Todd Gleason - VP of IR Randall J. Hogan - Chairman and CEO John L. Stauch - EVP and CFO

Curt Woodworth - JP Morgan Deane Dray - Goldman Sachs Michael Schneider - Robert W. Baird Chris Glynn - Oppenheimer Mike Hamilton - RBC Capital Markets Francesca McCann - Stanford Financial James Lucas - Janney Montgomery Scott Chip Moore - Canaccord Adams

Good morning. My name is Nicole, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Pentair 2008 Q1 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remark there will be a question-and-answer and session. [Operator Instructions]. At this time, I would like to turn the call over to Mr. Todd Gleason, Vice President of Investor Relation. Sir, please go ahead. Todd Gleason - Vice President of Investor Relations: Thanks, Nicole. And Welcome to Pentair's first quarter earnings release conference call. We are glad you could join us. I'm Todd Gleason, Vice President of Investor Relations. With me today is Randy Hogan, our Chairman and Chief Executive Officer; and John Stauch, our Chief Financial Officer. On today's call we will provide details on our first quarter results as well as discuss our guidance for the second quarter and update you on Pentair's outlook for the reminder of 2008. Before we begin, let me remind you that any statements made about the company's anticipated financial results are forward-looking statements subject to future risk and uncertainties, such as the risk outlined in Pentair's 10-K, as of December 31st, 2007 in Pentair news releases. Forward-looking statements included herein are made as of today and the company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could different materially from anticipated results. Today webcast is accompanied by a presentation, which can be found in the Financial Information section of our website at www.pentair.com. Please go to the Webcast section, its located there. We will reference these slides to our prepared remarks. Any references to non-GAAP financials are reconciled in the appendix of the presentation. I would also like to point out that all financial results and references to year-end numbers in today's call and presentation are on continuing operations basis unless otherwise noted or highlighted. As is our custom, we will reserve time for questions and answers after our prepared remarks. I will now hand the call over to Randy, who will take you through Pentair's first quarter results and highlights, highlight key growth drivers and initiatives, provide his perspective on the markets in which we operate and describe some of the actions we are taking to ensure we deliver expected results this year. Then John will conclude our follow remarks with an overview of our second quarter of full year forecast, Randy? Randall J. Hogan - Chairman and Chief Executive Officer: Thanks, Todd and thank you all for joining us today. Let's begin by reviewing our first quarter results shown on slide two of the document Todd just referenced. Summarizing our first quarter, we had very good performance and we are off to a great start in 2008. We delivered $0.53 per share of earnings from continuing operations on revenue growth of 6%. The $0.53 is up 26% versus the $0.42 clocked in the first quarter of 2007. Additionally, the $0.53 bested the high end of our EPS guidance of $0.46 to $0.48 by $0.05 per share. You can think about this as a $0.04 beat from the strong growth and resulting margin leverage in our technical products business, and $0.01 beat from water margins. We will provide additional detail on each of the businesses in a few minutes. Now to review the highlights of our first quarter performance overall; Pentair first quarter sales of $840 million were 6% above the $793 million in sales we generated in the first quarter last year. Our organic growth was 3% in the quarter or flat in local currencies. The diversity of our businesses and investments for growth in international, commercial and municipal markets enabled us to overcome the much headlined softness in the North American residential markets. Acquisitions added another 3% to our top line versus last year. First quarter sales in our Water segment were up 3% year-over-year. Water margins were 11.6%, flat when compared to first quarter 2007 after adjusting for the sale of National Pool Tile in both periods. We will walk through the Water sales and margin details in a few minutes. Our Technical Products' business grew 13% in the first quarter versus Q1 2007, as our electrical business and international electronics businesses achieved double-digit growth. Our North American electronics business grew single-digits versus last year. Overall, for Technical Products with 13% sales growth and the continued strong results from our lean driven productivity efforts enabled us to expand first quarter operating margins an impressive 340 basis points. As the slide shows, overall, Pentair expanded margins 120 basis points. Looking at total company margins year-over-year, the positive impact from volume, price, acquisitions and mix, coupled with solid productivity, provided 380 basis points of margin growth in aggregate. This seasonally offset a negative 260 basis points impact from total inflation and foreign exchange. As expected, our first quarter effective tax rate was lower. The 34% rate reflects the great work our team has done. We bought back shares worth $12.5 million in the quarter and we have $37.5 million remaining on our authorization, which we expect to fully utilize in 2008. As the slide shows, interest expense hurt us by $0.01 of EPS versus last year, as the 2007 acquisition of Jung Pump and Porus Media resulted in higher debt levels. We had a nice start to the year in free cash flow despite the fact that there was a usage cash of $78 million. As you know, receivables and inventories grow in our first quarter as we prepare for seasonal sales in the coming months. First quarter cash flow is also typically impacted by the dispersion of bonuses and customer and distributor rebates. The negative $78 million in free cash flow results met our expectations and we're on track to deliver at least 100% conversion of income from continuing operations. So those were the Pentair level of highlights for the first quarter. Now let's turn to slide number three, which highlights the divestiture we completed in the first quarter of National Pool Tile. As we announced in the first quarter, we sold the National Pool Tile business, or NPT to Pool Corp. NPT is a distributor of Pool related tile and decking products for the North American pool market. It's been a great growth business for us during the pool boom, but it's not central to the equipment business. By selling NPT, we honed our Water portfolio to better match our strategy of focusing on core equipment solutions and the business has a better home, where it's part of their core strategy. In 2007, NPT generated approximately $68 million in sales and lost a few million dollars in operating profit. Removing NPT from continuing operations improves Water margins approximately 30 basis points. 1The transaction is classified as discontinued operations and results in negative $0.08 earnings per share again in the quarter. Of which $0.07 was the loss on the sale of business and $0.01 related to NPT's financial results during the portion of the first quarter, while we still owned it. So a good distribution asset for Pool Corporation and a good move for our portfolio. Now, let's dive in our ongoing Water business and discuss first quarter results. So please turn to slide four where we'll cover that. Overall, Water Group sales $15 million to $555 million, up 3% versus last year sales. Organic sales were down 4%. The composition of our total water sales are shown on the top left section of the slide. In the walk you can see we had a fairly sizable decline in volumes versus the first quarter last year. Of that $22 million decline, about $15 million was because of the timing benefit we received in Q1 2007 for some of our Q4 2006 early buy orders carrying over into 2007. We highlighted this during last year's Q1 earnings call and it makes up the bulk of our sales decline year-over-year. Now let me give you some color on our Water Global business unit. Starting with Flow Technologies, GBU; sales grew 8% globally or up 5% when you adjust for the 2007 acquisition of Jung Pump. Flow continues to see strength in commercial, agricultural and municipal markets. Flow's commercial pump product line shipped a record number of units in the first quarter, in large part because of strong international sales. We expect over 30% of commercial pumps produced in the United States to be sold internationally this year. This is up over 10 percentage points in international sales since the end of the 2005. Flow's residential markets remain soft in the first quarter as expected. The weather was a positive factor, the heavy rains and snowfall helped drive residential sump pump sales. Our Faradyne joint venture continues on a positive trend as our customer acceptance of our Pentek model pumps remains greater than 90%. In municipal we continue to have record backlog of 20% year-over-year. This is particularly impressive when you take into consideration that last year our back log included the $21 million in New Orleans job. If you exclude that project our backlog is up over 60%. We made nice progress developing our global municipal pump strategy, so we anticipate continued growth in this space. In a few minutes we will highlight one of our new leading energy efficient municipal pumps that enabled us to win a key project recently. We're just beginning to introduce this technology at desalination projects and are starting to bid on the multitude of opportunities in that space. Our Filtration GBU was up 8% versus last year, but down single-digits when you exclude the 2007 acquisition of Porus Media. The organic sales decline was driven entirely by softness in the North American residential market, where demand for water treatment systems is down double-digit. We continue to have good growth in our food service and industrial filtration product lines, which were both up approximately 10%. We'll highlight more about our food service and industrial filtration solutions again in a few minutes. Our Pool GBU was down 10%, year-over-year a little worse than expected. Adjusting for the $15 million in 2007 first quarter carry over sales, our pool business was flat despite pool and spa markets being down double-digits. Key pool markets such as California, Florida, Arizona and Texas are all experiencing pool permit decline in the 20% to 60% range. Despite these battered markets, our pool business continues to maintain solid performance as our energy efficient and environmentally sensitive EcoSelect initiative continues to drive sales volume. We continue to invest in new applications and look to maintain our position as the leader in new product development. In fact approximately 50% of the business' technology budget is spent on new products, many of which are new to the market, not just new to Pentair. In commercial pool we grew sales over 30% in the quarter. We will highlight this segment more in a few minutes when we review our global growth initiatives. So our outlook for the residential pool and spa market is very cautious. We continue to invest in new products, distribution and global solutions for our commercial applications. We believe these actions couple with the divestiture of the National Pool Tile business better position our pool business for future growth. You can see on the chart that we provide growth figures for our international regions. We continue to make solid progress integrating our region or regional teams and strategies to realize true global business units. However, we intend to still provide you with these regional figures so you can track the progress of our international growth. The Europe, Middle East and Africa or EMEA was up 17%, but about flat when you remove the positive impact of foreign exchange and acquisitions. However, Eastern Europe and the Middle East grew almost 50% in the quarter. The flooring tiles [ph] and other investments in these fast growing areas and we expect continued strong growth in 2008. Asia continues to grow and was up 23% year-over-year. More importantly, orders were up over 40% in the first quarter. This growth demonstrates the continued success we're having in the region. Another item I'd point out is that our GBUs are working closely together to leverage each others strengths in distribution and technology. For example, our desalination backlog associated with our CodeLine vessels is at historic highs and our quote book is also at record levels. We're working to leverage our CodeLine knowledge and contacts within desalination and now have a quote backlog in our flow technologies business associated with numerous exciting desalination opportunities. So the major growth focus, we'd like to stress is that we continue to invest heavily in our global business unit structure and products for key markets. This is a journey, we're having success and we expect more growth throughout 2008 and more in 2009 from these investments. On the top right, you can see our year-over-year operating income walk for water. Margins were 11.6%, flat year-over-year, despite declining volumes in our North American residential related products, high materials inflation and tough comps in pool. We had a nice impact from productivity, which contributed a positive 220 basis points. Our lean initiatives are yielding positive results and we continue to work to reduce our fixed costs. In aggregate, growth in productivity offset a negative 270 basis point impact from total inflation and enabled us to achieve first quarter Water margins of 11.6%, a bit better than our expectation. If you normalize for the $15 million in Q1 early buy benefit, last year's margins expanded 40 basis points, which is highlighted in the bullet point. We point out that the sale of NPT does improve margins about 30 basis points from what we reported in water last year. So we feel good about improving our water portfolio. We continue to take new actions to improve our profitability and footprint. In the quarter, we initiated the shut down of a factory in UK. Additionally, we are making good progress on the restructuring actions we took in the second half of 2007. Let's now move to slide number five and review our Technical Products business. Similar to water, we provide you with total business sales and operating income loss of the upper half of the chart. Technical Products results in the first quarter were outstanding, as we grew sales 13% and achieved margins of 15.9%. Let's review what enabled our businesses to have better than originally expected performance in the quarter. As we look at our sales results, our global electrical business grew 10% versus last year, as we continue to take advantage of a strong and diverse business model. Our Thermal And Networking vertical market, each grew 30% year-over-year. We continue to see solid performance in our Hoffman channels, which serve over 20 different vertical markets. Our global electronics business grew 18%, every region posted positive growth and our Asia Pacific electronics business grew 46%. Looking at Technical Products' margins, growth and productivity together contributed 520 basis points of margin expansion. This easily offset the impact of a negative 180 basis points from total inflation. Our lean-driven productivity actions continued to prove solid results as we have excellent conversion from the 13% sales growth. We are executing well in the 2007 restructuring actions, which include the shut down of facilities outside Chicago and one in the UK. By reducing our technical products footprint, we believe we will get even better operating leverage, even if we see lower growth markets. Given the increase in the metal prices, mainly steel for technical products, we recently introduced new price actions in the segment. We believe these actions have been accepted by our customers and our product really sized to offset commodity pressure. We are also making great progress integrating our electric and electronics organizations into one global business unit. By leveraging best practices in sourcing and lean and leveraging administrative functions, we believe we can continue the momentum we started to build in technical products margin expansion. So in sum, Technical Products delivered a strong top line and had great executions to deliver outstanding bottom line results in Q1. We believe this segment is well positioned for the balance of the year. Let's move to slide number six, which shows our financial metrics. In particular, I would like to highlight cash and return on invested capital or ROIC. As mentioned earlier, we had a usage of $78 million of free cash flow in the first quarter, roughly equal to our result in same period of 2007. We continued to make progress in regard to working capital, but there is still lot of opportunity to improve further, particularly in inventories. If we take a look at the components of return on invested capital to the right of the slide, you see our fourth quarter trailing net operating profit after tax, or NOPAT was $274 million. Our average invested capital was $2.89 billion, which gives us an after tax or ROIC of 9.5%. This is up 50 basis points versus the same metric a year ago, and we continue to drive for steady improvements in this key metric. Our ending working capital was $512 million, an increase of $26 million versus last year and our five quarter moving average working capital is $437 million, which is 12.9% of fourth quarter's trailing sales. Our total debt was just over $1.1 billion, for a debt to total capital ratio of 36%. As a remainder the non-GAAP to GAAP reconciliations of these calculations in numbers are included in the appendix of this presentation. Now please turn to chart number seven. The next three slides are designed to highlight how we view and are seizing market opportunities for growth. Throughout 2008, we will provide an update on market opportunities and our growth initiatives. These next few charts lay the foundation for future quarterly update. This slide highlights global growth driver that have attractive long-term growth characteristic. As the chart show, they are energy efficiency, which represents the global demand from more cost effective solutions. The environment, which represents a growing awareness and willingness to pay for new technical solutions that will reduce the impact on our global environment. Infrastructure, which is the major opportunity for the companies like Pentair, they're going to assist emerging reasons develop industrial, commercial and residential infrastructure as well as aid in the replacement of ageing infrastructure in developed nations. Regulation, which represents the changing and more stringent legislative actions that are being put in place to better husband our water resources. Health and safety, which is garnering even more global awareness as developing areas often need advanced solutions to stave off diseases. Also as global weather pattern shift, there is a need to defend flood zones and protect coastal cities. And finally, industrialization, which is happening rapidly in Asia, Eastern Europe, Latin America, the Middle East and Africa. These regions require water and natural resources for industrial development, which is driving mining and exploitation needs as well. These processes are opportunities for our filtration, flow and technical product solutions. These global growth drivers aren't new and certainly we are not the only company to focus on these as growth opportunities. But we highlight them today to animate why we are performing well. We aren't just a residential focus company. You can see we have placed check marks next to each growth opportunity, as the next few slides demonstrate, we are successfully providing specific solutions in each of these areas and we have strategies to capture more growth. Now let's turn to slide number eight. This slide shows our seven key growth initiatives. To give you some history on these initiatives; 18 months ago, as we began to see the decline in residential markets, we prioritized these seven areas as key opportunities for Pentair based on the growth drivers. Now clearly, we have many other growth initiatives within our businesses, but these are ones where we've put additional resources and established global teams that have high level oversight, with either Mike Schrock or me, reviewing them on a monthly basis. You can read the information on the charts. I'll just quickly walk through some of the detail. The segment of Industrial Filtration we are focusing on is a large and growing $20 billion market. We've more than doubled our size in this space when we acquired Porus Media last year. This area specifically addresses industrialization and environmental global themes. We expect to grow our $100 million Industrial Filtration business by another 20% this year, similar to our organic growth rate in 2007. The second key growth initiative is food service. I know we've made a pretty big deal about this segment over the past year, that's because it is a big deal for us. First, it is our most global business. Also last year, we crossed the $100 million mark in this market. We have tremendous partnership with Eco Lab and with our customers such as Starsbucks, McDonald's and others. Restaurant and food service providers are more concerned about health and safety and increasingly about the environment. Our food service products help water with purity and efficiency within the food preparation process. We see double-digit growth in 2008 and our global expansion in this area continues to be very impressive. The third initiative is RO/Desalination. We continue to grow our CodeLine product line where we have the leading market share in desalination installations. As we aggressively introduce new pumps and pre-filtration applications, we are leveraging our project intimacy to get at bat for those products and we expect to grow even more rapidly in this $5 billion market space. The fourth initiative is Technical Products, India. While currently very small in terms of revenue, we think the market is at least $400 million, and not many companies are as uniquely qualified to participate as our technical products business. We have invested in sales and distribution; we are going establish a dedicated manufacturing facility in the country by year-end. The fifth initiative is Commercial Pools, which plays into the energy efficiency and health and safety platforms. Most hotels have pool or spas. The equipment installed in most of the world's pools is much less efficient than our current platform of EcoSelect products. Last year, we grew 30% in this $50 million market segment and have lots of room for growth, since we estimate the market size at $1 billion globally. The next initiative is our growth investment in Latin America, which is increasingly expanding its infrastructure in industrial footprint. We currently sell about $80 million into the region and we have the ability to go rapidly there. We expect double-digit growth in 2008 and our team is making real progress with sales channels and distribution. Our seventh key initiative is water reuse, which is becoming a hot topic with the growing crisis around water availability in more and more places. In Australia, there are a number of regulatory measures being considered that would require increased water reuse. We have integrated pump and filtration solutions and more are being developed. The market is estimated at over $1 billion, but until major legislation is passed, it is truly hard to estimate the size for the potential. These seven key growth initiatives play into the global growth themes that we highlighted on slide number seven. As you can see, we continue to make real progress with each initiative. Let's turn to slide number nine and review a few specific products or initiatives at a more granular level. As we drill in a little deeper, here's how we are changing what we do to get after these opportunities. This slide shows four examples of programs or products driving our key growth initiatives. Starting with industrial filtration, our Porus Media product line has developed leading filtration products to serve the oil and gas extraction, refining, in petrochemical end markets. Porus is heretofore focused on U.S. opportunities almost exclusively. Now we are leveraging this technology to provide similar solutions in the Middle East, Europe and Asia. The product's improved up time was socialized several multiple higher than existing approaches and reduced disposal on operating cost by as much as 50%. On the top right of slide we highlight one of our thermal solutions that we are driving in technical products. Many outside observers of Pentair may not be aware of this growing thermal product line within technical products. These products are becoming more critical as the power of electronics increase and as the global economy reaches new industrial areas. Many of these emerging regions and deployments have harsher environments, whether its temperature or other demanding environmental conditions. Our Thermal Enclosures provide energy efficient, cooling or heating devices to protect and extend the life of the critical electronic equipment. This is one of the fastest growing areas of technical products, as we mentioned it grew over 30% in the first quarter and it has double-digit margins. As I mentioned earlier we are leveraging our CodeLine market knowledge within the desalination market and we've introduced a line of large pumps that have three to four points of energy efficiency advantage for desalination projects. In fact, while not a de-sal project, the city of New York purchased these pumps through their Crotonville, New York municipal treatment center, based on this greater efficiency. Finally, our commercial pool applications are being installed with great success. Last year, we showed you that we installed one of our hotel pool equipment solutions at the Shanghai Marriot we saved the hotel 85% on their energy and maintenance cost. We believe we are well positioned for our new construction, a retrofit for energy and environmental upgrade. So this is just a few of the many exciting applications we have deployed to help our customers and to participate in the major global growth of things. Before I turn it over to John, let me update you on our outlook for our major markets in 2008. On slide number 10, you can see our current view of the major markets versus how we initially planned. We also provide update on our original market expectations as well as the market performance in 2007. To be helpful, the pie chart in the left of the slides are geographic and market mix as we exited 2007. This is from our fourth quarter earnings presentation. Taking a look at our markets, we would say the U.S. residential markets are in a more pronounced downturn in 2008 than we originally expected. We planned for down 15% to 20% in this market, we now expect at least a negative 25%. This encompasses a number of variables including housing starts and pool permits. This negative 25% for example assumed 2008 housing start of around 700,000 units. So it's pretty dismal. Other than this market which you can see is red versus our initial outlook, we would also point out that our other markets while not always expanding as strongly as 2007 are generally in line with our planning assumptions and remember we pointed out that many of our market assumptions were from moderating growth in key areas like commercial, industrial and Europe. As I mentioned earlier, we are also increasing price in many of our product lines to reflect the increased cost associated with metals and other commodities. So our planned price increase of 1% to 2% was too low and we're stepping up to a higher level. I'm sure we will see market segments both outperform and under perform our current out look, and we feel we are closing moderating the key trends that impact our business and we will adjust our forecast and actions accordingly. Now I turn it over to John for our second quarter and full year guidance overview. John? John L. Stauch - Executive Vice President and Chief Financial Officer: Thank you, Randy. Let's start by reviewing slide number 11 and take a look at our expectations for the second quarter. Our Q2 and full year forecast reflect our outlook that the North American residential market will not improve in 2008 and may even further contract, particularly in our pool equipment in our North American residential water treatment businesses. In water, we expect sales to be flat to down. We continue to see strong export related shipments in our industrial and commercial segments, but these are not enough to offset the continued softness in North American residential. Additionally, last year in the second quarter, we sold $21 million of municipal pump to the city of New Orleans. That project coupled with our expectation at the pool market will remain down high single to low double-digits; suppressed our outlook for growth in the water business in the second quarter. Overall though, we would say that 2008 Q2 is in line with our planned expectations including our corporate contingency. Our forecast for sales growth for first half of 2008 does not properly reflect the organic growth run rate in water due to the year-over-year headwinds. We believe water's real ongoing growth rate is around 3% for 2008 and once we begin to experience even a modest market recovery in North American residential, we expect to feedback to our 5% to 8% targeted water organic growth rate. We continue to fund our selling, marketing and R&D investments to serve the global demand in water for our products in growth regions. As for Technical Products, we expect moderating markets to impact sales in the second quarter, although we enter the quarter with solid order trends. Our forecast for the GBU is high single-digit growth as compared to low teen growth in the first quarter. We would suggest that our rebound in electronics is based on a few factors. As you may remember, the first half of 2007 was down dramatically because the market consolidation and the timing of certain orders in our business. Second, we continue to diversify and broaden our vertical market offerings which provides for more balance. In electrical, the strong U.S. industrial cycle continues. As a weak dollar provides insulation from other parts of the U.S. economy, driving an increase n export shipments. We have planned and forecasted for moderating growth in many of our verticals, therefore we continue to implement cost controls and pricing actions, which we think is prudent. Moving on, we expect the operating income to be between $114 million and $120 million. This should produce operating margins of about 12.5%, about flat with 2007 second quarter margins. We expect margins to benefit from additional productivity, driven by our lean initiatives, benefits from our growing pipeline of sourcing actions, our moves to emerging regions and a continual focus on reducing structure. Also the acquisitions we made in 2007 provide margin support as they continue to perform very well. We expect to maintain a 34% tax rate, as we continue to realize the benefit of a European water business move to Switzerland in 2007, and the shift of manufacturing to more favorable tax regions. Net interest expense is expected to be approximately $16 million, down about $2 million year-over-year, as our debt levels are expected to be reduced by cash generations. Finally, we are forecasting second quarter free cash flow to at least $125 million, as we drive toward our full year target of at least 100% conversion of income from continuing operations. So, as we previously mentioned, we expect second quarter EPS between $0.64 and $0.67, up between 5% and 10% on a year-over-year basis. Another way to look at our second quarter performance is to consider how we expect to do given some of our year-over-year hurdles. Please turn to slide 12. As we mentioned earlier, last year in the second quarter, we had a nice pick up in the large flow technologies municipal pump project in New Orleans. We continue to see solid results in our municipal vertical market and our municipal orders and backlog, are up double-digits even after the completion of this project. The upper two-thirds of this slide provides an analysis comparing our current second quarter forecast versus last year, with and without this large New Orleans job. We are not apologizing for the lumpy nature of these municipal projects, but we thought it might be helpful to evaluate the second quarter year-over-year this way. You will also note that at the bottom of the slide we highlight our second quarter guidance, also reflects the softer markets in pool and residential construction as well as higher than originally planned metals inflation. Despite these market conditions, we continue to invest in our GBU growth initiatives and new technologies. We still have a solid line of sight toward achieving our full year outlook. Let's turn to slide 13 and take a look at our EPS walks for the first quarter and for the balance for the year. In the interest of time, I am not going to go through all the details, but hopefully you will find the information helpful. As you can see in the first quarter we received $0.11 of year-over-year EPS from what we call above the line items, i.e. the positive impact from organic growth, '07 acquisitions and productivity net of inflation. This represents all of our EPS gain versus first quarter 2007 as our below the line items from share account, interest, equity and tax rate in aggregate netted to zero. The next several columns indicate that for the balance of 2008, we expect to see more benefits from the below the line items, which we invested in throughout 2007 and continue to drive in 2008. Our tax rate should deliver more year-over-year EPS benefit throughout the year and our share count will be more meaningfully balanced. Additionally, as we get into the second half of 2008, we expect our debt levels will be down versus 2007 and that lower interest expense will be a nice pick-up. Meanwhile, our above the line items remained steady, but is slightly less favorable levels than the first quarter. We expect to see roughly the same levels in net productivity but the second half will have less positive benefits from the 2007 acquisition as they were more fully integrated in last year's second half results. The middle section of the chart shows the impact we could or the impact that more difficult economic and inflationary situation could have on our results. We indicated that we were holding contingency for unknown economic impacts, such as a more pronounced downturn in North-American residential or perhaps higher commodity inflation. Both of which may now be more likely to occur. Meanwhile, we continue to invest in new technologies, global markets and then the completion of our global business unit organization. So this middle section should provide you with some balance to how we see our ability to offset a world that never sits still versus our original expectation. We also continue to evaluate and implement new price actions and businesses that continue to be hit with higher commodity cost. And in our mostly dealer distributor model, we typically can implement inflation related price increases through the channel rather effectively and will do so if necessary. The final observation we would like to make is that we feel we have the right initiatives and contingency plans in place to meet our commitments for the year, and we believe we are investing as needed to position your company for a solid 2009. Turning to slide 14, let's review our outlook for the full year. I might be jumping ahead to the key takeaway, but as you saw in our press release this morning, we have raised the lower end of our full year EPS guidance to $2.30. This updates our guidance to $2.30 to $2.40, up 10% to 14% year-over-year. We get to the new full year EPS by seeing sales growth of 2% to 4%. Given our view of the markets, we believe we have the right level of growth initiatives to produce these results. Our water business continues to drive great growth in its key initiatives, but we maintain an outlook for flattish organic growth as residential and pool markets remain very soft in North America. Technical products continued to grow nicely, and we see the full year of at least mid-single digits. We expect to increase both our operating income and margins and our forecasting overall margins of approximately 12%, up versus last year on a continuing basis. We expect the combination of margin expansion in conjunction with a lower tax rate of around 34% fewer shares outstanding and lower interest expense should produce earnings per share of $2.30 to $2.40 for the full year. Again, this represents EPS growth of 10% to 14% versus adjusted 2007 earnings per share of $2.10. Finally, we remain committed to our annual goal of generating cash in excess of income from continuing ops that continue to drive towards improving after tax ROIC. In summary, we are improving our guidance range for the full year based on solid start to the year and we feel we will continue that momentum through out the balance of 2008. As, a reminder, our 10-Q will be filed today, so you can be on the look out for that later this afternoon. That concludes our review. Operator, we will now open it up to questions. Question And Answer

[Operator Instructions]. Your first question is from Curt Woodworth of JP Morgan. Curt Woodworth - JP Morgan: Good afternoon. Randall J. Hogan - Chairman and Chief Executive Officer: Hi Curt. John L. Stauch - Executive Vice President and Chief Financial Officer: Hi, Curt. Curt Woodworth - JP Morgan: In looking out for water margin guidance for the second quarter of 13% to 13.5%, it looks like that's going to be down, no roughly 100 or 50 to 100 basis points and is that after adjusting for NPT and is that mainly a function of just the tough comparison within municipal and then kind of the higher margin pool market weakness? Randall J. Hogan - Chairman and Chief Executive Officer: Exactly. I mean ... we have ... if we go back and adjust for the MPT to your point, we have somewhat close to 14.8%. We had a really, really good quarter last year Curt because the New Orleans pump job was in there as well, which was a high margin job that we identified. That coupled with the softness in the pool marketing in Q2 which is the pool season. Curt Woodworth - JP Morgan: And residential -- Randall J. Hogan - Chairman and Chief Executive Officer: Which is a high margin business, which as we said was weak in the first quarter. Curt Woodworth - JP Morgan: Okay, and do you still feel confident in your 13% margin target for the year? John L. Stauch - Executive Vice President and Chief Financial Officer: I don't know if we have to have 13%, I want to make sure that point's clear, Curt I mean truly -- Curt Woodworth - JP Morgan: Okay. John L. Stauch - Executive Vice President and Chief Financial Officer: We want to do water margins because it's going to be drive ROIC. But we also want to improve water growth. so we are going to continue to invest in our water business. We are experiencing some pretty good technical product strength right now, which is allowing us to invest in that water growth. But we want to continue to drive margins. I would say we are probably close to the 13% margin right now, depending on how soft the North-American residential markets get. Curt Woodworth - JP Morgan: Okay, great and then in terms of residential filtration, I mean couple of years ago, this was definitely listed as key growth opportunity for the company, we had two years where I think you have seen negative growth in that market and clearly no longer kind of priority for the company. Can you help us understand why that shift has occurred, what's... kind of what's happened in that market relative to either overall market trends, or your market share? John L. Stauch - Executive Vice President and Chief Financial Officer: Let me... I would say that... I wouldn't say it's no longer our priority. I think you got to get growth where you can get it and we are a leading provider of equipment in the residential water treatment and filtration space and it's a space we are committed to. We just haven't been putting a lot of our resources to growing that because the degrees of freedom for growth there are as great as they are elsewhere, our market share was much lower in Food service and industrial, for example and we are investing to globalize residential filtration. So I think one of the reasons that we are down in growth, we did have some market share losses because we lost some of the OEM business in the residential arena. We haven't really offset that and secondly I would tell you that the impact on residential with the market downturn is harder or worse than we anticipated it would be. And that's sort of like to receive wisdom was that it wouldn't be impacted as much as it has been. So I would tell you that its not that we are de-emphasizing it, it's just that we are flowing our resources to where the growth is to get. Randall J. Hogan - Chairman and Chief Executive Officer: Curt, I mean there is... you are talking about our new housing number a few years ago with 2 million plus to drop into less than 700,000. So we realized that impact in the filtration business and water treatment doesn't generate the amount of after market revenue differences our residential pump business would have. So I think we've experienced a steeper downturn in that particularly market segment, but even despite that we still have average margins over 17 to 18% in that space at this level. I will talk about having the right technologies and the right solutions when the market turns out to be there for the customer. Curt Woodworth - JP Morgan: Okay, great, and in terms of the performance in North America, this quarter I mean EMEA and its specific result, very strong. Would that imply that North America... the Americas you were down organically probably high single digits, this quarter on water? John L. Stauch - Executive Vice President and Chief Financial Officer: If you include the pool downturn, which we are not trying to make excuse for that, but we carried that revenue over, yeah, we'll be down about 6% in North America and that would be despite some view that North America benefits after distributor and export sales as one. Curt Woodworth - JP Morgan: Right and I guess you normalized for the pool, pre-buy from last year, it's probably more like low single digits John L. Stauch - Executive Vice President and Chief Financial Officer: Yeah that's break up three points. Curt Woodworth - JP Morgan: Okay, all right, thanks. Randall J. Hogan - Chairman and Chief Executive Officer: Thank you, Kurt.

Your next question is from Deane Dray of Goldman Sachs. Deane Dray - Goldman Sachs: Your question on the Enclosures, technical products margin and that was a pleasant surprise this quarter. Can we address how sustainable these margins are and how... I know you are going to say the business is different this time because it certainly is, but if you go back to the last recession, you saw some mid single digit margins, lots of Mike Schrock type improvements there, but what gives you the confidence about the resiliency of those margins in an economic downturn? Randall J. Hogan - Chairman and Chief Executive Officer: There is two things, I would summit are different from before. We have a much more diverse set of end-markets that we don't think they all are going to move together, for example the public market, and the energy market, and the food beverage and pharmaceutical markets, as specific radical markets that we serve now as a security defense. They are moving with the overall markets and in fact last time every market went down, I can give you all the data on that if you want, but I think you remember. Everything went down all over, and I don't think that will happen again and evidence of that right now, I know our markets are moving the same way right now. The second thing is this, we had cost structure in place at that time to be a $1 billion dollars, and if you recall the peak was $780 million or something like that and then we went down from there. So we hade a lot cost more structure than we had... than we have now and we have a lot better lean discipline and we continue to take cost out even though we are performing at decent level with the closure of Chicago factory in one in the UK. So those are the differences, those are the differences I would say now, that doesn't say that we can sustain 16%, if there is a big down draft, but I'll be disappointed if it didn't stay double digit. Deane Dray - Goldman Sachs: Got it and then how about... help us understand what the impact of foreign exchange is... I mean you did the earnings walk by segment you could see the top line of that of foreign exchange, but is that ... is then it gets modeled in with the productivity and effects pocket on the operating income line. So what the operating income of effect on CapEx? Randall J. Hogan - Chairman and Chief Executive Officer: Yeah, I would for us and I won't take you through the map, I will have Todd do this with you, believe it or not it's a very little impact to us, because some of our units were actually hurt on the way that the purchasing product and the impact of the foreign exchange as they buy it and were pretty dollar denominated with a lot of our products. So, here is like India which is a global business, we are selling in Dollars but we are taking our cost in Rupees. So very little impact, $5 million positive for us on the foreign exchange from an operating income line which is less than a penny. Deane Dray - Goldman Sachs: Good, that's helpful and then how about some... am I correct that Porus is going to be part of your core revenue growth in the second quarter and how has that core growth been and what does that do to your core growth for water, because it's more than industrial business as well. Randall J. Hogan - Chairman and Chief Executive Officer: It is its all industrial and actually medical too. John L. Stauch - Executive Vice President and Chief Financial Officer: Well I could say I will answer the first question and let Randy tell you strategy. Industrial filtration which is part of the slide Todd was showing you and Porus is the leading partner, industrial filtration is up about 10% year-to-date and we are seeing a continued nice trend there and I will let Randy take-- Randall J. Hogan - Chairman and Chief Executive Officer: Well Porus Media is the big driver of that growth going forward on the organic basis. We really have some great technology in Porus Media also not just in industrial Porus Media technology is what we are using in the pre-filtration solution that we are introducing in desalination right now. So, I would say that Porus Media is helping to drive double digit growth and industrial is going to help drive double digit growth in products beyond CodeLine and desalination and its going to help us drive growth globally. And the markets that they are serving, Dean are not under the same type of challenges that the rest of the North American residential markets are facing. They serve a lot energy in markets, which are up nicely right now. Deane Dray - Goldman Sachs: Okay and then last question. Just on the pool business down 10% you may have addressed this, just want to make sure I am clear, is that what was the effect of the early buy this year versus previous years. Did you pull in how much of business into the fourth quarter? Randall J. Hogan - Chairman and Chief Executive Officer: Yeah, we didn't really pull in. If you recall back in 2006 when we adjusted our cost structure down we sized our Q4, 2006 early by production level to about... I think it was about $85 million or so and it turned out that the early buy was better than that by about $15 million. So we had to push it out. This year we sought last year in 2007 for early buy we sized our production level to a more normal level. So we carried over $15 million last but we still carried over some early buy into this year I have to get the exact numbers, you remember John. John L. Stauch - Executive Vice President and Chief Financial Officer: No, I don't, but we can get it to you Dean. The real answer is that we are not pulling in. Randall J. Hogan - Chairman and Chief Executive Officer: Well my answer wasn't that. John L. Stauch - Executive Vice President and Chief Financial Officer: No, it was right. I am just saying, all right, I wanted to make sure Deane Dray - Goldman Sachs: That's a good point there. John L. Stauch - Executive Vice President and Chief Financial Officer: I just want to make sure, we are not pulling in here its really indicative of the markers in the dealer channel and as Randy mentioned the pool permits are down significantly. So our distributors aren't stocking up or bringing in inventory into the channel like they normally would do. Deane Dray - Goldman Sachs: Okay, that's helpful, thank you. John L. Stauch - Executive Vice President and Chief Financial Officer: I think Randy's answer is better, Dean --

Your next question is from Mike Schneider of Robert W. Baird Michael Schneider - Robert W. Baird: Good morning, guys. Randall J. Hogan - Chairman and Chief Executive Officer: Hi, Mike. John L. Stauch - Executive Vice President and Chief Financial Officer: Hey, Mike. Michael Schneider - Robert W. Baird: Maybe we can stick to water for a second, just in the chart on page 10 where you identify the North-American replacement market and just the change from your plan, you identify that as a little less. Does that relate to replacement sales that Ever Pure? Randall J. Hogan - Chairman and Chief Executive Officer: Not Ever Pure, that's... let me get this, this is a little lighter and Ever Pure is not a... they don't do much in residential, Mike. The split there that should... if there was more over, I would say North-American residential replacement. We separate residential replacement there. Ever Pure globally is... is doing just fine, it's a little softer in North America then it is in other markets because there's some... its interesting in particular... the consumer spending has hit what we would call the mid level restaurants and which is a big customer base for food service so... so it's a little bit slower on the turns there. But, actually the quick serve, the fast foods and the high end restaurants are doing just fine. So, a... and we saw a lot of momentum in terms of new placements. Michael Schneider - Robert W. Baird: Okay and then you reduced the forecast by water as you said from about 3% organic to flat for the year, which is about $70 million. Is that really all coming out of pool mainly or there's some other just minor reductions across the board? Randall J. Hogan - Chairman and Chief Executive Officer: Well, we really are taking it out everything related to residential and whether it's pool, its filtration and its flow [indiscernible]. Michael Schneider - Robert W. Baird: Okay, and then Europe... did I hear you correctly that Europe was flat in local currency? Randall J. Hogan - Chairman and Chief Executive Officer: Correct. Michael Schneider - Robert W. Baird: In water? Randall J. Hogan - Chairman and Chief Executive Officer: Correct. Michael Schneider - Robert W. Baird: And can you give us some sense of what the trends are there... is that also residential? Randall J. Hogan - Chairman and Chief Executive Officer: Well, yeah, exactly. It's very much... I think you might have heard this from other companies, residential has slowed in Europe and residential is the big segment of our European water business. When I look at industrial, it's looking pretty good and food service is looking good but... and we want to a push Energy with of course Media there. So we think residential is going to stay flat, we don't expect any kind of down draft as we seen in North America. John L. Stauch - Executive Vice President and Chief Financial Officer: And Mike, I mean to fall back up with you, we're getting better at some of the reporting, but some of our, for instance Middle East revenue will shift from distributors out of the states or direct from North American -- Randall J. Hogan - Chairman and Chief Executive Officer: Oh, yes true. John L. Stauch - Executive Vice President and Chief Financial Officer: But to your point, Western Europe has slowed in our view, Eastern Europe is still strong and areas like the Middle East are still booming. Michael Schneider - Robert W. Baird: Okay, and then just final question on margins in water. You point out that margins were up 40 basis points if you exclude kind of this pool pre-buy that occurred and which implies 12%. I'm curious there if you are able to really scrub Porus and the acquisitions in their entirety out of that water operating income, were water margin actually down for the core business? Randall J. Hogan - Chairman and Chief Executive Officer: Well, I have to get you that. I mean you are right but Jung and Porus definitely helped and we would say we have already fixed this properly stated by the way the prior year would be the one that would be a little lower, because of the pool. Michael Schneider - Robert W. Baird: Sure. John L. Stauch - Executive Vice President and Chief Financial Officer: And it's hard to just isolate those things, because you can pick a couple of others for instance because weather was strong in flow technology, we had the sump pumps a lot of that goes to retail, retail is not as profitable channels as pro channel, and there's lots of moving parts and I think they're probably worthwhile to have that explore out of type. Because it isn't just those things, it's the fact that their water treatment was down at a greater proportion and its one of the most profitable businesses. So there lots of different mixtures, I wouldn't punch it to just one or two things but I guess it's important to understand all about it. Michael Schneider - Robert W. Baird: Thank you, again. John L. Stauch - Executive Vice President and Chief Financial Officer: Thank you, Mike.

Your next question is from Christopher Glynn of Oppenheimer. Chris Glynn - Oppenheimer: Thanks, Good afternoon. Randall J. Hogan - Chairman and Chief Executive Officer: Hey Chris. Chris Glynn - Oppenheimer: Just talk a little bit about the Asia markets, some pretty good growth there obviously and give us an update on how the infrastructure is around that business as well as the competition around some of the product lines and if you're shifting your emphasis among the sectors and end markets you are targeting there. John L. Stauch - Executive Vice President and Chief Financial Officer: Yes ... I know we've been investing there. We talked about that before, we invested in sales and distribution and technology. We've highlighted a number of different focuses and what I would tell you is our focus is beneath a lot of the competition. We are not focusing on the big infrastructure, we are focused on the smaller infrastructure. So I would say we're focused on buildings and construction. We're focused on food service and we are focused on residential. In particular and we are focusing on bundling our products into solutions. So, for instance we recently won the Beijing Financial Centre, we have 92 HVAC pumps in there. It's just a very, very large program and it's something that we can focus on and sell our value. Similarly on hospitality, it's not just the pool business that we are driving there, we are driving the flow technology and filtration business, we mentioned before the Beijing Airport for instance where we're providing the portable water filtration system. So we are trying to if you will in a more granular level on our focus particularly in China versus what I would call our larger competitors. We are focusing on larger infrastructure. And we think we are in the right position because we got the products and we built that sales and distribution to serve those. Couple of other things we are focused is schools and we are focused in residential there, we're focused on the built out of someone what I would call the middle class where they need water softeners and the water filtration in their homes. So, it's a very tailored strategy that John Ma and the team in Asia are driving in and it's going very, very well. At the same time we've had a rebirth really of our Australia business and we've seen a little bit of growth finally in Japan. So, it's really quite satisfying to see the progress we made there. It's all part of us really becoming a global company and I think we almost have earned the right to be able to say we are. But I am not quite there yet. Chris Glynn - Oppenheimer: Okay, and then just on the pool guys, it sounds like it's for the same kind of year-over-year dynamic as we just supported for the first quarter. The comps dramatically easier and you have the commercial pool kind of a new dynamic then maybe we've ever seen it before? Randall J. Hogan - Chairman and Chief Executive Officer: Yes, commercial pools really interesting because it does go particularly with the global trust and Middle East and China in particular where they are building out hotels at a great clip and we have superior solutions. So for us it's a matter of getting there, and while we reported our $50 million and I am sure we have more business going in the commercial applications. We just aren't tracking it that well as it goes through distribution. All we are tracking there is these programs and projects that we really focus on driving. Our Eco Select line which reduces the use of chemicals, it gives you cleaner water and it reduces the energy and gives remote control and monitoring. It's all very-very well received. So we expect the growth of that to continue, and it's largely outside north America where we see a lot of that growth coming. Chris Glynn - Oppenheimer: But that's not an offset --? Randall J. Hogan - Chairman and Chief Executive Officer: That's not big enough to offset the residential decline and we're talking about a business that's 15% of the size of North American. North American residential pool is the single biggest pool market. Chris Glynn - Oppenheimer: Right, but with the much easier comp coming up in the same sort of 10% decline for cash, or are we just seeing --? John L. Stauch - Executive Vice President and Chief Financial Officer: We are struggling with that a little bit; I mean we actually had a decent pool year last year, Chris because we grew 4% on the pool equipment business. So the 10% down draft that we're talking about in Q2 was a pretty significant down draft for us. Chris Glynn - Oppenheimer: Yes, so real time that's just kind of quickly deteriorating further? John L. Stauch - Executive Vice President and Chief Financial Officer: But you can take a note, I think next years Q2 would be easier comparison. Chris Glynn - Oppenheimer: Noted. Thank you. Randall J. Hogan - Chairman and Chief Executive Officer: Thanks, Chris.

Your next question is from Mike Hamilton of RBC. Randall J. Hogan - Chairman and Chief Executive Officer: Hi, Mike, hello? Mike Hamilton - RBC Capital Markets: Are you there? Randall J. Hogan - Chairman and Chief Executive Officer: Yes, here we are, Mike. Mike Hamilton - RBC Capital Markets: Was wondering if you could just comment a little bit on what you are seeing on the municipal side given some of the concerns on pipeline freezing, and ability to get financing and whether you think that becomes an issue or your business is just too much in demand on the part of municipalities. So it's not really a lot walk through buy on their part? Randall J. Hogan - Chairman and Chief Executive Officer: I have got a review on Friday and that will be something we'll drill into a little deeper, but I already know, the backlog is firm, we don't report things in the backlog unless they are firm and we have got a good view all the way through into 2009 and when you take a look at lot of these projects, there is... they are real projects, they are urgent projects and I mentioned in my script because I been around the water business for well 31 years after a big hiatus. People are willing to pay for water now. It's the first time I have seen it where the people are willing to pay. So I don't think there is an issue of the projects we have firm in our backlog. At the same time, we are building out the capability to grow municipal globally. We put in three or four distributors in Southeast Asia, who are excited about selling our products with the dollar where it is, Kansas City is becoming a low cost producer. And so we actually can compete with product coming out of other areas of the world and we have superior technology and great technical applications. So to tell you truth, no I am not worried about municipal. Mike Hamilton - RBC Capital Markets: Okay, thanks, Randy.

Your next question is from Francesca McCann of Stanford Financial. Francesca McCann - Stanford Financial: Hello, everybody, good afternoon. Randall J. Hogan - Chairman and Chief Executive Officer: Hello, hi there, how are you doing? Francesca McCann - Stanford Financial: Doing all right, thanks. Randall J. Hogan - Chairman and Chief Executive Officer: Can you speak up a little, we can't hear you. Francesca McCann - Stanford Financial: Sure is this... I hope this is better. Randall J. Hogan - Chairman and Chief Executive Officer: Yeah its better Francesca McCann - Stanford Financial: Follow up to my question on the European markets, you kind of said Western versus Eastern Europe and than the Middle East. Can you break down a little bit more kind of country by country for us what you are seeing particularly in Western Europe? Randall J. Hogan - Chairman and Chief Executive Officer: I think that will be difficult to do, right here all those specifics, I mean could we look at ... our look at in terms of Western Europe sort of the established markets and then Eastern Europe and Middle East. Middle East is the highest growth region and Eastern Europe is excellent, as we mentioned Western Europe is flat for water. I don't know whether you want to add anything John L. Stauch - Executive Vice President and Chief Financial Officer: I say we are happy to follow up with you and Todd's got that data, I know your scheduled call in what so we can do to get to by the time the call is because you really got to look at the technical product and water and they combine in this varying degrees, I can't give you percentages because numbers are small. Francesca McCann - Stanford Financial: Okay, that's fine, we can follow up on that, and then on the pricing pass through as you said kind of anticipating that you have been anticipating doing the 1% to 2% increase, now you are planning on doing more, what push back do you get with that? John L. Stauch - Executive Vice President and Chief Financial Officer: Well the ones... we have implemented a number in the first quarter, and the people never liked it. But the fact is this... the oil hit ... talking at 116, we got top carbon steel up almost 60% and these are real inputs and because of the structure of our business through distribution, they tend to stick. So nobody ever likes the price increase so we don't have to ask them about ... we buy about $148 million or so $150 million what we call metal in that steel which is the largest component by $80 million for us and walking down from their stainless steel will be about 30 and we only do about $12 million in copper about $10 million pig iron. That's relative to $1.2 billion direct material buy and so part we've not been significantly impacted because we can divide forward and we block into certain capacities. So, we are anticipating the second half is going to require us to do some actually down in the market place and where we would do these our businesses in which we have a distributor type of model and which we imagine most people are experiencing exactly what we are experiencing and there will be everybody raising prices due to where we are struggling. I think everybody is anticipating it Francesca. Francesca McCann - Stanford Financial: Okay. So possibly more in Q2, but definitely in second half. Randall J. Hogan - Chairman and Chief Executive Officer: Correct. Francesca McCann - Stanford Financial: Okay, and then I guess just a little bit of commentary on what you are seeing on the acquisition landscape, partly in terms of valuation, partly what you see out there. Randall J. Hogan - Chairman and Chief Executive Officer: Right now we ... our focus is on ... we've a lot of opportunities that I characterized here on the call today, they are really organic in nature and we are flowing a lot of resources there. We are still in the flow of event but there is nothing that I see on horizon that obviously I wouldn't mention anything unless, but besides both arms and as I have said before would we be interested, we don't need to buy capacity. In fact we have plenty of capacity, but market entry and capability expansion would be the only thing I am interested in. The Jung Pump and Porus Media both were examples of that, they pricey examples of that. But they were examples of that and so I guess I just leave it at that for now-- John L. Stauch - Executive Vice President and Chief Financial Officer: And I would add on the evaluation side franchise I don't think the valuation on deals that weren't to be done or could done have dropped at levels that we would be interested in. Randall J. Hogan - Chairman and Chief Executive Officer: That's a good point too. John L. Stauch - Executive Vice President and Chief Financial Officer: And I think that's going to have to be a realization somewhere along the line especially with the weak dollar in the global market. Francesca McCann - Stanford Financial: Okay, that's great. Thank you. Randall J. Hogan - Chairman and Chief Executive Officer: Thank you.

Your next question is from James Lucas of JE Janney [ph]. Randall J. Hogan - Chairman and Chief Executive Officer: Hey Jamie, [indiscernible] how are you doing? James Lucas - Janney Montgomery Scott: Two questions, guys. First of, Randy can you give us an update on the technical products, GBU with electrical now following the ... the electrical and electronic together, kind of a early read on what your seeing there and is it delivering what you had hoped for putting the businesses under one GBU and, secondly if you could just provide any color. As you might want to on the commercial construction market both domestically and abroad? Randall J. Hogan - Chairman and Chief Executive Officer: Yes sure, thanks James. First I am... of all the GBU's I think the tech products one is not surprisingly given the dominical and it is off to a great start. And the synergies we see in terms of running it's more directly as one GBU or one business was the fact that Hoffman is our greatest practice of lean. Hoffman is better than electronics on sourcing and their vertical market focus is outstanding. All of those practices are being rolled out, at the same time we are looking at how we can consolidate backroom to reduce cost and structure. The other thing is we have electrical factories that are bursting at the seams and we had electronic factories that were underutilized and electrical opportunities that we weren't going after as aggressively. That hasn't met out in the first quarter but our ability to leverage those electronics facilities more directly to electrical opportunities, I think is a big deal, and getting the thermal business which is part of Hoffman more integrated with electronics is going to be a big deal that help drives accruals. So, I think the early returns are good, I think the ... I mean the early ... the early reports are good. But they're not even reading the benefits aren't even reading out the numbers yet. So I said I'm very... I'm very bullish on the GBU. In terms of commercial because there's a lot of focus on commercial, just to give you a little perspective. In commercials less than $18 million out of the $286 million of sales in the business so its 6% of our sales. James Lucas - Janney Montgomery Scott: But also as it relates to water. Randall J. Hogan - Chairman and Chief Executive Officer: Oh, water is bigger than that I don't have that data in front of me. James Lucas - Janney Montgomery Scott: But, just if I add that overall margin. Randall J. Hogan - Chairman and Chief Executive Officer: Commercial has slowed in North America. In fact in only in the electrical GBU it was flat similarly when we look around in water, its slowed to single-digit, but commercial globally has got... is really strong, and that's what I was mentioning before... in our Aurora pump business which is the one I was referencing. The exports are just screaming right now and we don't see that abating. Those are exports to mostly the Middle East and Asia. So, commercial as we mentioned on our charts is coming in about where we thought, we thought it was slow in North America and it is. But that's sort of within our expectations. No, I would say no surprises there. James Lucas - Janney Montgomery Scott: Okay, great thank you. John L. Stauch - Executive Vice President and Chief Financial Officer: Okay Jim. Before... we are probably time is running on little lower, I don't know how many people left in the queue, but definitely there's time for at least one more.

Thank you. Your final question is from John Quealy of Canaccord Adams Chip Moore - Canaccord Adams: Thanks, this is actually Chip Moore for John. You touched briefly on the opportunity to improve working capital. I am wondering if you could just give us sense of where channel inventories stand and how you see those progressing over the next couple of quarters. John L. Stauch - Executive Vice President and Chief Financial Officer: Yes, I was going to say, I will speak to the channel inventories, I mean the channel inventories in most of our markets we would say are relatively modest, primarily because we have been experiencing some significant down turns in North American residential and everybody has spent a little bit queasy to add inventory in this particular down cycle. Our particular inventories are doing okay with the exception of the areas where we are into this submersible pumps where we carry a fair amount of inventory, both of our stuff and for others -- Randall J. Hogan - Chairman and Chief Executive Officer: Probably still too much in the channel. John L. Stauch - Executive Vice President and Chief Financial Officer: And there is still too much in the channel there and then the second area we would tend take to take on more inventory, specially in Q1 is pool, because even though pool will have a year-over-year drop in the pool season, there is still a huge ramp-up from Q1 to Q2 from the seasonality of that market. Other than that, we have done a pretty good job of taking our inventories out but I would say we had at least $75 million to $100 million more to go before we would say we have done a good job. But the channel inventories with the exception of the residential pump, we would deem as pretty light right now. Chip Moore - Canaccord Adams: Great, thanks. Randall J. Hogan - Chairman and Chief Executive Officer: You are welcomed, okay is that is. John L. Stauch - Executive Vice President and Chief Financial Officer: Thanks everybody. Randall J. Hogan - Chairman and Chief Executive Officer: Okay now, thanks a lot and for every one we will be around all day, we will be speaking with you this afternoon and the rest of week. Thank you. John L. Stauch - Executive Vice President and Chief Financial Officer: Thank you.

This concludes today's conference. You may now disconnect.