Lori A. Walker - Sr. VP and CFO William L. Mansfield - Chairman of the Board and CEO

Jeffrey Zekauskas - J.P. Morgan Prashant Juvekar - Citigroup David Begleiter - Deutsche Bank Rosemarie Morbelli - Ingalls & Snyder Llc Saul Ludwig - Keybanc Capital Markets Donald Carson - Merrill Lynch Dmitry Silversteyn - Longbow Research Robert Koort - Goldman Sachs Steven Schwartz - First Analysis Corp Michael Hamilton - RBC Capital Markets

Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter and Fiscal 2008 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session instructions will be given at that time. [Operator instructions] And as a reminder, this conference is being recorded. I would now like to turn the conference over to Lori Walker. Please go ahead. Lori A. Walker - Senior Vice President and Chief Financial Officer: Good morning everyone, and welcome to our earnings conference call. Today we will be covering results for the fourth quarter and the full year. Bill Mansfield, our Chairman and CEO is with me on our call this morning. A couple of brief comments before we begin; first, I would direct your attention to the press release we issued this morning which contains much of the information that we'll be covering on the call. Also a quick reminder that this call is subject to the forward-looking statements language contained in our press release as our comments this morning may include forward-looking statements; as that term is defined by Security's Law. This morning, I'll cover our fourth quarter and full year results. Bill will make comments particularly about our 2009 outlook. Then we'll get to your questions. Results for the quarter were in line with our expectations reflecting a solid effort from Valspar employees in a challenging economic environment. As a reminder, our fourth quarter this year does include 14 weeks versus 13 weeks in 2007. This extra week only impacts our domestic business, which accounts for about 60% of total company revenue Fourth quarter sales totaled $923.2 million, an 8.3% increase from last year. Sales for the quarter increased 3.8% excluding the fourteenth week. Demand for our products in international markets remains strong driven by acquisitions and core growth in Asia. In coatings, we continue to see solid growth in our packaging and general industrial product line, and sales in our paint segment were quite strong. Net income for the fourth quarter was $38.9 million. Fourth quarter adjusted net income per share was $0.42, which excludes a $0.13 per share charge related to restructuring action, a non-cash of $0.03 per share for the Huarun minority interest share, and a $0.09 per share after tax gain from the sale of assets. Fourth quarter reported earnings per share for 2008 were $0.35. Net income for the fourth quarter of 2007 was $48.8 million. Fourth quarter adjusted net income per share in 2007 was $0.38 which excludes a $0.10 per share after tax gain from the sale of assets and a non-cash charge of $0.03 per share for Huarun minority interest shares. Fourth quarter reporting earnings per share in 2007 were $0.45. The underlying earnings per share comparison for the fourth quarter is $0.42 in 2008 and $0.38 in 2007, a 10.5% year-over-year increase and the extra week accounts for about $0.01 to $0.02 per share. On a full year basis, again adjusting for restructuring one time gain and Huarun, the underlying earnings per share comparison is $1.57 in fiscal 2008 and $1.58 in fiscal 2007. For the fourth quarter our reported gross margin was 26.9% or 28.3% after excluding the impact of our restructuring actions, down 70 basis points from 29% in the fourth quarter of 2007. The 70 basis point decline was due to higher raw material cost which were partially offset by pricing. Operating expenses were 18.7% of sale or 19.6% excluding restructuring and the gain from the sale of assets, down 50 basis points from 20.1% in the fourth quarter of 2007. The 50 basis point decline was driven by good control of expenses. The tax rate for the fourth quarter was 34.7% down from 36% in the fourth quarter of last year. For the full year our tax rate was 34.1% compared with 33.7% in 2007. For fiscal 2009 we expect the effective tax rate on income from ongoing operations to be approximately 33.5 to 34%. Average shares outstanding were down $1.5 million from a year ago with the decline related to the share repurchases that we completed in the first half of fiscal 2008. We did not purchase any additional shares during the fourth quarter. Average sales outstanding were $100.4 million for the quarter and are projected to be approximately the same for the first quarter of 2009. As a reminder, we repurchased $1.85 million shares in 2008. Recapping our sales performance for the quarter, our core growth defined as volume price mix was up 4%, currency added 2.3% and acquisitions added another 2% for total growth of 8.3% in the quarter. Without the extra week, price volume mix was essentially flat, reflecting an increase in price, which offset a decline in volume. Turning to our segment results for the quarter, coating sales increased 8.6% and were up lower single-digit when adjusted for currency and acquisitions. We had solid performance in our packaging and general industrial product lines with packaging in particular continuing to show excellent strength. Soft sales in wood coatings continued. Paints sales increased 11.6% and were up high single digit when adjusted for currency and acquisition, driven primarily by strong performance of our Huarun operations and price increases. Sales in our other category which includes resins, colorants, gel coats, and our furniture repair business were down 5.1% reflecting weak market conditions. Looking at segment results for the full year, coating segment sales were up 10.9% and up low single digit when adjusted for currency and acquisition. Again, our best sales performance came from packaging and coating, which was up net double-digit for the year and up high single digit when adjusted for currency. Paint segment sales increased 3.5% and were up low single digit when adjusted for currency and acquisition. Our other category was down 2.3% for the year and down mid single digit when adjusted for currency. Addressing margins for the quarter by segment, and I will talk about these results excluding restructuring charges. Our coating segment EBIT margin was 10.9%, down from 11.8% in the fourth quarter of 2007. Our Paint segment EBIT margin was 9.3%, up from 7.4% in 2007. The EBIT margin for our other category, excluding restructuring and the one time gains in both '07 and in '08 was negative 10.7% compared with negative 6% in the fourth quarter last year. As a reminder, our other category includes corporate expenses. Total company event margin for the quarter with 8.6%, this compares with our 2007 fourth quarter margin of 8.7%. Looking at margins with a full year again excluding restructuring charges, our coating's EBIT margin was 9.8% down from 10.7% in the 2007. The paint's segment EBIT margin for the year was 9% compared to 9.7% last year. The EBIT margin for our other category, excluding restructuring and one time gain was negative 2.4% compared with positive 0.03% in 2007. Total company full year EBIT margin was 8.5%. This compares with our fiscal 2007 margins of 9.4%. The 90 basis point decline in comparable year-over-year margin is primarily a reflection of a lag between raw material cost increases and the impact from pricing actions. Moving to the balance sheet, total debt at the end of the fourth quarter was $923 million down $162 million from $1.85 billion at the end of the third quarter and down $94 million from the end of last fiscal year. The decrease in our debt was driven primarily by improved free cash flow and proceeds from divestitures offset by acquisitions and share repurchases. We estimate that year end debt for fiscal 2009 will be approximately $825 million assuming no acquisitions or share repurchases. This implies free cash flow after dividend of approximately $100 million. Our year end debt to capital ratio was 38.8%, a 340 basis point improvement from last year's level of 42.2%. Net debt to cap for the year was 36.4%, a 390 basis point improvement from 40.3% at the end of 2007. Capital spending in the fourth quarter was $16.6 million down from $29.2 million in last year's fourth quarter. For the full year, capital spending was $43 million versus $76.9 million in 2007. Our forecast for 2009 capital spending is approximately $60 million depreciation and amortization for the quarter totaled $21.9 million versus $20.3 million in the fourth quarter of 2007. Our full year depreciation and amortization was $80.8 million versus $71.8 million last year. Our forecast for depreciation and amortization in 2009 is $80 million. Let me give a few more details on the restructuring actions that we announced in August. The total cost of the overall effort are expected to be $0.23 to $0.25 per share with a two year payback. Of the total restructuring cost, about 65% is cash and 39... or 35% is non-cash. In fiscal 2008, we took a $0.16 per share charge; the remaining $0.07 to $0.09 per share charge will primarily occur in the first half of fiscal 2009. In fiscal 2010, these actions are expected to generate annual savings of $0.13 to $0.15 per share. Given the level of uncertainty in credit markets, I know you will like to hear a few details about our capital structure, debt maturity and liquidity position. We have a $200 million bond that matures in May 2012 and two additional bond issuances totaling $300 million that mature in August 2015 and May 2017. We have a $150 million committed credit facility that has been extended through November 2009 and a $600 million five year committed credit facility that expire in October 2010. Our liquidity at October 31st stood at $430 million with approximately $90 million in cash and $340 million available through our committed bank credit facility. As I mentioned earlier, we are expecting to use our free cash flow to reduce debt by approximately $100 million by the end of 2009. As mentioned in our release, we currently expect our fiscal 2009 adjusted net income per share to be in the range $1.55 to a $1.65, excluding restructuring charges and a non-cash charge for Huarun minority interest shares. With that, I'll turn the call over to Bill for his comments and more about the outlook for 2009. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Thank you Lori and good morning everyone. Thanks for joining our call today. As Lori mentioned, results for the fourth quarter were inline with our guidance. Our global packaging architectural and general industrial product lines and our Huarun business in China all performed well. Our expenses continue under tight control and we reported a 10.5% increase in our adjusted earnings per share for the fourth quarter. Our management team and employees did a great job of focusing on execution and operational discipline, and made good progress on pricing, on lowering our cost, on improving our productivity and on generating cash. In addition, our Valspar, Cabot and Huarun brands were strengthened significantly as a result of our ongoing strategic investments. With respect to the restructuring we announced in August, it is certainly the right action given economic conditions, and we have taken steps beyond those we originally announced. Our actions impact all our geographic regions and touch most of our businesses. About half of the total cost is related to optimizing our European operations where we have closed satellite operations, consolidated warehousing and streamlined our administrative processes. In North America, we closed four manufacturing plants. And we continue to reduce the cost structure of our global wood business which incidentally delivered a modest profit in 2008. Our global head count is down about 7% since January of 2008 and we expect it to be down about 10% when we complete our restructuring actions; very difficult decisions but necessary actions in the current economic environment. We will continue to tightly manage our employment levels and expenses. I want to make some comments on the dynamics around raw materials and raw material cost. Raw materials represent $0.60 of very dollar of sales. In 2008, our raw material cost continued to increase through October, the last month of our fiscal year. We told you on our last call that our raw material cost would increase 9% to 14% and in the quarter we were at the high end of that range. Raw material cost increases, combined with the expected lag in increasing our selling prices, caused our margins to decline in 2008. We've continue to increase prices but the dynamics are now changing and changing quickly. We expect the raw material cost to decline and we're committed to restoring our margins during 2009. During the year, we generated a $160 million in free cash flow which we define as operating cash less CapEx and dividends, an increase of a $100 million from 2007 and we reduced our debt by $94 million. As Lori reviewed we have committed bank credit facilities and reserve liquidity well in excess of our anticipated funding needs. In 2008 we reduced our working capital, which we define as accounts receivable and inventories less accounts payable. And improved our working capital ratio by 160 basis points to 12.5% of sales, which we believe puts us among the leaders in the coatings industry. We have continued to invest in the Valspar, Cabot and Huarun brands. We and our customers have seen tangible benefits from that investment in 2008. In United States we have seen consistent gains in consumer awareness and we believe the Valspar and Cabot brands outperform the market. In China our Huarun brand continues to experience significant growth, and in 2009 we will continue to invest and add to the growing strength of our brands. Looking ahead to 2009, we believe we are in a global recession. In this environment, we expect our packaging, architectural and automotive refinished product lines and our Huarun business in China which comprise about 60% of the company to continue to perform well. Our global packaging business which supplies the food and beverage industry has been a steady performer over numerous business cycles. Our Huarun business in China is focused on the Chinese domestic market. Our automotive refinished product line is focused exclusively on the repair market with no OEM business. In our architectural business, our branding investments will allow us to continue to outperform the market. Our coil and general industrial and wood product lines which comprise the remaining 40% of the company will face top-line challenges during 2009 and that expectation is built into our '09 guidance. Want to take a few moments to make sure everyone understands the assumptions that have gone into our guidance. We believe we are in a global recession, we have assumed a partial reversal of the raw material cost increases we experienced in 2008, we expect our coil, general industrial and wood product lines which comprise about 40% of the company to face top-line pressure. Our guidance does include expected savings from our restructuring actions and we expect our packaging, architectural, automotive refinish product lines and our Huarun business in China which comprise about 60% of the company to continue to perform well. I believe that Valspar is well positioned to deal with the impact of a global recession. We have a balanced business mix and expect about 60% of our business to continue to perform. We have lowered our overall cost structure and reduced capacity to match weaker demand. It is reasonable to expect to see some easing in raw material cost. We are controlling expenses, working capital and employment levels. We have committed bank credit facilities and reserve liquidity well in excess of our anticipated funding needs. We have strong brands and differentiated market positions that we have made stronger with our investments in the global markets over the last three years. And we will continue to deliver strong consistent cash flow. With those comments, I'll open the call up for your questions. Question And Answer

Thank you. [Operator Instructions] Our first question is from the line of Jeff Zekauskas from J.P. Morgan. Please go ahead. Jeffrey Zekauskas - J.P. Morgan: Hi, good morning. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Good morning, Jeff. Jeffrey Zekauskas - J.P. Morgan: A couple of things. The overhead expenses you had in the quarter were roughly 188 versus 172 in a year ago period, were up 5%. Why were they up so much in the quarter? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Frankly, I don't have an answer to your question, Jeff. Why don't you give us a second and go on with the rest of the questions and we'll see if we can sort that out. Jeffrey Zekauskas - J.P. Morgan: Okay. Second, raw materials are obviously coming down at a pretty rapid rate and through the year you've been increasing prices. How do you expect the dynamic to play out between you and your customer base in terms of the split of who benefits from raw material? And what are the operative dynamics there? Could you here that? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Jeff, are you there. Jeffrey Zekauskas - J.P. Morgan: Yes, I am now. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Oh, I don't know what happened. Sorry about that. Jeffrey Zekauskas - J.P. Morgan: No it's all right. William L. Mansfield - Chairman of the Board and Chief Executive Officer: We were talking about raw material cost coming down and pricing and how that dynamic will play out in 2009. Jeffrey Zekauskas - J.P. Morgan: Yes. William L. Mansfield - Chairman of the Board and Chief Executive Officer: As I mentioned in my opening comments, we are committed to restoring our margins during 2009. As the cost went up, our pricing lagged and our margins went down in '08. So first order of business is we need to restore our margins and second order of business we'll be the right thing for our shareholders and our customers if the material markets continue to decline during 2009. Jeffrey Zekauskas - J.P. Morgan: So when you talk to your major customers, what did they say about that? Did they say yes your margins have lagged on the way up and so we are going give you a certain amount of grace and then after that we'll see where raw materials go or is it more contentious than that? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Well I would tell you that through the end of October, I mentioned our costs were continuing to go up. The dynamic, the inflection point with respect to the material markets has just occurred over the last three or four weeks. And frankly the benefit as to what that benefit may be, is still unclear as we move forward. So I think it's premature for me to comment on any discussions that involve our customers. Jeffrey Zekauskas - J.P. Morgan: Yes, I guess lastly, have you noticed any change in business conditions since your quarter ended? Or in general has there been a continuity in your business conditions with what happened in the quarter? William L. Mansfield - Chairman of the Board and Chief Executive Officer: We saw a downturn quiet frankly in the second half of September; like a lot of people did. And that weakness continued in October and it continues still. And it really reflects my comments with respect to 60% of the company is continuing to perform well, the other 40%, as I mentioned, is certainly seeing and experiencing the effects of what we think is a global recession. Now back to your first question. Lori will provide an answer to that. Jeffrey Zekauskas - J.P. Morgan: Okay, thank you. Lori A. Walker - Senior Vice President and Chief Financial Officer: Yes.Jeff, just in terms of that comment, our expenses grew at 6.5% versus the sales growth of 8.3%. So we actually did have lower expense growth and sales growth. But we did have a couple of headwinds there; one was the fact in terms incentive comp, so our incentive comp went a little bit higher this year than last year. So it was headwinds there and the other piece of it is that we also looked at our bad debt and we did have two of our bad debt reserves which added a probably couple of cents. Jeffrey Zekauskas - J.P. Morgan: Okay, thank you very much. William L. Mansfield - Chairman of the Board and Chief Executive Officer: You're welcome, Jeff.

Thank you. Our next question is from the line of P. Juvekar from Citi. Please go ahead. Prashant Juvekar - Citigroup: Yes, hi, good morning. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Good morning, P.J. Prashant Juvekar - Citigroup: Bill, I was wondering if you could comment on China and what you are seeing there through Huarun and have seen any slow down there at all? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Yes, I'd be happy to. Our business in China consists of the Huarun business and then what we call the historic Valspar business. That is furniture coatings and industrial coatings. Our business in China, the historic Valspar business that is related to the export economy clearly has softened; that meaning exports out of China back to the US or Western Europe. However our Huarun business that is focused on the domestic Chinese economy, the domestic Chinese consumers is doing quite well. And as we look forward, we would expect that they will continue to do well. Prashant Juvekar - Citigroup: And secondly in the US, have you seen that the paint volume declines have slowed down? And what I'm trying to get at is, if in 2008 industry paint volumes decline maybe let's say high single digits. What are your expectations for '09? William L. Mansfield - Chairman of the Board and Chief Executive Officer: I think that the 8% to 10% is a number that has been used to describe the downturn in the consumer or architectural things market. The DIY and professional markets that ... and we would agree with that comment for 2008. I can tell you that our business has been quiet good on a relative basis in '08. We think we've outperformed the market. Our business has been stable with respect to softness that we saw at the end of '07 and the beginning of '08 and so as we looked forward in 2009, we expect a continuation of our architectural, paint performance. I think where we're going to see pressure PJ is in the businesses that I described in my opening comments in our coil, general industrial and frankly the wood coating's business. Prashant Juvekar - Citigroup: And you think your business held up better than the industry, because it focuses on DIY? William L. Mansfield - Chairman of the Board and Chief Executive Officer: I think there is, I can't quantitatively give you the numbers that would support that conclusion, but I believe it has held up better because of its DIY focus and also ... and I can't emphasize this enough because of the investments in the Valspar and Cabot brands in the US. Prashant Juvekar - Citigroup: Alright, thank you. William L. Mansfield - Chairman of the Board and Chief Executive Officer: You are welcome P. J.

Thank you our next question is from the line of David Begleiter from Deutsche Bank. Please go ahead. David Begleiter - Deutsche Bank: Thank you, good morning. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Good morning David. David Begleiter - Deutsche Bank: Bill in your packaging business, do prices tend to hold there little bit longer than they do in either industrial or your architectural business? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Well I guess, I suppose I could take it exception to the question in the way it was framed in that, do they hold a little bit longer; I think as we have described in past calls, this is not the first time the company or the coatings market has faced the dynamic of accelerating raw material cost followed by a period of weakness. In fact this is the, I believe the third time where we've seen a tremendous run up in material cost followed by a major recession. And I would tell you that the dynamic that applied in prior experiences has been that our prices have been relatively sticky. And I don't see any reason why wouldn't be the case this time. David Begleiter - Deutsche Bank: That's very helpful. And Bill just in your coil, wood and GI business, any share shifts of note this year or lately? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Coil, packaging and general industrial, yes we continue to take share in '08 as we have done in past years. I wouldn't say that it's notably different from the performance we've turned in over a number of years in that business. Otherwise things ... as normal. David Begleiter - Deutsche Bank: And, then Bill on your brand building expense, what was it in '08 and will it be down in '09? William L. Mansfield - Chairman of the Board and Chief Executive Officer: We had communicated prior that it would be done in '08, in fact it was. I think the number was approximately $10 million and on an absolute dollar basis. Going into '09, prior we had also communicated that it would go down again. But on a going forward basis David, I ... quite candidly, I'm not going to comment any more on the delta declines, I think we have passed the point at which there's material to understanding the company. We will continue to make the right investments in our brands and I think we've made the investment case and so I don't feel the need. When you think about it we're a $3.5 billion company to talk about $5 million and $10 million changes like ... I think on a go forward basis we're not going to comment anymore. But I will tell you that consistent with my prior comments that the brand spin will be down in absolute dollars in, again in 2009. David Begleiter - Deutsche Bank: Understood, thank you very much. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Thank you David.

Thank you our next question is through line of Rosemarie Morbelli from Ingalls & Snyder. Please go ahead. Rosemarie Morbelli - Ingalls & Snyder Llc: Good morning all. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Good morning Rosemarie. Rosemarie Morbelli - Ingalls & Snyder Llc: Bill could you talk about what you have in mind in terms of CapEx for 2009. I mean it was $60 million you are saying versus for the $43 million this year in recession, global recession year, what are you focusing on can you give us a better feel or what did you eliminate in '08 that you are now going to pickup in '09? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Well $43 million that we spent in '08 was a number that we exercised a lot of control around and there is probably some money that we would have spent in '08 that's carrying over into '09 number one. Number two, there is some capital, modest amount of capital that we are spending as a result of our restructuring actions, that will occur in '09 and then we have a what I would tell you is a normal capital spending of productivity in progress in our facility, safety, health and environmental expense around the globe. Rosemarie Morbelli - Ingalls & Snyder Llc: What is more or less Bill, the maintenance CapEx? William L. Mansfield - Chairman of the Board and Chief Executive Officer: I would say maintenance CapEx is in the ... it's not 50% of the $60 million. The other dynamic Rosemarie is, in years past there have been times where we spent as much as $18 million and in those years we were building new plants. And so you had a significant piece of capital associated with the construction of the new facility and certainly in 2009 we don't intent to build any new facilities. Rosemarie Morbelli - Ingalls & Snyder Llc: You ... thanks that is helpful. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Welcome. Rosemarie Morbelli - Ingalls & Snyder Llc: You said that you are going to do some more restructuring versus what you initially announced. Could you give us a feel for what you are planning in doing? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Yes that is associated with expenses, selling, general administrative expenses, associated with our general industrial and coil businesses primarily and a little bit in continuing in our wood business. Lori A. Walker - Senior Vice President and Chief Financial Officer: And Rosemarie just as a reminder, in the third quarter we had set the total cost to be $0.21 to $0.23 with, in essence since in the year of the $0.13 to $0.15 is what we would incur in fiscal 2008, and we actually incurred $0.16 because we've already taken those actions. Rosemarie Morbelli - Ingalls & Snyder Llc: Okay. And there's additional restructuring charges gain on sale of assets Lori, where are they in the fourth quarter, meaning Huarun is separate, but the other two how do you split them between cost of goods and SG&A? Lori A. Walker - Senior Vice President and Chief Financial Officer: Okay. For 2008 the gain on the sale of the asset is in the operating expense line, the entire gain. And last year the gain on sale of the intellectual property is sitting in the other. Rosemarie Morbelli - Ingalls & Snyder Llc: And the restructuring is all sitting in cost of goods? Lori A. Walker - Senior Vice President and Chief Financial Officer: No the restructuring is spilt between cost of goods and expenses and it's roughly 65% as in cost of goods sold. Rosemarie Morbelli - Ingalls & Snyder Llc: And if I can go back to the ... they're [ph] my last question and you have already heard it but, I'll try another tack, on pricing versus raw material cost. Usually, it takes about 6 to 12 months to catch up in pricing versus raw material cost on the way up. Can we anticipate that it is similar on the way down or do you think that given the current environment and the low demand for some of your products and so on, it may go down a little faster than it went up? William L. Mansfield - Chairman of the Board and Chief Executive Officer: I can answer the question. We are sitting at an inflection point today. Really for the past 45 days or so, where our material markets have gotten weak and its quite clear we are in a global recession. The dynamics and I realized that folks would like a better answer. But the dynamics still have to play out. We are in un-chartered territory in my opinion with respect to length and depth of a recession. Rosemarie Morbelli - Ingalls & Snyder Llc: Okay. Thank you. William L. Mansfield - Chairman of the Board and Chief Executive Officer: You are welcome.

Thank you. Our next question is from line Saul Ludwig from Keybanc. Please go ahead. Saul Ludwig - Keybanc Capital Markets: Hi. Good morning everybody. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Good morning Saul. Lori A. Walker - Senior Vice President and Chief Financial Officer: Hi, Saul. Saul Ludwig - Keybanc Capital Markets: In your guidance for next year, there is a lot moving parts and we understand that the difficultly in being precise. But what have you baked in for raw material cost changes? You'd probably be wrong but you had to have a starting point? William L. Mansfield - Chairman of the Board and Chief Executive Officer: And that's probably why won't answer the question, because I probably be wrong. Saul it's ... I think the interplay that we have here are, is the perceived weakness in the raw material cost and what's also going to be top line challenges in about 40% of the company. And we think our guidance is appropriate. We think our guidance reflects the dynamics of the global market today and as you pointed out in your initial comments, very difficult to be quantitatively precise. Saul Ludwig - Keybanc Capital Markets: And Lori what were the pretax announced for the gains and restructuring numbers? Lori A. Walker - Senior Vice President and Chief Financial Officer: The gain was roughly $14 million Saul and restructuring is round ... this is in the quarter around $19.5. Saul Ludwig - Keybanc Capital Markets: Okay and then in your guidance Bill where you are basically saying we think we're going to have a relatively flat year in earnings for '09 versus '08. Do you think that's going to play out fairly equally as we go through the four quarters or do you see a more challenging first half with a little better second half, how do you sort of see the year in a general way unfolding? William L. Mansfield - Chairman of the Board and Chief Executive Officer: That's a fair question. I think we're going to have more downside pressure in the first half of the year, with the expectation that the second half of the year will start to see some improvement. Saul Ludwig - Keybanc Capital Markets: And do you think the second half improvement is due to a little bit of hope that your policies across the economy to start to improve or is it a function of easy comps or what is it that makes you think the second half is going to be better than the first half, is it the raw materials ... I mean what's the thinking? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Well I don't know hold any hope out for what the government does Saul. I think that as was described earlier, there is a lag between this inflection point and this material cost moved down. So I think we'll see a little more favorable second half scenario with respect to material cost than we will see in the first half. Saul Ludwig - Keybanc Capital Markets: Okay. William L. Mansfield - Chairman of the Board and Chief Executive Officer: That's primarily. Saul Ludwig - Keybanc Capital Markets: Okay, hey Lori what was the FX component to the revenues in the fourth quarter? Lori A. Walker - Senior Vice President and Chief Financial Officer: The fourth quarter was 2.3% in the fourth quarter. Saul Ludwig - Keybanc Capital Markets: 2.3% out of the 3.8% growth. Lori A. Walker - Senior Vice President and Chief Financial Officer: Correct. Saul Ludwig - Keybanc Capital Markets: Wait, the 3.8% didn't count for 14th week? Lori A. Walker - Senior Vice President and Chief Financial Officer: The 3.8% does not count the 14th week. Saul Ludwig - Keybanc Capital Markets: Okay. So that means, so extra fourteenth week price mix ... price volume mix was 1.5%? Lori A. Walker - Senior Vice President and Chief Financial Officer: No, it's doubly negative 0.5%. Saul Ludwig - Keybanc Capital Markets: Didn't you say you're sales were up ... oh, yes you have the acquisition in there too? Lori A. Walker - Senior Vice President and Chief Financial Officer: Yes, so 0.5%, negative 0.5% will be price volume mix about the extra week. Saul Ludwig - Keybanc Capital Markets: Next fourteenth week, got it. Okay, thank you very much. William L. Mansfield - Chairman of the Board and Chief Executive Officer: You're welcome, Saul.

Your next question is from the line of Don Carson from Merrill Lynch. Please go ahead. Donald Carson - Merrill Lynch: Yes, just wanted to follow up on the FX. What you've given a bit of the revenue impact but as you look at the whole year, what do you think the contribution to earnings was from the weak dollar and what is your guidance to assume in terms of how much that reverses is in 2009? William L. Mansfield - Chairman of the Board and Chief Executive Officer: In both cases Don, probably $0.02 to $0.03 benefit '08 reversing two to three in '09 and that impact is included in our guidance. Donald Carson - Merrill Lynch: Okay, so pretty to minimize. Though what did you see your customers' doing in terms, I know there is not lot of inventory in the paint system but did you see your customers deliberately drawing down inventories, so that give some hope but at some point there is bit of snapback thinking specifically about your big box customers and moves they're taking to reduce working capital? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Well, if you're talking about our architectural paint business those inventories in our opinion are in very good shape, and they have been all year. I think we have to remember that the housing related part of the ... of our business has been in a recession floor well onto two years now. And so people are controlled and are managing their inventories in our opinion very, very well. So certainly, we don't expect anything there. Donald Carson - Merrill Lynch: And that gives the broader issue again, your positive outlook in architectural is just more of the few, you've kind of reached bottom here and it can't get much worse, although perhaps we shouldn't say that, but it's just the easy comps that they give you confidence that it's not going to get worse? William L. Mansfield - Chairman of the Board and Chief Executive Officer: I look at our fourth quarter performance in the paint segment, and we look at our performance relative to the market, the brands; that investment clearly is paying off in terms of our performance. And we see a continuation of that performance in '09. Donald Carson - Merrill Lynch: Okay, great. Thank you. William L. Mansfield - Chairman of the Board and Chief Executive Officer: And you are welcome.

Your next question is from line of Dmitry Silversteyn from Longbow Research, please go ahead. Dmitry Silversteyn - Longbow Research: Good morning. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Good morning Dmitry. Dmitry Silversteyn - Longbow Research: Thanks for taking my questions. Couple of them have already been answered; but I just want to ... got to clarify. You talked about not doing any share repurchases in the fourth quarter. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Right. Dmitry Silversteyn - Longbow Research: Of this year. Can you give us kind of your outlook for your share repurchase strategy heading into 2009 given that you were just recently up to your authorization and the stock certainly seems to be priced attractively? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Well Dmitry we ... yes we did. We renewed the authorization, but we have that authorization every year. And there have been some years where we have bought close to the authorization, there have been some years where we have bought very little. I think I would draw your attention to the comment that Lori made relative to cash in 2009 and our debt forecast in terms of going from roughly 925 to 825 and I think that would give you a some insight into our cash, cash use priorities. Dmitry Silversteyn - Longbow Research: Okay, so at this point you think that it's more impactful to draw down debts to perhaps position yourself for some acquisitions when market conditions begin to recover rather than repurchasing your shares? William L. Mansfield - Chairman of the Board and Chief Executive Officer: That is correct. Dmitry Silversteyn - Longbow Research: Okay excellent. Second question, you've turned in a quite a good performance in architectural, I think even if you exclude the extra week you are probably still up in the organic growth. Can you talk about the drivers there, you talked about your brands being strong, and the market no performing, perhaps competition in gaining some market share especially for Cabot. But is there anything more beyond that, is there anything going on in the automotive after market business or perhaps some of your smaller businesses that are doing particularly well or is it just overall strength? William L. Mansfield - Chairman of the Board and Chief Executive Officer: No, no its overall strength. As you well know, Lowes is our primary customer in the big box channel. We think we have a great strategic partnership with Lowes and certainly the Valspar brand has gone very well. In our dealer business our independent retailer business, again it's a story of the Valspar brand and our mass merchant business, was okay this year. So I think what you are seeing in that segment really reflects strength across our architectural business, which I have to remind you does also include, our Chinese Huarun branded consumer papers which of all of them has performed the best year-over-year, 2008 versus 2007. Dmitry Silversteyn - Longbow Research: Okay, okay, that's helpful. And then that actually brings me to my next question, in discussing acquisitions in the 2% of the impact from acquisitions in the quarter. Was there any Huarun left at that or is that totally an anniversary to mutual stock and about the Mexican and the Finnish acquisitions you made this year? Lori A. Walker - Senior Vice President and Chief Financial Officer: That will anniversary in the first quarter of '09. William L. Mansfield - Chairman of the Board and Chief Executive Officer: So it's primarily ... it's just the Aries acquisition in Mexico. Lori A. Walker - Senior Vice President and Chief Financial Officer: Yes just the Mexico. Dmitry Silversteyn - Longbow Research: Okay so it's just the Mexican acquisition? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Right. Dmitry Silversteyn - Longbow Research: Okay. So we should expect the acquisition component and how should we think about that with Huarun anniversaring in the first quarter of next year and the Finnish deal that you've done later in the year. Should we be thinking about kind of that 1.5% to 2% positive impact continuing in '09? William L. Mansfield - Chairman of the Board and Chief Executive Officer: No Dimitry, we should not. The only anniversary that's going to occur is the Aries acquisition in January. Dmitry Silversteyn - Longbow Research: Okay. All the other ones have been anniversaried? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Correct. They have. Lori A. Walker - Senior Vice President and Chief Financial Officer: Correct. Dmitry Silversteyn - Longbow Research: Okay. Very good, and then final question, you mentioned in your comments that packaging was doing well and you also mentioned general industrial business was continuing to do well. And then later on I think it was an answer to Jeff's question you talked about that business slowing down in the second half of September and October. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Right. Dmitry Silversteyn - Longbow Research: As you are looking into 2009 have you seen incremental weakness in the general industrial business or is that part of your franchise still doing well? William L. Mansfield - Chairman of the Board and Chief Executive Officer: No, I would tell from probably late September, the month of October the business started to get little softer and certainly we see that in November. Dmitry Silversteyn - Longbow Research: Okay. So then if you look at your kind of 60% of the business that did well in '08 versus 40 that didn't, would you say that going into '09 this is going to more like a 50-50 with some weakening in general industrial? William L. Mansfield - Chairman of the Board and Chief Executive Officer: No, no it's still 60-40. Dmitry Silversteyn - Longbow Research: Still 60-40. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Yes. Dmitry Silversteyn - Longbow Research: So in general industrial was ... is in the 48% or in the 60%? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Correct, it's in the 48%. Dmitry Silversteyn - Longbow Research: Okay. All right, thank you very much. That's all I have. Thank you William L. Mansfield - Chairman of the Board and Chief Executive Officer: You're welcome, Dmitry.

Thank you. Our next question is from the line of Bob Koort from Goldman Sachs. Please go ahead. Robert Koort - Goldman Sachs: Thanks, Good morning. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Good morning Bob. Lori A. Walker - Senior Vice President and Chief Financial Officer: Hi, Bob. Robert Koort - Goldman Sachs: Well, I've to say, I'm impressed you're able to give an '09 guidance number given, so many moving parts. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Thank you, Bob. Robert Koort - Goldman Sachs: I think you said ... I'll put words in your mouth and then you correct me if I'm wrong, but ... that you deserve the right to restore your margins. In terms of how you price your products going into next year and how much of this raw material relief you actually get to harvest on the bottom-line. So assuming that's true, restore means what, does that mean go back to sort of the low 30s where you have been in prior periods of weaker raw materials or does it mean more around the 30% gross margin range where you sort of averaged over the last decade. How much worth of room [ph] is there in terms of getting margins back to where you think is a acceptable level William L. Mansfield - Chairman of the Board and Chief Executive Officer: No. Well certainly back 2004, they're about low 30s is the right target I think. I don't think we have a right to restore margins. I was actually too strong, so I will have to change the words you put into my mouth. I think that that is our intent. For us to be a viable supplier that continues to invest in technologies, continues to invest in branding. We have to have the ability to attract capital, and our shareholders are entitled to a reasonable return. And that's all we are saying. Robert Koort - Goldman Sachs: Got it. And then you mentioned Huarun is ... I think you characterized, it is continuing to be strong. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Yes. Robert Koort - Goldman Sachs: But I guess what I read in the press reports that the Chinese real estate is not all that encouraging. Could you give me a little bit more flavor on what gives you confidence going into the next year and is that to sustain where you are today or to keep growing at the rates you've seen? William L. Mansfield - Chairman of the Board and Chief Executive Officer: We're, and with respect to our business model, Huarun business model, we continue to penetrate and move out into cities where we have not had a major presence. And this is what gives us confidence in 2009, although the Chinese economy on an overall basis may not grow double-digits who knows, may grow less than that. As we increase our penetration in the market, in the country, we are able to sustain our growth model. So we are quite confident in 2009 with respect to that. Robert Koort - Goldman Sachs: Terrific, thanks. William L. Mansfield - Chairman of the Board and Chief Executive Officer: You're welcome Bob.

Thank you. Our next question is from the line of Steve Schwartz from First Analysis. Please go ahead. Steven Schwartz - First Analysis Corp: Hi, good morning. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Good morning, Steve. Steven Schwartz - First Analysis Corp: Elco announced that they were going to shutter one of their can sheet facilities some ... I'm wondering with your strength and packaging is it because you're gaining share, and is your core business shrinking or is your core business itself still strong? William L. Mansfield - Chairman of the Board and Chief Executive Officer: I think what you're probably getting at is there, there was softness reported in the beverage market in both Western Europe and in United States, here in the late summer ... I guess really through the summer and in the fall. Unclear exactly what that's about but it's reasonable to think that there is probably some consumer reaction to increase prices; there has been increased prices across the whole food and beverage sector. And there might be some reactions to that. What we are hear, what our customers tell us is that this is a dynamic, it will start to correct itself when we get into the turn of the year. That there is some inventory corrections going on but we should move beyond that as we get into early '09. Steven Schwartz - First Analysis Corp: Okay. So have been able to continue to see growth in that business then because you are picking up some share? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Correct. Steven Schwartz - First Analysis Corp: Okay. And then do you have a rough breakout of the 14th week, how it benefited the segments? I know Lori; you mentioned that it was exclusively domestic business? But of that it looks like $38 million. How much of that fell into paying? Lori A. Walker - Senior Vice President and Chief Financial Officer: You're talking sales to sales dollars? Steven Schwartz - First Analysis Corp: Yes. Lori A. Walker - Senior Vice President and Chief Financial Officer: Lets see ... I don't have it really quick the top of my head here to... William L. Mansfield - Chairman of the Board and Chief Executive Officer: Can we get back to you? Steven Schwartz - First Analysis Corp: Oh yes. Just to echo an observation Dmitry made, your paint sales were very strong. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Yes. Steven Schwartz - First Analysis Corp: Considering the environment, would you feel comfortable saying that your volumes were actually up at your national accounts primarily the one? William L. Mansfield - Chairman of the Board and Chief Executive Officer: I think we have to remember a significant thing that occurred in the market place and that was paint prices at retail, across the DIY channel increased in late July, early August. Steven Schwartz - First Analysis Corp: Okay. So good percentage of that then was price. William L. Mansfield - Chairman of the Board and Chief Executive Officer: That would be a good assumption. Steven Schwartz - First Analysis Corp: Okay great. Thanks for taking the questions. William L. Mansfield - Chairman of the Board and Chief Executive Officer: You are quite welcome.

Thank you. Our next question is from Mike Hamilton from RBC. Please go ahead. Michael Hamilton - RBC Capital Markets: Good morning. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Good morning Mike. Michael Hamilton - RBC Capital Markets: So just technical question first on the Huarun non-cash charge both in text and in comment you used it as a charge, is that something different from the normal mechanism we have seen in the last couple of years or referenced to the same thing? Lori A. Walker - Senior Vice President and Chief Financial Officer: It's referenced to the same thing Mike. Michael Hamilton - RBC Capital Markets: Okay, thanks. You've ... starting with paint you've done some successful sales this year. You're beginning to flex muscle in terms of how well you are taking advantage of brand? Do you see an environment in here where taking share accelerates or would you kind of put it on a par with what we have been seeing? William L. Mansfield - Chairman of the Board and Chief Executive Officer: No I would tell you that we are taking a long view on our brand investment and we are quite pleased with the '08 performance. We would expect to turn in another good '09 performance and I think we see a steady, sustained increase in the brand equity of the Valspar brand, and Calbot brand and Huarun brand. Michael Hamilton - RBC Capital Markets: Thanks. My other question as you look forward on potential to be able to take advantage of the environment for both time acquisitions, are there any areas either geographically or technically that you particularly want to be focusing on here? William L. Mansfield - Chairman of the Board and Chief Executive Officer: I think I need to get some clear transparency into what may be the longer term economic fundamentals. We still like Latin America. It's been a great area for us and so certainly from a geographic basis, and China is still a highly attractive market for on a geographical basis. The architectural business, our consumer paint business we're always looking in that area. Michael Hamilton - RBC Capital Markets: Thanks, that is it for me. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Okay, Mike.

Thank you. And we have a follow up from the line of Jeff Zekauskas from J.P. Morgan. Please, go ahead. Jeffrey Zekauskas - J.P. Morgan: Thanks for taking my question. William L. Mansfield - Chairman of the Board and Chief Executive Officer: You're welcome, Jeff. Jeffrey Zekauskas - J.P. Morgan: How much were prices up sequentially for the company on average? Lori A. Walker - Senior Vice President and Chief Financial Officer: Lower single digit. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Yes, low single digit, Jeff. Jeffrey Zekauskas - J.P. Morgan: Okay, 2% or 3 %. Including the extra week, was your gallon interrupt [ph] in the quarter? Lori A. Walker - Senior Vice President and Chief Financial Officer: Including the extra week was our...? Jeffrey Zekauskas - J.P. Morgan: Gallon interrupt [ph]. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Yes, probably, Jeff. Jeffrey Zekauskas - J.P. Morgan: Okay. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Yes, close but maybe not quite spot on. Jeffrey Zekauskas - J.P. Morgan: Okay. And you know there is a lot of talk about how fast your raw materials affect your cost of goods sold but then don't you turn your inventories twice a quarter, so shouldn't it be pretty quick? William L. Mansfield - Chairman of the Board and Chief Executive Officer: To the extent that the drops in propylene and ethylene neither of which we buy, we buy derivatives to extent that those derivative prices come down, it should come through pretty quick, that is correct? Jeffrey Zekauskas - J.P. Morgan: Okay and then lastly, just if you could just quickly compare sort of business conditions in Europe versus business conditions in the United States, sort of which market is stronger, which market is weaker, or are they both the same? How you see that? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Yes, I think as we've said before, our bigger business in Europe is can coatings and so the US, European can coatings market is about the same. I'm probably not a good one to comment on the overall European industrial market. But my sense is it might be a tad weaker than the U.S. Jeffrey Zekauskas - J.P. Morgan: Right. William L. Mansfield - Chairman of the Board and Chief Executive Officer: From what we see. Jeffrey Zekauskas - J.P. Morgan: Alright. And how about the U.S. architectural market, can you make some general comments about how strong or how weak that is, forgetting your business for a moment? William L. Mansfield - Chairman of the Board and Chief Executive Officer: Other than, we see reported, we happen to think it's probably correct that the market for the second year in a row has declined. In that, I guess 7% to 9%, somewhere around there we concur with that. Have we hit bottom from a market basis, I don't know. Certainly our business stabilized a while ago and is frankly doing well in this environment. Jeffrey Zekauskas - J.P. Morgan: Okay, thanks. Thank you very much. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Yes Jeff. Jeffrey Zekauskas - J.P. Morgan: Yes. William L. Mansfield - Chairman of the Board and Chief Executive Officer: I figured out what happened on your first question, somehow I hit the mute button. So that caused all sorts of problem, so I apologize. Jeffrey Zekauskas - J.P. Morgan: No, it's no trouble. Thank you, very much. William L. Mansfield - Chairman of the Board and Chief Executive Officer: You're welcome.

Thank you. And due to the time, we will turn it back for closing comments. William L. Mansfield - Chairman of the Board and Chief Executive Officer: Okay. Thank you everyone for joining our call. We believe we had a good fourth quarter and a good ending to our fiscal 2008 year. We believe we're well positioned to deal with the impact of a global recession. We have reserve liquidity well in excess of our funding needs and as you heard us say several times, we will generate roughly $100 million of free cash during '09. Again thank you for participating in today's call, we wish everyone a happy and peaceful Thanksgiving and we'll talk to you in February, when we have our first quarter '09 earnings call.

Thank you. Ladies and gentlemen this conference will be available for replay after 12:00 PM Central time today till midnight, December 5th. You may access the replay service by dialing 1800-475-6701, and entering the access code 967988, international participants may dial 320-365-3844 and use the same access code 967988. That does conclude our conference for today. Thank you for using AT&T Executive Teleconference. You may now disconnect. .