Good day everyone and welcome to this AMETEK Incorporated Fourth Quarter Earnings Conference Call. This call is being recorded. For opening remarks and introductions, I would like to turn the call over to Mr. Bill Burke, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Rayne. Good morning and welcome to AMETEK's fourth quarter earnings conference call. Joining me this morning are Frank Hermance, Chairman and Chief Executive Officer and John Molinelli, Executive Vice President and Chief Financial Officer. AMETEK's fourth quarter results were released before the market opened today and have been distributed to everyone on our lists. These results are also available electronically on your market systems and on our website at www.ametek.com\investors. A tape of today's conference call may be accessed until February 6 by calling 888-203-1112 and entering the confirmation code number 4626500. This conference call is also webcasted. It can be accessed at ametek.com and at streetevents.com. The conference call will be archived on both of these web sites. I will remind you that any statements made by AMETEK during the call that are not historical in nature are to be considered forward-looking statements. As such, these statements are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. Those factors are contained in our SEC filings. I will also refer you to the investor's section of ametek.com for a reconciliation of any non-GAAP financial measures used during this conference call. We will begin today with some prepared remarks and then we will take your questions. I will now turn the meeting over to Frank.

Thank you, Bill. AMETEK had an excellent fourth quarter. We set records for sales, operating income, net income, and diluted earnings per share. Sales were up 21% to $583.3 million on strong internal growth of 7% and the contributions from acquired businesses. If the effects of foreign currency are included, internal growth was 10%. Order growth was very strong as well, with total orders up 26% in the quarter, internal growth in orders with excellent at 12%. Operating income was up 31%, driven by the topline growth in operational excellence improvements, resulting in 130 basis points improvement in operating income and margin. Net income was up 29% and diluted earnings per share of $0.57 were up 27%. Cash flow from operations was $97 million, up 48% over the last year’s fourth quarter. For the full year, our performance was also excellent. Sales were up 17% to $2.14 billion. Operating income was up 25% and operating margins expanded 110 basis points. Net income was up 25% and diluted earnings per share were $2.12, up 24% over 2006. Excellent internal growth in each of our segments and contributions from acquired businesses enabled us to post this sharp sales increase. Our operating leverage and improved mix of businesses and our focused operation excellence initiatives drove our record earnings performance. Cash flow from operations for the year was $279 million, up 23% from last year’s level of $226 million. Overall, we are very pleased with these results, our markets are strong, our strategy of acquiring differentiated businesses is working well, and our focus on operational excellence continues to drive profitability. Turning our attention to the individual operating groups. Electronic Instruments Group had an excellent quarter. Sales were up 23% on strong core growth of 8% and the contributions from the acquisitions of Precitech, Advanced…

Thanks, Frank. As Frank has covered our results at a high level, I will provide some additional details on the company’s performance. Compared with the same quarter of a year ago, we drove margin improvement at the group level and increased our operating income margins by 130 basis points. Selling expenses were up 23% in the fourth quarter. Excluding acquisitions, selling expense increased at a rate below our core growth. The acquired businesses tend to have higher selling expenses as a percentage of sales and the base AMETEK businesses due to their differentiated nature. Corporate G&A expense was up on higher costs associated with growing the Company. Year-to-date, corporate G&A expense was 1.9% of sales, the same percentage as a year ago. We expect G&A spend for 2008 to be flat versus 2007. The effective tax rate for the quarter was 31.7%, and for the full year 2007, the rate was 32.2%. We expect a very similar effective tax rate for the full year of 2008. As we said before, this is a full year rate and actual quarterly rates can differ dramatically, either positively or negatively from this full year rate. On the balance sheet. Working capital to sales, defined as receivables plus inventory less payables was 20.6% for the fourth quarter, essentially unchanged from last year’s fourth quarter. We continue to see an opportunity to reduce our working capital investment. Our plans are to reduce this overall percentage further in 2008 by approximately 1%. Capital spending was $13 million for the quarter and $38 million for the year of 2007. Depreciation and amortization was $15 million for the quarter and $53 million for the year. For 2008, we expect the capital expenditures will total approximately $50 million, while depreciation and amortization is expected to be about $60 million.…

That concludes our prepared remarks. Rayne, we would be happy to take questions at this time. Question and Answer

Thank you. [Operator Instructions]. And we have our first question from Jim Lucas with Janney Investment.

Thanks. Good morning, guys.

Hi, Jim.

First question, John, just a housekeeping here. The ’07 CapEx number again, I missed that and also the payables?

The ’07 payables is $206.2 million, and the ’07 CapEx I said was…

$38 million.

$38 million. Right. $38 million.

Okay. Thank you. I had missed that. Frank, very positive remarks in your opening commentary. I mean, clearly, the work that’s been done over the last several years is showing up in the reported results. Two questions. When you look at the end-markets, we understand in terms of a lot of the positives that are going on and the commentary regarding the belt tightening, are you seeing any markets showing any signs and deterioration wouldn’t be the right word. But any signs of any potential slowing with that belt tightening is beginning to occur?

No. Not really, Jim. We are really not seeing any of end-markets showing a slowing that would cause us to react significantly. The reason we decided to do some belt tightening is just… as we looked at what was happening in the world, it obviously feels like things are slowing down. So, we could be moving into a recession. And we just wanted to take some precautionary steps. But there’s nothing in the end-markets that is concerning us or that we are seeing, at this point in time. You may recall that last year the only market that was weak for us was heavy vehicles. It was pretty small part of the company was only $20 million exposure and actually that market this year is forecasted to turnaround It went down substantially last year and is forecasted to turnaround. So, in essence, all the markets are in good shape.

And switching gears on the acquisition side, you went in a couple of new directions in ’07 with your acquisitions. And as you are in the early stages on the integration side, are you seeing anything one way or the other with regards to the acquisitions that’s either more positive or as expected?

I would say that, in general, everything is moving ahead just as we had outlined. The one that stands out in terms of extremely positive performance was Precitech. That business did extremely well and far exceeded our targets. But in general, they are doing just fine. We are getting their synergies. We are getting obviously the bottom line results as you can see in our performance. And we are pretty optimistic about 2008 to see further savings and integration synergies occurring and leveraging our profitability.

Okay. And finally, on the aerospace side, looking at the various buckets that you are competing in there from the OEM, military helicopter, could you give us a little commentary on what you are seeing on the aerospace side?

Sure. I mean, again, all of those markets are very strong. Boeing and Airbus are producing at levels as Cessna on a commercial side. The combine backlog for Boeing and Airbuses is about $750 billion. For 2008, Boeing is expected to be up in terms of production about 10% and Airbus up about 5%. So, very strong performance in the large commercial aircraft market in terms of the business and regional jet market. As you know, Cessna is our largest customer. Their backlog is about $12 billion and they are essentially sold out for the next three years. So, very strong market conditions in that part of our business. And then last is military, and that’s also a very strong. As you know, we decided to invest in helicopters and electronic cooling a number of years ago. And those two markets areas in terms of the DoD budget are performing at a higher level and a higher growth rate than the base DoD budget. And we are enjoying that growth. So, we had excellent performance in 2008, and… excuse me… in 2007 and 2008 looks very strong. Our backlog from the beginning of last year to the end of last year for the Company was up about $150 million. It was actually $151 million is the exact number. About half of that is in aerospace and defense. So, it’s a significant backlog that we are going to be enjoying for the next several years.

And where did the aero mix end up at the end of the year of that $675 million between OEM, military, and business jet?

Yes, it’s interesting mix now, because if you look at it in the way that you are talking about it, it’s 40% for large commercial aircraft, 40% for military, and 20% for business in regional aircraft. If you look at it in terms of after market on a component versus OEM, it’s… for our base business, it’s about 30% of our sort of OEM driven business, is about… is in the after market. However, now with this third party MRO, another 18% is in the third party MRO business. So, it totals in rough numbers almost half of the total aerospace business is in the after market arena.

Great. Well, thanks and congratulations again.

Thanks Jim.

Thanks, Jim.

And our next question will come from Robert LaGaipa with Oppenheimer.

Good morning.

Few questions. I guess, one just to circle back on the end-markets. Hopefully, you could provide us with what you usually do. Just looking at your cross end-markets. And in doing so, you already gave us commentary relative to aerospace, we have another aerospace company, related company, materials company report this morning. Now granted they provide materials and they have about a year, year and a half type lead time, but they had mentioned some cautiousness in the channel, especially related to the 787. I was also curious as to about there.

Okay. Well, let’s take your second question first and then I will come back and look through the Company as the share of what we do.

Sure.

We are not seeing any slowdown in the MRO market either for our MRO market or in essence to the third party repair business that we are seeing. It’s very strong both in the U.S. and internationally. The 787 is not a major factor for us. We have got nice potential revenue on that aircraft, but it’s out in time. It’s not on the short-term. As a matter of fact, we looked at what this recent delay would be on the 787 and how it would impact AMETEK, and it’s roughly $1 million to $1.5 million worth of revenue in 2008. So, it’s just a not a major factor. I could see where a company that has substantial content in terms of their business mix on that aircraft might have a more significant issue, but for us, it simply. It is not a major factor. And actually that $1 million to $1.5 million doesn’t include the fact that the probably more other Boeing and/or Airbus aircraft are going to be shipped because of that delay. So, it will probably be even less than.

Very good.

So, let me walk you through the end-markets as I normally do and I’ll try to give you a picture of looking into 2008 as to what we see, sort of coming off of 2007. And I’ll start with EIG. As I mentioned in my opening remarks for that group, sales were up 23% in Q4. Organic growth was 8%, 11% if currency is included. And if we look at the various parts of the business, we have already talked about aerospace in terms of the end markets being strong, so I will not repeat that. Organic growth for aerospace was up double digits in the quarter. Total growth with acquisitions was more than 45%. For 2008, we expect continued strong growth. Internal growth should be high single digits for the year of 2008. In the process business, the markets are very strong, driven obviously by the price of oil. Process and Analytic Instruments division had a great quarter. Materials analysis and ultra precision metrology businesses were also particularly strong in the quarter. New products are doing well. Q4 internal growth was up high single digits. Total growth with acquisitions was up double digits for this part of the business and we expect that good growth to continue. For 2008, internal growth should be up conservatively mid single digits, I think there is a great chance we will do better than that but that’s what’s included in our financial forecast. Power and Industrial. Power and Industrial continues to do well, Q4 was up mid single digits organically and for 2008 we expect Power and Industrial to have high single digit organic growth, so actually an improvement in this part of the business, and that’s driven by the continued strength in Power and the improved market conditions in heavy vehicles. Flipping…

Terrific and last question if I could. This was just related to the cash level, if I were to result in the private placing, you have the second one in July, and I recognize that you are going to be paying down near those notes, but still seems like cash level is fairly high, just by design and latter this slowing economy, looking for acquisitions at potentially lower multiples and, what kind of pace should we expect if that is the case over the course of 2008, especially if we are heading towards recession, or already in recession. What kind of pace we can expect from you guys?

Well that’s… asked several questions there, once.

Sure.

This flow is clearly resulted in funding in December and our positioning is… we are being a little conservative, it’s better to have cash on hand in these times and… than not. But from an economic standpoint it didn’t make sense for us to pay anything off earlier. It is better suited for us to keep the cash on hand and look for opportunistic uses of that cash, in the next few months, several months even if we have to and then pay the debt down later as in July when we get to that point.

Right.

Funding acquisitions is the top of our priority, that’s our number one use of cash and… so we are obviously… we have got a lot of powder in our ammunition there to use and we could spend much more than we spent this year and still not affect the leverage factors of the company.

If I could just add to John’s comments, we view this as an opportunity in the acquisitions arena. What typically happens as the economy slows, is several things. Multiples come down, as you mentioned. Also the EBITDAs of the acquired companies tend to go down. So when you look at what you are paying for those companies, it’s a great time to buy. Also, many of the strategics, not all obviously, but many will pull in their horns in a down environment, and we view it just the opposite as a time to get more aggressive. And I think as you know we substantially increase the amount of management capability we have for acquisitions by increasing the number of people that are 100% focused on acquisitions from 4 to 10 last year and we’ve got a great backlog right now and the cash is there. Obviously we are going to be judicious in the use of the cash but we do see there’s an opportunity.

And is there an official target just to clarify, $200 million, $300 million, whatever?

We haven’t changed our targets; it is consistent with the strategy that we have outlined for you. We have basically said it’s a $100 million, it’s a $150 million in acquisitions. But I can tell you that my goal is to do better than that, my personal goal.

Terrific, very good. Good quarter. Thank you.

I just want to make one other point that I touched on earlier. Our capital structure is just absolutely rock solid. At the urging of our Board last summer, they encouraged us to get ahead of the curve from taking the steps to protect us from funding to take, clear that $225 million notes that are due next summer, that inspired us to go into the private placement market, we pushed the envelope in getting delayed fundings and the upsized that to match the growth of the company. And when we look downstream our capital structure, coupled with the cash flows of the company is just a rock solid story. So I just wanted to take that opportunity to reiterate that.

Terrific. Thanks again.

See you then. Thanks.

We will take our next question from Amit Daryanani with RBC Capital Markets.

Hello.

Hello, Amit.

I say the state got into a [inaudible] Research, a couple of things. You guys talked during the call regarding Lean and Six Sigma to drive your businesses. Frank, can you talk in a little more detail what you guys are doing, what’s your initiative for Lean and Six Sigma and the benefits that you’re seeing across your businesses?

Absolutely. We are very excited about the, what we have accomplished to date and what we see going forward from both Lean and Six Sigma. Six Sigma is being deployed and has been deployed in two different ways. One, focused predominantly on the business today, if you will, basically the flow of products from the material side through the production process and out to our customers. And secondly, we are focused on design for Six Sigma, which is really in the research development and engineering process, so that we bring products to market that meet our customer needs, we do that efficiently, get them in production efficiently and obviously satisfy their needs and that levers our growth. And, when you look at the margin improvement that AMETEK has done over the last really six, seven years, it’s been a fairly remarkable story. I don’t exactly remember the numbers. Bill, you probably do, but I think when we started this our margins were down in the 12% to 13% kind of region. And we are running now, starting to teeter around 20%. So it’s a phenomenal story. And although we have not quantified this as to how much is Lean, how much is Six Sigma and how much is off shore manufacturing, how much is low cost materials sourcing, et cetera et cetera, obviously Lean and Six sigma are a major part of this. So, as we go into this year and as John has mentioned, we are going to focus some of our activities on the inventory side of the company. And we are actually, we have decided to hire 11 people into the company that are going to be put in our key operations, and these will be people who have significant Lean capability focused on the material movement. And we are going to really attack that material side of the business. It will take a while to see the results because we have to hire the people, get them in place et cetera. But we see an opportunity there and we are focused on that working capital metric and see if we can make some improvements in it, and then obviously satisfy our customers at the same time to a higher degree.

In terms of like OE and RONA, how are you guys using those metrics to look at your manufacturing blueprint, to make sure you are doing the right job at the right plant?

Oh we are always looking at our returns no matter what we do, and I think our financial reports on performance shows that. Any investment that we are making we are looking at it from a RONA viewpoint, and I think you can see that our performance has been excellent.

And over the next year how do you, what percentage do you expect to improve on RONA? Do you have a target mark? Target you would like to achieve?

No, we don’t have a specific target.

Okay. And final question, like everything I have been hearing, congratulations on a great quarter.

Thank you.

How long did your continuous improvement program been in place and going forward on the next couple of years, what systems are you going to put in place to accelerate the initiatives, to make sure you guys stay number one in the market?

Yes. I know it’s a great point. I mean, in that sense we have had these continuous efforts in place for an extended period of time, probably even before I was CEO and I have been CEO now, I think it is eight years. And so, I mean it has been a continual process, but we are continuing to augment the process and it is very important to us. The Company grows and we acquire other companies to inject that into those acquired companies, so the kinds of things we are doing is part of these 11 people that we hired, we are going to actually put a training function into the Company so that we have better capability as we acquire these companies to… in essence go out and teach them using the basic techniques of Lean, Six Sigma, other cost improvement types of initiatives. But it has an AMETEK tinge to it in terms of what we like to do and how we like to focus on and so, that’s definitely one initiative that’s going in place. Another major initiative is that we are putting a Business Analytic system in place, which sits on top of all of the IT systems we have throughout the Company, and it basically puts a dashboard on our desks that allows us to look at things that are not the typical financial metrics that we typically and very consistently look at. We could look at things like first pass yields, closing [ph] on the production lines, and things of that nature, amalgamate them and that will give our people additional focus into where the areas of opportunity are et cetera. So, those are a few of the initiatives that we have in place.

Great. Nice work, guys. Congratulations on a great quarter.

Okay.

And our next question comes from Wendy Caplan with Wachovia.

Thanks. Good morning.

Hi, Wendy.

A couple of quick acquisition questions. In terms of the environment, I don’t think I heard you talking about… mentioning the credit crunch and whether… you talked about strategic buyers but have you seen any impact yet, from the credit crunch and the financial buyers, backing up?

Yes. In essence when we look back, Wendy over the acquisitions we did, we very seldom competed head-to-head with financial buyers. Usually we have got huge synergies and the deals we are acquiring is good strategic fit, so we really didn’t go head-to-head with them and I think the impact on us was more indirect in that because they were being very aggressive and there was huge amounts of capital available as we go back in time. Multiples went up on deals, so we were paying higher multiples in the last year or two than we were in other time before that, so I think the impact, as obviously that cash is not available to the same… anywhere near the same degree is that we are going to see multiples come down. As I mentioned before and I am starting to feel a little of that, but I can’t say right now that we are back to where we were before the bubble.

Okay. Thank you. And there were a lot of acquisitions in this quarter. Have you calculated what the operating margins in the segments or on a consolidated basis would have been, excluding those acquisitions?

No, that’s not a calculation that we do, Wendy.

And…

Obviously, the acquisitions are going to be dilutive to margins.

Right.

And in essence, our margins were up substantially. So, the base business margins are extremely good and they’ve all set back dilution. But I don’t have a number as to what that is.

Okay. And a number I know you do calculate is the incremental margin excluding acquisitions. Can you--?

That we do

Do that for the quarter?

That, it was off the charts. It was well above 40% for the quarter.

Okay. And finally, can you speak about the new 2008 Mexican tax laws and whether you expect that will help… how you expect that will affect AMETEK?

We're studying that Wendy, but we don’t have a real clear picture of how that’s going to affect us and what strategies we may play, we may use to handle that. So, I can’t give you a finite answer to that.

Okay. Well, we’ll look forward to getting it. Thank you very much.

All right, Wendy.

And we’ll take our next question from Scott Graham with Bear Stearns.

Good morning, Frank, John, Bill.

Hello Scott.

Hey. Just a couple of questions for you all. The acquisitions that you made in 2007, and Frank, I’m not asking you for all seven, but maybe just the bigger ones, could you tell us how those businesses are performing organically? Just a bit, maybe just the bigger ones.

Yes. See, if I think about them, the first one we did was Seacon Phoenix and that was a submarine related business, it’s not one of the bigger ones, but it’s the first one that came to mind, and that one is doing great. As a matter of fact, a part of the strong order growth and internal growth that I mentioned for the company in orders came from that particular business. So, we've won some major contracts actually with the Spanish government on their submarine fleet to equip those submarines with… basically these are interconnect systems that do cabling interconnect between the outside water and the inside of the submarine. So they’re very high pressure type devices. So, that business is doing just fine. It’s organic growth, I don’t have numbers in my head, but they’re very, very strong. Some of the larger ones, Cameca is another one in there and Cameca was about an $80 million acquisition and that business has exceeded our expectations. Organic growth has been good. They’ve had great order intakes since we bought them. There are really no issues that I can think of with that particular acquisition. What else is in there, fellows, the--?

Umeco would be the only other large… that would be the only other large one and that was… really we acquired that one in November. So, it’s too early to tell…

Right. So, it’s kind of early. I don’t know if you've heard Bill, but Umeco is kind of early because it’s November, but we have no indications of any of any issues with Umeco.

Well, was that business rising 5% to 10% plus before you bough it?

This is a 6% growth kind of business.

Okay. Where some of the order rates concern, I mean, I think I heard you right, when you said 12% organic growth.

That’s right.

In orders. Could you give me an… give us idea of what you are seeing in intake wise in the first part of January?

It looks fine. Actually, I just check yesterday, it was all the group presidents, because I knew we are going to be talking about it this morning. And all three of the group guys were very confident and they are… what they not only what they saw in terms of input so far this year, but also how they are feeling about the first quarter.

Okay. I guess, lastly would be some of the belt tightening stuff you guys, last time things weakened, you guys were way ahead of the curve on that. And it doesn’t sound like you are doing belt tightening now. It sounds like you very much at already. Although, my question would be, John did indicate that I think you guys are expecting G&A to be flat in 2008. Is that maybe the first glimpse of a belt tightening or is that something else?

I would say it’s maybe a little bit of belt tightening but we had some spend in ’07 that just won’t repeat itself because we got some… some initiatives out of the way. So, it’s a mixture of just our normal cost conscious approach to running the business and some things behind us. Yes, we are looking at… always looking at ways to watch our spend there.

Okay.

If I could add to that. That what I mentioned the belt tightening in my opening remarks, we were very judicious both when we went through the budget process and as we rolled it up, and putting some pressure on our operations, recognizing the slowing economy and we really asked them to be more judicious in their spends, to look for more cost savings opportunities. It was not to the magnitude of what you are referring to, the last time we did this because of back and when was that? I guess it was year 2000 or so because our markets are strong, everything is really doing quite well right now but if I quantify that for you I would say roughly, probably $5 million of, sort of incremental additional cost savings. We didn’t go back and roll it up but I think that’s probably the rough magnitude of what we did. And again it’s purely precautionary, it’s not because we are seeing something that we have to react to.

Okay. Very good. I do actually have one other question and that would be regarding 2008 acquisitions. I know that you guys have done just a… I think a tremendous job in improving the portfolio but if you had to name… I mean you now seem to be kind of full or approaching critical mass in your MRO area, although I am sure that there is more opportunity there but what are the other areas that you are seeing or… maybe the potential for acquisitions to be focused upon in that 2008?

I mean if I looked at where the concentration of our efforts are going, I would put the process businesses first. There is lots of potential acquisitions in that arena that fit the size range where we like to do deals and they are great businesses and they tend not to cycle as much as other businesses, so that’s the number one focus I would say for deals. In addition, aerospace and defense outside of MRO is also an area that we see great opportunity to expand our product portfolio. So, we are going to be… continuing to look for in new acquisitions in that part of the business and as I already mentioned, we have built about $100 million third party MRO business now with the three acquisitions we have done over the last year and a half plus… I guess this was about a year and a half and we see that platform to become $200 million, $300 million platform, what we are talking so, and that really puts our acquisition strategy well, because they tend to be roll-ups, you kind of tend to bring them in, consolidate facilities, give substantial cost reductions and also being in an end market obviously is doing extremely well. The Power businesses are another key area, they are very good businesses, very good markets. That’s a smaller platform, as you know for AMETEK, we have got about $150 million of concentration and we have got good management in that part of the Company and we see it as an opportunity to continue to grow that platform. And although I am asked, I mean I am really speaking to all the differentiated businesses, because that’s where we are focusing… the last is really the differentiated side of EMG. We have built a really nice platform of businesses in our EMIPS [ph] division. We started with the core specialty metals company. We added HCC. We made other additions, Hamilton Precision in 2007 and I can tell you we are looking at a bunch of deals that go into that particular arena right now, so, I mean one of the advantages of our portfolio, I would say in that we have got a number of these diverse markets and you never know when deals are going to pop and what’s going to work from a financial viewpoint, so we are going to look across that whole spectrum of differentiated businesses and just continue to deploy the capital in a very efficient manner and get the kind of returns that we all like.

Well, since you essentially named all of your businesses, Frank, I have come to tell you that I have got very encouraging

I didn’t name cost driven motors.

Thanks.

All right.

And our next question comes from Amit Daryanani with RBC Capital Markets.

Thanks. Most of my questions have been answered but just had a few quick clarifications. In terms of the Final indulgence savings you expect from belt tightening, let’s call it, is that because you are going to consolidate try and do some restructuring or whether that’s going to come from?

It is a combination of things. Every year we do consolidation of facilities and we are going to do some additional ones in 2008. You heard me talk about higher low cost region sourcing, we probably wouldn’t have been quite as aggressive if we didn’t see the slowing U.S. economy. I mentioned we are going to do $40 million to $50 million of additional manufacturing in low cost regions. We will push for the $50 million instead of the $40 million so it is those and those general types of things. It’s not a major restructuring of the Company in any way, shape or form. It’s just looking at opportunities and being a little more cautious as the U.S. and to some degree the world environment is changing.

Got it. And then in terms of the low cost procurement or sourcing. We had $11 million in ’07 and $16 million in ’08. Is that right?

That is correct.

And what is the dollar amount that we are sourcing from low cost regions today?

It’s about $60 million.

Well, that’s for China. If we had expanded to other low cost areas you might add another $15 million to $20 million to that.

All right. So $60 million to $80 million .

Yes.

All right and then what is the number going to 2008?

Probably another $20 million.

Yes.

I mean we are going to still work on the $60 million, I mean we didn’t do it all so…

Got it. And then into low cost manufacturing, that number was around $326 million?

That’s correct.

And it is going up by $40 million to $50 million and we typically save about 20% of those savings right in…?

We say 10%, but probably our more recent performance has been closer to 20%, but the targets we have given you have been 10%.

All right. I am still trying to look at my model and the way things look like they would end up at the mid or high end of the EPS number is about 50 basis points to 60 basis points of operating margin improvement?

Yes. You hit the number but we are saying 40 basis points to 50 basis points margin improvement.

All right. Are you sequentially… to follow up all the savings you get, the $16 million here and low cost sourcing and the final from general belt tightening, plus the incremental margins you can draw in your organic business. You should be… I mean that seems to be like a pretty conservative place to start, I mean, is the math right there or…?

Well, remember we are in a slowing economy and we don’t want to be ultra aggressive at this point in time because none of us know exactly what’s going to happen with the economy, so we are… our numbers we think are very realistic. We think we can handle a slowing economic environment, if the environment did not further slow we probably would beat these numbers but we are assuming in our numbers are slowing economic situation.

And you got to remember too there are cost increases that are offsetting this, I mean, you have taken the one side of the equation. There is other things that your cost increases in investments as well.

All right. Well, maybe on the cost increases part, could you guys just run down raw material if that’s been an issue, it doesn’t look like commodities have spiked up too much of late other than oil.

Commodities, I mean even when they were spiking up, it’s just… it really speaks to the strength of our Company where our operational excellence initiatives, they simply have not been a problem… we were very aggressive in alternate sourcing, very aggressive in pricing as the commodities have gone up. And now we are actually… as you mentioned enjoying an environment where they are probably going to moderate and there is opportunity as it moderates.

All right. Thanks a lot.

Sure.

[Operators Instructions]. And we will take our next question from Matt Summerville with KeyBanc.

Good morning. Just 2 questions. First, you mentioned pricing. How much were average selling prices up ’07 versus ’06 and then what’s your thought on 2008?

That’s a good question Matt. We took a look at this actually, just the other day to see exactly what we had done and we were up about two percentage points in 2007 over 2006. The pricing that we have put into the budget for 2008 is the same, it’s 2%. It is going to be more difficult to get that, but we are going to be aggressive and shoot for that number.

Okay. And then any color on organic sales growth by geography in the fourth quarter? Do you have that data?

I mean, it was a good picture. It was actually balanced where the organic growth internationally was about the same as the U.S. was about the same as the Company. So, it was a good picture. We are very pleased with the U.S. performance.

Okay. Great. Thank you.

Sure.

And there are no further questions at this time, Mr. Burke I will turn the call back over to you.

Okay. I would like to thank everyone for joining us today and we look forward to speaking with you next quarter.

That would conclude today’s conference call. We appreciate your participation. Have a good day.