – First Analysis Corp.: Okay. And then with respect to capex and D&A guidance, it looks like your capex is expected to go up significantly in the year and yet D&A it looks like will drop relative to 2007. Can you talk about what’s going on there? James C. McCreary, Jr.: Let me do the amortization piece. That drops because we did take an additional charge in the earlier part of this year related to an intangible tied into the Roanoke acquisition. So we’re essentially flat on amortization year over year if we exclude that item. And let me turn it over to Michele to talk about some initiatives that we have in mind that impact the capex.

Yes. As I said before, we will do what is right to deliver on the long-term plan that we outlined only three months ago. It is a plan for growth and includes investment. As I said before, investment decisions are being taken as we speak and that is replaced in our capex number. James C. McCreary, Jr.: Yeah, let me make one more comment. Concerning the depreciation trending down, that ties into the timing of when the capital expenditures would take place during the course of the year and when they would move into the depreciation, which would be further out.

Your next question comes from the line of Rosemarie Morbelli from Ingalls & Snyder. Rosemarie Morbelli – Ingalls & Snyder: Good morning, all.

Good morning. James C. McCreary, Jr.: Good morning. Rosemarie Morbelli – Ingalls & Snyder: I would say that most of my questions have been answered, but I do have a couple of clarifications. You said that in 2008 you expect raw material costs to go up 2% to 4% and that you expect your price increases to follow that particular trend. However, in the fourth quarter your raw material costs you’ve said increased 6% over the prior year, but you only show a 1.4% increase in pricing. So what makes you think that next year you will actually be able to cover the raw material costs and will not have to give back some of that pricing regardless to the competitive environment?

Well, the fourth quarter raw material increase, Rosemarie, was 3% and our price increase was 1.4%. So our price increase was below the range that I’ve given for next year. The rationale behind the 2% to 4% price increase for next year is because some of those decisions have already been made as we speak. Rosemarie Morbelli – Ingalls & Snyder: And you don’t think that customers will come back and say, well, you know, we don’t have the demand, so we can leave out of our inventories or we can just go somewhere else for lower prices.

I think we are in a better position than several of our competitors to do that with the right processes. We are doing it in a way that doesn’t affect our long-term relationships with the customers. Rosemarie Morbelli – Ingalls & Snyder: Okay. Well, (inaudible) ask my other question if I could have clarification on ROGE trailing 12 months for ’06, Jim, was 7.5%, in the fourth quarter of this year it is 9.6%. What was it for the 12 months, 12 trailing months in ’07? So we have an apples-to-apples basis. Or is it already in an apples to apples? James C. McCreary, Jr.: That is an apples-to-apples basis. Rosemarie Morbelli – Ingalls & Snyder: It is apples to apples? It was not specifically the number for Q4? James C. McCreary, Jr.: When we do the calculation (inaudible). Rosemarie Morbelli – Ingalls & Snyder: Okay. I got it. So now, Michele, what are your, when you look at the low end of your range, which will be actually a couple of pennies lower than in 2007, do you have a recession in that or do you just have a slow down? I mean, based on all of your comments it sounds to me as though you expect everything to kind of pick up in the second half of ’08. Well, if it is not the case isn’t your low end expectations kind of high?

As we said, Rosemarie, our entire range of 2% to 8% factors the current situation of the economy. Rosemarie Morbelli – Ingalls & Snyder: But not the recession. We are not in a recession yet. What if we get there? Do you have that? It is not in there then.

Look, I am not an economist, but I read the newspapers like you and I talk to my customers and I can tell you that it’s clearly not pretty out there. People are extremely cautious. Some others are extremely concerned. And it is clear that we have to factor that in our estimates and make sure that that panorama is incorporated in the outlook. The reason for the range, 2% to 8%, a not discrete number, is related to the time factor around our controllables. How fast, how good will we be in delivering on the new business, on the new investments, and on the new acquisitions. That explains our 2% to 8% range. Rosemarie Morbelli – Ingalls & Snyder: So in the 8% you have some acquisitions? I mean, potential acquisitions that you would close between now and the end of the year? Am I hearing this properly?

I would say, well, I would say that the 8% includes delivering very well on the organic growth. Even if we deliver very well on the acquisitions, you know, with trauma (sic) costs and timing on when they would come aboard in ’08, that’s not necessarily a factor that you can say there is going to be very (inaudible) for the first year. Rosemarie Morbelli – Ingalls & Snyder: And since we’re on the acquisition subject, when do you expect Roanoke to actually show some improvement versus the prior year?

Two-thousand-and-eight. Rosemarie Morbelli – Ingalls & Snyder: Starting in the first quarter or you are still fixing some product lines and it won’t take effect, I mean, the benefit won’t take effect until the second half?

Roanoke is not exempt from the general trend and gradual ramp up we’ve given, so I would call it for the second half of ’08 to make sure that we are realistic with our estimate. Rosemarie Morbelli – Ingalls & Snyder: Okay. Thanks a lot. I appreciate it.

Thank you, Rosemarie.

Ladies and gentlemen we have time for one more question. Your final question comes from the line of David Begleiter with Deutsche Bank. David Begleiter – Deutsche Bank: Thank you. Good morning.

Good morning, David. James C. McCreary, Jr.: Good morning, David. David Begleiter – Deutsche Bank: Michele, you mentioned your organic buying growth should be positive in a back end for 2008. For the full year for 2008 what is your expectation for organic buying growth?

As we said, we expect positive organic growth for the year. Clearly not to the high end that we outlined at the investor conference. David Begleiter – Deutsche Bank: And just looking at the Q4 results, Michele, did you lose any market share in terms of business you wanted to keep in that negative 10% volume decline?

Well, there are some businesses that had customers that we didn’t want to lose. Roanoke is one of the examples. We bought it because of a high profitability profile and clearly losing volume is an example of business that you didn’t want to lose. On the rest of the business I think we are getting better and better at reducing water erosion and lost business. That doesn’t mean that there are no defects, but I would say that the vast majority of the disappointments come from Roanoke from high margin customer perspective. David Begleiter – Deutsche Bank: And lastly, what was Roanoke’s operating loss for the full year 2007?

We typically don’t break down to that level because, as you know, that is part of the STP group of business within the North American business. James C. McCreary, Jr.: Yeah, David, it becomes part of the STP component, so it become pretty entwined in the way that business operates. David Begleiter – Deutsche Bank: Should Roanoke be profitable, do you think, in 2008?

Well, I think yes. David Begleiter – Deutsche Bank: Thank you very much.

Thank you very much.

We have reached the allotted time for questions. Gentlemen, do you have any closing remarks?

We’d just like to thank everybody for joining us today. Have a good day. Thank you.