Good morning. My name is Ashley and I will be your conference operator today. At this time, I would like to welcome everyone to the Flowserve 2008 Earnings Conference Call. All lines have been place on-mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions). Thank you. I would now like to turn today's conference over to Mr. Paul, Treasurer and Vice President of Investor Relations. You may begin your conference.

Thank you, operator. Hello everyone and thank you for joining us. Welcome to Flowserve's 2008 earnings conference. Today's call is being webcast with our earnings presentation via our website at flowserve.com. Simply click on the Investor Relations tab to access the website and the accompanying presentation. Before we get started with the presentation, I want to point out a couple of important items. Firstly, for those of you that have accessed today's call through our dial-in phone number and also wish to follow along with your earnings presentation slides via our website please click on the Click Here to Listen via Phone icon at the bottom of the event detail page. I'd also like to note that our webcast will be posted on our website for replay approximately two hours following the end of this call. The replay will stay on the site for on-demand review over the next few months. Joining us today are Lew Kling, President and CEO of Flowserve; Mr. Mark Blinn, Senior Vice President, Chief Financial Officer and Latin America Operations, Dick Guiltinan our Chief Accounting Officer. Following our commentary we'll begin the Q&A session. Regarding any forward-looking statements, I'll refer you to yesterday's earnings release and 10-K filing and today's earnings presentation slides deck for Flowserve's Safe Harbor statement on this topic. All of this information could be found on Flowserve's website under the Investor Relations section. I encourage you to read these statements carefully with respect to our conference call this morning. The information in this call including all statements by management plus their answers to questions related in any way to projections or other forward-looking statements are subject to Flowserve's Safe Harbor. Now I'd like to turn it over to Lou to begin the formal presentation. Lew.

Thanks Paul. It's a pleasure to walking you to our 2008 fourth quarter and year-end conference call. I'm pleased to report that the fourth quarter was another outstanding quarter for Flowserve with strong execution and outstanding financial results culminating in another record year for the company. These record sales and earnings per share for both the quarter and the year demonstrate the continuing success of our operational excellence initiatives, the resilience of our diverse global end markets and the strength of our product portfolio and aftermarket platform. We also exceeded the previously announced high end of our 2008 earnings per share target range of 7.20 to 7.50 per share with the following result of 7.74 per share up nearly 74% over the previous year. In addition, we generated very strong annual cash flow of over $400 million resulting in a net debt to book capital ratio of 5.2%. Through our constant focus on costs and efficiency, we have also continued to improve on both our gross margins and operating margins. We are also reaffirming our previously stated 2009 earnings per share target range of 675 to 750 per share, which includes the full effect of up to $0.50 per share in realigning cost for the year. In addition, we announced last night that we've increased our dividend by 8%, reflecting our confidence in our cash flows, which allows us to return additional capital to our shareholders while still positioning us to maintain a strong balance sheet and financial flexibility for the future. There in the next few slides I'll discuss some of the company highlights both for the fourth quarter and the full year, as well as many of the primary performance metrics we've achieved during the period. I have also planned to discuss what we're seeing in our major…

Thank you, Lew and good morning everyone. As Lewis discussed, we had a terrific year in 2008 and while we all faced challenges in the current global economy, I want to reiterate and highlight a few key trends in our performance that give us confidence as we face market opportunities and challenges. The first is our strong year-end back log. We ended 2008 with 2.83 billion of backlog and we expect to ship over 87% in 2008 2009, excuse me. Anyway the second thing is the strong growth of our aftermarket business, with continued strong execution of our aftermarket strategies. We saw our aftermarket business e grow in the fourth quarter, 5% and for the year 14%, including a full year growth in FPD of 16%. As you look at aftermarket revenues, there are $1.6 billion in 2008 representing a 33% increase over two years. Next an important measure of efficiency, execution and improvement of our operating platform is our significantly improved operating margin. As Lew mentioned, operating margin expanded 280 basis points driven by operational excellence, migration to higher end products, improved pricing; volume leverage resulting in a gross margin improvement of 210 basis points despite a 200 basis point mix to more original equipment. We also saw improvement through cost containment, as SG&A reduced is 80 basis point as a percent of sale. I will note that corporate costs were less than 300 basis points of sales at 276 basis points. In the fourth quarter as Lew mentioned, we saw an increase of 90 basis points and SG&A to 21.9%. This was impacted by a discrete 2008 bad debt accrual of 7.3 million or 60 basis points, as well as comparing the prior year, we had gains of $15 million in the fourth quarter of '07 which didn't…

Operator, if you'd please open it up for Q&A.

(Operator Instructions) And our first question comes from the line of Mike Schneider with Robert W. Baird.

Good morning guys

Good morning Mike.

Good morning Mike.

First I guess I need to say that Lew and gang its just an incredible transformation you guys have done with this business over the last seven years. So, I have to give you due plenitude but this is truly incredible that you arrived at this point in the cycle with basically no debt and highest margins you have seen and best global platform you have seen in this company's history.

That's right, you know Mike thank you. And you do have that historical perspective and that's why we are optimistic going into these market opportunities and challenges.

So on to the business now I guess the question I have is really around the aftermarket, if we look at the key difference you guys have invested an immense amount of money to try and cushion this business in the down cycle with an aftermarket presence. And during the quarter it looks like aftermarket revenue was just up a point or two. Did you see any change in maintenance schedules or maintenance budgets at your major customers and the orders being up 5%. That's a clear deceleration, just maybe give us some insights as to what's going on in this period with the refineries and other customers in this aftermarket business?

Yeah, I mean, let me answer the question straight on. I mean the 5% in itself didn't concern us in terms of the end of the trend or any indication that we are not executing on those strategies. I mean as you can, as you can imagine Mike and I think you mentioned in it in your note, with what happened in the fourth quarter of last year, I think it basically paralyzed everybody. And so we are actually quite pleased to see that we continued to execute well and got 5% growth in that period of time and what we feel is, we are going to continue to execute on our strategies and drive to take share and ultimately with the market goes as well. So as we said before, we can call one quarter a trend especially a quarter like we had in Q4 where all companies in the global economies were facing a tremendous amount of uncertainty

And as you budget say the next two, three years of an immediate forecast if we assume project activity remains very soft and energy prices stay roughly where they are today. Would you in any given year expect your aftermarket business to go backwards even modestly or is this a business based on the installed base over the last few years that has embedded growth even in a pessimistic scenario like that?

See I think that the latter point is the point here is that a lot of the installed base that you've seen that we've been putting into place or still are putting into place is really going to come online for aftermarket this year and beyond. So we've talked about it. The benefit of the installed base that we put in we think will start to benefit us going forward. Also keep in mind a lot of the growth that you've seen in the aftermarket business in the last year and a half is not just been on the heels of our installed base. It's been capturing aftermarket opportunities from customers, competitors and the local replicators as well. So we still think the aftermarket opportunity is out there for us to continue to execute.

Okay. And then on the pump project business, you mentioned cancellations have been fairly minor and it appears to be in the numbers. The outlook though for pricing on projects, we have had companies even a competitor this morning mentioning that they have had quotes coming back for requotes as ENCs (ph) were to capture lower input cost. Can you describe just what is indeed occurring with project pricing and if you can put any ranges around it to give us some sense as to whether we're talking double-digit price declines or relatively modest price declines?

Well, I mean a couple of things, as I pointed to the advance cash and Lew talked about our contracts, I mean we have firm fixed pricing in these contracts. Now what we -- as Lou mentioned, what we certainly have seen is these projects may have been budgeted in the beginning of last year and as they went to go bidding, the world (ph) incentive change. And by the way so did ours. A lot of it cost in materials and labor costs had gone down, so they basically re-budgeted and wanted to consider that in the bidding process. We had the opportunity to do that as well. That's not to say a costumer won't comeback and say the world is changed we want you to take our price down, but we haven't seen a lot of that activity up to this point.

And even on current bidding that is quotes that are going out today. Are you seeing merge-ins beginning to fall as the cycle loosens here and as capacity becomes available?

Two things that you're seeing out there. You are seeing you do see some pressure on pricing and again what we do is we look to our suppliers and try to preserve and capture that margin through driving that value through our supply base as well. And so you certainly will see that environment out there and as Lew talked about, there's still bid activity. Does that answer your question Mike?

Our next question comes from the line of Charlie Brady with BMO Capital Markets.

Hey thanks. Good morning Lew. Good morning Mark. I like Mike's comments. Obviously a tremendous transformation this company over the past several years. It's refreshing to see that. Can just walk me through the, what the roll out on the alignment costs might be. How should we assume that might roll out across '09?

Well, obviously when you look to take costs out, speed it one of the most important factors, but you've got to make sure that you're thoughtful as to how you approach the business. And the reason we call these realignment Charlie is a lot of these you're going to see about the line. We will certainly talk about them, but these are continued optimization efforts. So our approach is to be very thoughtful, but execute with speed so that we can capture the benefits and our goal is to take these realignment costs and get a better than one-to-one return on them on a permanent basis in our business. So of course the sooner you can get them online the better.

Is that are waiting towards one of the, or two of the segments versus another one. And I'm assuming pumps, valves may be more than seals?

Not really. I mean we are looking at these across all the three divisions and by the way corporate is. And I think the way we've rolled out this program and it is really a program that we'll manage very tightly. Its really looking for what the best opportunity for return is this year and beyond. So you know some of the point, I want to point out is we this year we may not get the full benefit of the dollar necessarily, but what it will do is improve our platform long term. So we don't want to be short sighted with this effort. We definitely want to be long term.

Okay. And with respect to the bad debt accrual. Am I correct -- did I hear you correctly that that came out of flow control entirely. It's about 200 basis point hit there?

Yeah, the discrete one, the $7.3 million was in the flow control business. Keep in mind Charlie that we are not saying that was all our bad debt accrual. We have a regular bad debt accrual process basing on ageing of receivables. This was an outlying (ph) that occurred at the end of the year as we took a conservative approach as to some customers.

Yeah, I guess I was trying to look at the operating level, the segment level that margin looks around 15 or so. If you're back in that the actual performance of that segment is probably a bit better. There wasn't a sharp drop off in Q4 in terms of margin performance of valves?

You're exactly right and if you follow that segment, they are consistently improving their margin. So if you exclude the impact, they had a higher margin, which is consistent with the way they've have been operating the business. They had a strong margin improvement in the fourth quarter, strong margin improvement for the year, and this is a division that has been very tightly controlling their cost. What I wanted to point out was if you look at full Euro quarter-over-quarter corporate pump and valve SG&A, it was really relatively flat. If you exclude these one time items and I think that's an important message. So you are write on that the valve division has been really holding cost while driving margin improvement.

Here's one more and I'll hop back in the queue here. In terms of tax rate and what your expectation might be in 2009?

We've been steadily improving our tax rate. We did have the benefit of items and some of those that were generated from tax planning. So we think we'll continue to plan, but we see a rate plus or minus 28%. What I do want to caution on that is what I don't know is the impact of FIN 48, because that does create volatility in the company's tax rates, and I don't know what the U.S. administration is going to do with corporate tax rates.

Thanks.

You're welcome.

Our next question comes from the line of Scott Graham with Ladenburg. Scott Graham - Ladenburg Thalmann & Co: Hey good afternoon. Very nice quarter guys.

Thanks Scott.

Hi Scott. Scott Graham - Ladenburg Thalmann & Co: Couple of questions of course. Could you talk us through the OEM pumps booking decline of 30% and recognizing of course there is some noise with the whiplash that we all felt in the fourth quarter, but just trying to get a handle on what are some of the facts that you think drove that number down. What would you argue would be sort of the real run rate in the bookings for OEM pumps right now?

Well its tough to say what the real run rate was, because there was such a drastic current in terms of the global economy. But as Lew mentioned I think a month and a half ago we did see one large order, a very significant order, that got pushed out. And so if that's any indication of the trend, it was pushed out for two to three quarters basically to go and reprice the underlying project. You also had a currency impact as well. But I think it's really hard to say what a normal run rate would have been because of what happened in the global economy. Our sense is would it cause everybody to do is probably people did in their households as well is just to stop and think for a period of time. What I come to back to is what Lew talked about in his presentation is these projects are not decisions that you necessarily make on the margin. They are long-term decisions. So I think there was an element of wait and see. But we think some of the underlying drivers of project spend are going to be out there. Capital spend doesn't go away and what we need to focus on is that spend does decline as capturing more share.

Mark, I'm with you on that and I do understand that. The thing is that from what I remember from the company back before you guys got here and this number might have changed. But from what I remember, 70% of OEM pumps are engineered for a specific project, roughly 30% are not. And I guess it's... I'm with you on the 70% being pushed back and booking that will take place. But I guess I am more concerned about the 30% and again, if that number is correct to this day. And maybe if you can marry the answer to we are two months into first quarter. And I am wondering kind of what that OEM pumps run rate looks like right now on the bookings side. Is it still at that 30 level or is it maybe a softer minus 20 or 15 or what have you?

Yes, Scott, as usual, I don't want to comment on anything during the first quarter this year and I think I understand your question a little bit better. The point I want to make and you are the historian on our company is we've certainly seen and we talked about this, a migration to more engineered pumps. So when you followed the business a number years ago, we had a lot of standard industrial products that were made for stock. And what you do see in that and it pertains to a certain degree to our valve business is if that goes through distribution channels or distributors, distributors get focused on cash flow and tend to start destocking their inventory for a period of time, turning to now the supplier focused on just in time inventory. So we did see a little bit of that in the fourth quarter as you saw everybody kind of stop and got focused on cash flow. I think the call to action and the respond is when they do need this product, the distributors are going to have to turn to a supplier who can supply it very quickly. And that's where we think our on time delivery is going to help. But we certainly did see an impact in the traditional products business. And over the years, we've migrated to more engineered products because it really supports our strategy around getting the aftermarket behind it.

All right. Okay. So you did sense that there might have been some destocking impacts in that number. That's really all I was looking for on that question. I have two other questions for you. The organic bookings in aftermarket and the other two businesses were up and in the press release, you guys are always very clear on where the hot points, where the strengths were. You think you are right now in a position with your QRCs around the world to continue to find ways into the incremental revenue opportunity that you might not have been able to one or two years ago? Are you situated enough with your QRCs where you can kind of chase the revenue right now as things come up?

Well, situated enough means we are done, and I don't want to suggest that we are done. But I do think we have significantly improved that platform. For example, we are going to be opening a QRC, which is basically a large manufacturing facility in the Middle East. We are building one in Vietnam to support a petrochemical facility. There is a number of stories that I can go through that we are also building them in other parts of the Middle East as well to support the growing business. So the answer to your question is absolutely yes. I think we have certainly increased our platform in terms of QRCs, our penetration rate in terms of service technicians, field technicians and alliance agreement that will support the growth in our aftermarket strategy. Also keep in mind add on to that a lot of the installed base we've put in over the last couple of years and are still putting in... keep in mind, our backlog was up year-over-year, a lot of that installed base is going to come off of warranty in the future and provide aftermarket opportunity.

I completely agree with that, okay. Last question is this is more of a housekeeping one. This other income line gives the analyst fits, and my hope would be that you could maybe put some type of parameters on what you think this number might be in 2009.

Well, I'll tell you what. I'll answer the question, if you tell me the euro, the yen, the sterling, the peso, the Canadian dollar are going to be.

Well I'm going to have to get back to you on that, but.

Glad you didn't... if it is, I think we can start another business here. But that's really what's driving it Scott is, simply put, because we have to under the accounting rules treat our foreign currency hedges as what they call speculative hedges. We are not speculating. But the fact is we have to mark those through other income expense. At the same time, you are marking certain amount of your balance sheet items through there. So it just creates a lot of volatility. And you basically have the underlying often times backlog and your marking your hedge in other income expense. And that's what creating a lot of the volatility. But I think going back to the theme is we saw, we had planned and forecast that the euro was going to be at 127, and it ended up at 140 at the end of the year. So we got a little bit of a pick up relative to our expected headwind. We'll try to provide clarity on that to let you know what changed. But to give you a forecast for the year, one thing is for certain is I'll be wrong.

All right, let me... Mark, I have to get an answer from you on this one, at least some type of bigger than a bread box. And here is what I mean by that. If we just assume the currencies did nothing for the rest of the year, would we see other income kind of revert back to the mean, which historically has been about a $5 million, $10 million, $15 million number income?

If currencies remain relatively stable, then the volatility of the other income expense line would go down significantly.

And revert maybe to what we've seen in the past?

I don't know where those were in the past, so I don't want to give you a specific number. But I can tell you, look over... look in the first quarter and the last quarter last year. The euro was relatively stable, other currencies were relatively stable and the mark in the other income expense line was slight. There was more that was going on in the hedges there. But you've got to keep in mind gains or losses on the sale of assets are going to be in there. There is a number of line items, but it's fair to say that if currencies remained stable and don't fluctuate, particularly at quarter end, that line should remain relatively stable at whatever rate it is.

I'm with you. Okay, very good. Thanks a lot and congratulations on the quarter.

Thanks Scott.

Our next question comes from the line of William Bremer with Maxim Group.

Good morning gentlemen, very nice quarter.

Good morning. Thank you.

Scott I think referenced exactly where I was going in terms of CapEx, in terms of building out the QRCs. Besides increased deployment there, where else can we start seeing some of this capital, some of your cash on hand being deployed?

In terms of capital expenditures, I mean we still have investments in our systems which drive cost reductions, efficiency and better visibility across our network. As I mentioned, with the advent of what's going on in the nuclear industry, we have teed up to spend some capital on expanding some of our nuclear capabilities and products this year. And also we've talked about this, our investment in the Middle East. As we said, we call those QRCs. That's how we're going to use our capital is to make sure that we have the right geographic expansion, that we increase our QRC platform and that we go ahead and drive continued efficiency. I mean one of the important things in this market right now is we have very good low-cost manufacturing presence around the world. And we want to make sure that we expand those capabilities in this market to keep our cost of production down. As to other capital, it's just the things or cash, the things that we highlighted. I mean we've been very conservative about making sure that our U.S. pension fund is adequately funded. We do return value to the shareholder in the form of dividends and share repurchases. So that's how we intend to use our cash.

When I look at your other markets that you are pursuing, can you sort of break down which ones you are investing more so or more immediately so to?

I think it was some of the things that I talked about in my comments earlier. I mean last year we opened an additional manufacturing facility in India. We're investing in Brazil. We have invested in China. We are investing in the Middle East. But also let's step away from geographic expansion, look at our investment we have made in geothermal, we've also made in LNG capabilities and some of the joint ventures that Lew talked about earlier and in solar and wind. We are spending our money on product expansion. We're spending our money in geographic expansion. And all the while what we're doing is working on standardizing our platform to make sure we drive global visibility and efficiency.

Okay, great. And let's just touch base on the stock buyback plan that you have allotted. What do you see in 2009 there?

As I said, we have $135 million available on our program. We don't comment specifically on how many shares that we are going to buy back. It is an open and active program and that's generally what we do. We just view it is an opportunity to return value to the shareholder, but without any specifics for this year. But we will report on it as we go along and let you know what we did.

Very nice quarter gentlemen, thank you.

Thank you.

(Operator Instructions) Your next question comes from the line of Wendy Caplan with Wachovia.

Thank you. Good morning.

Good morning Wendy.

As we look at your assumptions for '09, can you talk about kind of how you're operating? That is are you operating under the assumption that your business demand for products will deteriorate as '09 unfolds, will improve, will stay the same? And then I have a couple of follow ups to that.

Okay, well, Wendy, without providing any specifics in terms of trends and I will comment as we did before. One, as we look into '09, we do look at our 2008 year-end backlog. It remains cash (ph) pricing and margin and net backlog. We also look at how we're going to execute on our aftermarket strategies. In our forecast, we do take into consideration the current market environment. We also look in terms of getting at what our anticipated results that we give in the guidance, where we think we'll be in terms of our cost controls and also the value we'll drive through the realignment costs. We still have opportunity to drive efficiency and cost control in the business. So that's... and I think finally, to add on top of that, one of the things we'll do is look at the opportunities to continue to take market share regardless of where the capital spend goes.

Okay. But to not to beat a dead horse certainly, but the demand for your products specifically, do you think that they will... given the backlog that you have today, you expect that they will stay the same? Is that what you're saying, just to clarify?

I mean we think the demand for our products is going to remain out there. I mean it's going to depend on us to execute on this. And actually, we think that demand for our aftermarket capabilities is going to go up as a lot of our costumers look to outsource some of their maintenance activities. And also our ability with our strong balance sheet we think is going to give us the opportunity for additional penetration both on the OEM and on the aftermarket side. And as I commented earlier, a lot of our traditional industrial products, we've certainly seen some of the distributors in a destocking mode. But if those products are needed, we will be able to respond quickly and if we can respond quickly and if we can support these products, we are going to have demand for our product.

Okay. And just to follow up with that, what are the metrics, the specific metrics that you are focused on that would allow you to see whether things were again deteriorating, staying the same or improving?

Well we look at some of the things that we comment about when we have these discussions in terms of the overall market. As Lew commented, we look at bid activity out there. We have very close relationships with our customers. We are talking to them all the time. I don't know that there is necessarily a metric around that, but one thing to keep in mind is our businesses employ a sales and operation process, basically where there are constant communications with the customers and these businesses look globally across their opportunities and their manufacturing platforms to see where they can move work, what type of margin they're going to need in the business and what the aftermarket opportunity is going to be. So it is very metric-driven in terms of how we look at opportunities, how we bid these opportunities and what we think the total revenue stream is going to be on that. We also look in terms of the aftermarket business. As we talked about, this is a business that really grows traditionally with installed base on an absolute basis. We have seen our growth rates well above that. That's an important metric for us as we want to continue to drive, capture of this aftermarket business in excess of the market growth. I think the other metric that we look at in terms of performance is how we're doing on SG&A as a percent of sales and our gross margin improvement. We think that is a very important efficiency metric to understand what is going on in our business.

Okay, fair. And if we were to look at your recent project wins, can you give us a sense of is there... are there... is there more or less competition versus a year ago in terms of those that are looking to win that project? What are your hit rates on projects relative to where they were a year ago and what are we seeing in terms of the margin that you are able to derive from those, or bid those projects versus a year ago?

Well, let me... the competitive environment that's out there, competition has always been out there. What we saw actually when the market was growing at a very, very rapid rate is often times some of the customers who actually split bids because they were concerned about the timing of their supply base. So as we look at bid opportunities now, what they're focused on is being able to deliver on time, because regardless of the environment out there, time is money. I think the other thing that they're looking it is your ability to support it. So the competitive environment has always been out there. As you know, on many of the highly reengineered pumps in the oil and gas business, we often run up against a very good competitor, Solzar. And so what we're seeing out there is continued competition, and it's really up to us to make sure that we continue to execute and deliver against that. In terms of the win rates, we don't talk publicly about our win rates out there. But we certainly will say we are getting our fair share of the business. And also we talked about what you are seeing in pricing out there is there was a lot of price appreciation in these overall projects. A lot of it was because the underlying supply base and the cost was appreciating as well. So as those things start to temper out in the marketplace, using our SNOP (ph) process, we continue to monitor that price to make sure that we are capturing the margin that we need in that business. Keep in mind as prices stabilize or moderate or even decline in terms of the orders, we have the opportunity to go and manage our supply base on that side as well to drive the price and preserve margin.

Okay. And one more for you Mark, if you don't mind, the scrubbing of your receivable. There were some... you mentioned the bad debt accruals this quarter. Are there any... as you look at your receivables, how aggressive are you scrubbing them and are there any that look particularly worrisome at this point? How would you characterize that please?

We are spending. As we commented on the last call, we are spending a tremendous amount of time looking at our costumers and their wherewithal, looking at our supply base, all of our bank constituencies, everything. So it's fair to say that over the last three or four months, we have significantly ramped that up. And what you saw in our year-end financials was a result of that, fairly consistent bad debt reserve except for the additional bad debt reserve we took in the valve business. So I would generally say this, we feel this was relatively isolated to this one small group of customers. But we still have a very, very robust process. We haven't seen a significant deterioration of the credit quality of our customers. Also, keep in mind often times, on these large projects, we may either have advanced cash or letters of credit supporting our bid.

Thanks very much.

You're welcome.

And your next question comes from the line of Jamie Sullivan with RBC Capital.

Hey it's Mike Salinsky in for Jamie. Hey, I've got two questions. First of all, to follow up on the bad debt. So just to sort on I guess verify, you did not increase your provision for bad debt in '08 versus '07, is that correct, or not in a major way at least?

Well, I mean we certainly... it didn't reach the line $7.3 million that we referred to.

Sure, outside of that.

Yes. But normally, our bad accrual is upward, between 15 and $20 million is the net against receivables. And so absent the $7.3 million isolated or event-driven bad debt accrual, it was pretty much in line with consistent patterns, especially with the increase in receivables out there.

Okay, okay. And then another question is about potential contributions to pension in'09. I know you had to a range of 55 to 75 million. If you find yourself I guess with your overall cash uses, whatever is CapEx or pension expense or share repurchases. You had extra cash that you didn't use. Let say you didn't use your CapEx to the extent that you were expecting that you got better pricing or just found less to do (ph). If you had extra money, which use of cash would you allocate it to? Would it be additional pension contributions? Would it be just additional share buyback or any color there would be appreciated.

Well I mean I think to your point, choices that we make around our cash we don't feel are mutually exclusive. So if I did one, doesn't necessarily mean I can't do another. With respect to the pension contribution, that amount is really driven by where funding requirements go in terms of the Pension Guaranty Corporation. And last year what we did is we topped up our U.S. pension plan. Obviously, our plan with many other companies saw a decline in their assets. So what we want to do is make sure that pension asset is secure for our employees, that we fund the requirements to reduce insurance premiums on that pension. So that's going to be the way we drive that decision is really towards what's best for the employees and what we can do to make sure we minimize the cost in terms of insurance out there. As to other priorities, we evaluate them on a continuous basis and we are really look at it in terms of what's the best return to the company and the shareholder at that time.

Okay. All right, thanks good luck.

Thank you.

You're welcome.

There appear to be no more questions at this time. I will now turn the call back over to Mr. Fehlman

Okay, very good. I would like to thank everybody for joining us on the call today. We hope to see you at one of our many investor events this year. Have a great day.

This concludes today's Flowserve 2008 earnings conference call. You may now disconnect.