At this time, I would like to welcome everyone to the Flowserve second quarter 2009 Earnings Call. (Operator Instructions). I would now like to turn the conference over to Mr. Paul Fehlman, Vice President of Investor Relations. Please go ahead, sir.

Welcome to Flowserve’s second quarter 2009 earnings conference call. 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 webcast and the accompanying presentation. Before we get started with the presentation, I’d like to point out a few 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 the earnings presentation slides via our website, please click on the click here to listen via phone icon at the bottom of the Event Details 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; Mark Blinn, Senior Vice President, Chief Financial Officer and Latin American Operations; and 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-Q filing and today’s earnings presentation slide deck for Flowserve’s Safe Harbor statement on this topic. All of this information can be found on Flowserve’s website under the Investor Relations section. I encourage you to read those 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 Lew to begin the formal presentation. Lew?

Thanks, Paul, and good morning. It’s a pleasure to welcome you to our 2009 second quarter earnings conference call. I am pleased to report another strong quarter for Flowserve, highlighted by sequential quarter-over-quarter in bookings, most notably driven by the Pump Division, taking us back to the $1 billion quarterly mark again, followed by strong sales growing almost 4% over last year on a constant dollar basis, and once again the continuation of improved gross and operating margins when we exclude the impact of our realignment expenses. During the next few slides, I plan to discuss many of the key company highlights from the second quarter, as well as many of the primary performance metrics that we’ve achieved during the period. As I’ve done several times on these calls, I’ll discuss what we are currently seeing in our major markets, oil, gas, power, water and chemical. Covering not only the current macro environment, but also the areas of particular strength and weaknesses inside those markets, as well as the continuing long-term drivers of demand. Although some of the uncertainty in the global marketplace that surfaced from last year has not gone away, we remain cautiously optimistic that many of our key end markets are beginning to show some signs of stabilization. As you may recall from our first quarter earnings presentation, I stated that we saw relatively stronger pump bookings performance during the latter part of the first quarter that continued into the early part of the second quarter. I am now pleased to report that our pump bookings performance in the second quarter did indeed strengthen by 15.3% versus the first quarter. On a quarter-over-quarter basis, pumps produced a currency adjusted bookings number just 2% lower than the same quarter a year ago, which was the third highest pump…

As Lew discussed, we are very pleased with our results for the quarter, which demonstrate the strength of our global platform and aftermarket capabilities. Looking at bookings, second quarter bookings reported were down 21%, or 11.6% if you exclude currency in the thruster orders. First half bookings down 27%, were down 16.3% excluding currency in thruster orders. Sequential bookings were up Q2 versus Q1 and resulting in a 0.95 book-to-bill and a strong backlog of $2.71 billion. We also saw continued aftermarket opportunities. Second quarter aftermarket bookings were down 4.7%, but up 4% excluding currency, and first half bookings were up 2.6% when you exclude currency. We saw good sequential growth in aftermarket bookings of 9.6%, or 6.3% excluding currency. As expected, we saw a shift in aftermarket orders, 700 basis point shift in Q2 and a 900 basis point shift year-to-date. Our second quarter results also highlighted the continuous improvement of our operating platform. Second quarter reported margin was down 30 basis points to 14.6%, but up 150 basis points to 16.4% excluding realignment. We saw continued SG&A reduction as a percent of sales, down 40 basis points to 21.2%, or 110 basis points to 20.5% excluding realignment. As to our realignment initiatives, we also saw benefits in the second quarter. The chart on the bottom of slide 21 shows that in the first half we’ve seen $7 million of benefits with over $6 million occurring in the second quarter. We expect $22 million of benefits in the second half of the year and $10 million of costs for a net benefit of $12 million. More important, what we see is a $56 million annual run rate in our business going forward. As we have mentioned, it’s important to note that we have been and will continue to reinvest…

(Operator Instructions). Your first question comes from the line of Kevin Maczka with BB&T Capital. Kevin Maczka - BB&T Capital: I guess I’ll ask my first question around these margin goals. Your operating margin goal of 15%, obviously you are handily ahead of that already. The 20% SG&A margin goal, maybe you could have hit that already if you weren’t spending on growth initiatives. But can you just comment directionally on that? Does your guidance increase suggest that maybe you will be closer to that level in the back half of the year?

We set out as a target for 2010. I think, to your point, 20.5% on an adjusted basis, we’ve made substantial progress to that. What we can say and I think you’ve picked up on an important point, we’re going to continue to invest where we think we see strategic opportunities. So as you look at our comment around the guidance on the back half of the year, it is continued performance that you’ve seen the likes of. Also to point out, we have seen relative to the guidance in the beginning of the year a weakening dollar, which has provided a benefit. So what I would say is the goal still stands out there as one we expect to achieve and we set out for in 2010 and we’re continuing to drive that going forward. Kevin Maczka - BB&T Capital: Just to follow-up on the backlog. The orders, the backlog, impressive given the later cycle nature of the business to see those improve like they did. The book-to-bill around 1. So I guess my question is, do you expect to burn more of that backlog in the second half? Or with your commentary about the pump orders potentially leading the valve and seal orders higher as well, is it your expectation that you will maintain that backlog in the back half as well?

That’s kind of a roundabout way of getting bookings guidance going forward, which we don’t give. But let me just give you a better clarity and understanding on what’s going on. When you look at bookings, backlog, sales and cancellations, that really captures what’s happening in our business. As Lew mentioned, we’ve had very little in cancellations. What you are seeing in our backlog and we talked about this last year is these are very complex, long lead-time projects that you’ve seen that are working through our backlog right now, and so that’s kind of what you’ve seen. You’ve seen that aspect in the book-to-bill, but more importantly you’ve seen the strong bookings that we’ve reported. We’ve been very pleased with our bookings now for the last three quarters, all things considered. So going forward, what I’d like to refer to as Lew’s market comments, I think our discipline around how we take business in, and that should give you information that you can make your own determination of what you think the book-to-bill is going to be going forward.

Your next question comes from the line of Hamzah Mazari from Credit Suisse.

Could you talk a little bit about what business lines and end markets you’re gaining share? You compete with just a handful of players in an industry that’s pretty fragmented. Are you gaining share from the larger guys on a specialized side of your business, or are you gaining share from sort of Tier 2 players? What’s driving that essentially?

Hamzah, it’s really both. As we’ve talked about before, the strong balance sheet becomes ever present with regard to the Tier 2 players. We’ve talked about the strength in our balance sheet. Having said that, if you look at our global presence, you look at our aftermarket capabilities, that’s what gives us the belief that we are gaining share against the large competitors as well.

Just a follow-up on the SG&A. You guys have talked about 200 basis points of additional costs takeout. Can you just repeat for us, has that process already begun, or is that 200 basis points additional room and cushion for you to run on?

Yes, Hamzah, I’m not sure what you’re referring to in the 200 basis points. I think what we commented on that was when our SG&A was at 22% on a reported basis, and we said look, our bogey is 20, so it’s 200 basis points. Certainly you saw some progress about that. One thing that’s important is we’re not saying, structurally, 20% is our business. Once again, we’re going back to a couple of years where we set a target for a period of time and we measure ourselves against that. Our focus is around taking costs out of our business where we have the opportunity, but also reinvesting around strategic opportunities. The Integrated Solutions Group has been a significant capital and SG&A investment for this company, has also been the build-out in India and the Middle East. We’re adding resources there. So I think my general comment is, we’ll stay focused on costs. We think we still have plenty of opportunity in terms of our cost structure. We reinvest where we think it’s appropriate.

Just lastly, could you comment on how much more linked your valve and seal business is to chemicals and general industrials versus your overall mix?

As we talked about even last year, because if you look at the valve business, they have what we call kind of a boomer of a quarter in the second quarter last year in the chemical industry, and you’ve seen that as one that’s been the hardest hit. They’ve always had great execution and great penetration in the chemical industry worldwide. We’ve talked about we’ve seen the impact in Europe and the U.S. So they’re linked, but also they’re expanding. The valve business has been expanding their opportunities in oil and gas. As we talked about on the order today, you saw in the nuclear, they are ever-present in the nuclear capabilities around the world. The same thing in the seal business. I think when you look at our business, historically, yes, we’ve had strong penetration in the chemical industry, but we’ve been working very hard at expanding our sector base over the last couple of years.

Your next question comes from the line of Scott Graham with Ladenburg Thalmann.

I wanted to ask a couple of questions about the aftermarket business. I think, first, if you could tell me kind of how the bookings progressed in the quarter. You indicated that they improved late in the first quarter. I’m wondering if you saw improvement as the quarter progressed, and in particular the pumps aftermarket.

We talked about what had occurred in the first two months of the first quarter and that we’d seen a lot of that debate during the end of the first quarter and beginning of the second quarter. So we saw continued improvement in the aftermarket bookings, because some of the dynamics that we talked about earlier is that you can certainly delay some maintenance, but you can’t delay it forever. So those things started certainly coming back on line. But also what you saw on our growth as well is we’re starting to get some tractions in our Integrated Solutions Group and some of the other initiatives as well. So it was a combination. We did see progress. We always caution people we are not a quarter-to-quarter business. The greatest example is that nuclear order we got today. That would change everybody’s commentary around valves if that would have been in the last quarter, but the fact is we’re not a quarter-to-quarter business but we have seen good, steady progress in our aftermarket business.

It looks to me as if production capacity utilization however we want to define, the influence is on aftermarket on a global basis, since everything is a click lower today than it was a year ago, yet your aftermarket business is up year-over-year. It would suggest some share gain. I’m wondering if you could maybe share with us sort of your end-user strategy on pumps. Now, you’ve been shipping a lot of pumps for a long time now, four or five years. I’m just wondering if, in fact, you have any idea of what your win rate on your pumps aftermarket business is right now.

Yes, we’ve talked about it before as the capture rate, and it has gone up. We’ve talked about years ago we saw it in the low 30s and it’s probably in the high 30s or low 40s at this point in time. But that is part of the equation. When we talk about share gain, it’s capturing the installed base that we’ve put in. As Lew commented, a lot of that we are going to be able to harvest that starting towards really the middle or the back half of this year as it comes out of warranty. Part of it also is going back in and capturing installed base that we lost many years ago, but a more important way to think of our business of share gain along the lines certainly of our competitors, also the term people have talked about the pump pirates, which are the local machine shops, but also where we get a lot of shares, especially in our alliance agreements, are from customers themselves. We’ve seen benefits really across all of those fronts. If you think about it, we’ve got a lot of installed base. We are the original equipment manufacturer. We have the drawings. We have the capabilities. They are going to want to put their service to us. That also applies to what I’d call the local machine shops as well. They’ll replicate; we will duplicate. There is a significance around that in terms of performance of the equipment. Also on the customers, as we talked about, they are looking to outsource a lot of their fixed costs around maintenance, and we are there to provide that service to them. So really that’s how you’re seeing the growth here. We don’t want to only tie it to incremental installed base, because the story is much broader than that really in all of our three divisions. It’s not just isolated to pumps.

Your next question comes from the line of Karen Finerman with Metropolitan Capital.

Very nice quarter. We’ve seen some high profile delays from Petrobras. Does that affect you?

Very little. They had four refineries that they had on the map. One they are moving forward with. Now, some of them they may push out to future periods, but you can see from some of the announcements we had out over the last two or three months, Petrobras remains a very, very key customer, not only on the project side, but also great opportunity on the aftermarket side. We’ve been building out a lot of our capabilities down in Brazil.

Can you give us any sense of, is it significant for earnings or no?

The good thing is not any one of these projects are going to make a material difference to our earnings. But in the aggregate, these projects are all very important. Petrobras is a very important customer. We’ve really seen them ramp up for us over the last couple of years, especially with our committed investment in the region.

So do you expect, just looking at your pie chart as a geography, that Latin America piece to grow meaningfully over the next two or three years?

From a personal standpoint, I certainly hope so. Yes, I am a little bit biased here.

It was your baby.

Yes, it is. It is. I mean, oftentimes people don’t refer to that as an emerging area because it’s been around for a long time. We’ve had a long standing presence in that region, but if you look at what’s happening to the economies and as you well know, Brazil is now investment grade. I mean, who would have thought that ten years ago? Their economies are starting to grow, we are seeing good growth in Colombia and in areas like that. I do think that that’s going to continue to be a growth area, along with China, along with India and the Middle East. So those four may start to overtake the U.S. But I do, I think we see good growth opportunities in Latin America, and that’s why we’re making an investment down there.

Your next question comes from the line of Jamie Sullivan with RBC Capital Management.

A question on the bookings side. You mentioned that these were long lead time projects in the pumps business. Are you seeing some of this in the projects that were being re-bid or re-budgeted, as you describe it? Are you seeing those being led? Is that what’s happening or are these just long lead time projects? That would be the first part. The second part would be about lead times in general, what you’re seeing in the pipeline. Are those changing at all?

On the first question, we are seeing both. These complicated projects have had long lead times. We talked about this last year, as people were trying to understand better how our bookings converted to sales. Now the important thing is looking forward. As we’ve talked about before, on any project time is money. So the project management is going to be looking for ways to tighten down the project timeline. That’s going to hit the sweet spot of companies around on-time delivery, which we’ve talked about our excellence in on-time delivery for a long period of time. So what I would say is the way the supply base was, even eight months ago what they were doing is quoting longer lead times and you’re seeing how that moves through our backlog. I think, on your second question on large projects. We are starting to see, as Lew talked about, they are starting to let them. But going forward, what they’re going to do is they are going to look for shorter lead times to try to reduce the overall project cost. That will play right into our hands.

Okay. Are you seeing that in your pipeline and bid activity now, the shorter lead times?

Yes.

Okay, great. Then my second question was just on the Integrated Solutions Group. You’ve talked about that a little bit. Can you give a few more details there on kind of how that changes, how you go to market at all, and how you’ve seen some success there so far?

We were doing this. We launched this at the beginning of the year. Actually in our discussions around this call what we’ve talked about is we really wanted to talk about this on our next call, because it’s still early stages. But it is around what it says; it’s integrated solutions. It’s around providing reliability and efficiency to the customer and information so that he understands how his systems are running and how profitable it is. That’s a general way to summarize it, but we will be talking about it more and more going forward because we are very excited about it.

Your next question comes from the line of Mike Schneider with Robert W. Baird.

First just an incredible quarter and kudos to you, just great execution. I guess first question is just starting at the macro level. If you look at the guidance, ex the restructuring, you’ve basically earned about $4 in the first half. The guidance would be for something roughly similar or slightly higher in the second half. Just conceptually, will you see the typical seasonality or frankly even more, given that the first quarter was kind of starting in a hole with the global economy? It strikes me that the back half guidance, even at the high end, is low.

That’s a fair point, but one of the things that you’ve got to consider is around currency and a lot of it is what could happen in the marks of our currency. We’ve certainly seen, on an unexpected basis, the dollar has weakened over the period of time, so part of that going forward. The other thing is we estimate benefits to be received by the realignment, but we are going to want to see them progress through over the course of the year as we refine our guidance going forward. We thought you’d be happy when we took the guidance up. There’s not too many companies doing that at this point.

Mike, if nothing else, you have been consistent.

I have been. You’ve come up to meet my numbers, but now I am considering that the second half, you are starting with record margin momentum coming out of this quarter. You’ve got lower restructuring costs, lower raw materials. Yes, currency is becoming a headwind, but it strikes me that seasonality alone and those tailwinds and the backlog only down 12% strikes me again that the guidance doesn’t really account for any of that.

One of the things that I saw in your comment around revenue, keep in mind these longer lead time projects, there’s more in the stability around the book-to-bill. There tends to be more stability around our sales on a currency neutral basis during the course of the year. That’s kind of what you’re seeing in terms of how we manage our load and our projects, and also the growth of our aftermarket business. I am not calling a revenue trend going forward, but it’s just something to think about in our business, is historically what you saw is a substantial amount of sales in the fourth quarter. That may be what you’re looking at historically. Just keep in mind, longer lead time projects, more of a mix on the aftermarket business which tends to be more steady.

Got it. Then in the backlog, if you look at and focus even on pumps specifically, can you talk about multipliers that are embedded in the backlog versus what we are shipping today, just so we can get a sense of are these margins sustainable as you begin to ship the backlog that’s in place today?

We don’t comment specifically on multipliers. We commented earlier on the call that, as you noted, we saw an impact certainly on pricing out there. But the point is we are also able to turn to our supply base and drive that as well. So we maintain discipline around how we approach margins in our business. But as you commented and as we’ve said before, we certainly see the impact of pricing. But what you also see going on is we are able to manage our supply base. You can see the continuous improvement in our operating platform. Also look around aftermarket growth and mix, and all those things factor into how you should look at margins going forward.

Qualitatively, are multipliers in the backlog today similar to what they were six months ago?

Again, I don’t want to comment specifically on multipliers, because that is obviously very market sensitive data right now, but my comment was around pricing that we talked about on the year end call.

Right. Then gross margins again for the enterprise, if you scrub it of restructuring, they were flat sequentially at 36.5%. I’m curious. You’re further along into the restructuring, so you’re getting some savings. The aftermarket shifted even more so this quarter. Why wouldn’t we have seen gross margins? I hate to even pull out a negative here, because it’s an incredible quarter, but why wouldn’t gross margins have expanded sequentially?

Let me flip through my deck real quick to respond to one of your comments. Actually consolidated gross margins had an impact in the quarter. They were reported at 35.4%. You’re right, but that had a 110 basis point impact from realignment. So we’ve still seen certainly some leverage in there around the gross margins. So good gross margin improvement, and I guess I am kind of missing the point there of what you’re trying to say.

If Q1 had 60 points of impact from restructuring, so the reported number of 35.9% would have been 36.5% as well. So just sequentially, margins ex-restructuring, were at 36.5%, 36.5%. I am just curious again. The aftermarket certainly would have been beneficial. Some early savings would have been beneficial. Is there something about the mix that I’m missing?

No, no, nothing. By the way, we saw very little savings in the gross margin. We expect to see certainly more, but no, I don’t think there’s anything other there. The 36.5% adjusted margins, gross margins, are very high in our business.

Yes, not taking anything away from you. Then aftermarket, we’ve heard some companies discuss how, as your customer base begins to take plants down, in particular in chemical, that even their service contracts are being canceled. Have you seen any impact in your aftermarket business from that type of cancellations?

A lot of that you’ve already seen in the numbers in the seal business in the first half of the year. We’ve seen the impact of certainly shuttering some of those plants, and as we’ve talked about before, it’s not determined at this point if and when they’re going to bring those facilities back up. Having said that, an example is we built out a QRC in Vietnam because they are putting a petrochem facility there. So in one area where they are taking capacity down and moving it to other regions of the world, that’s where we are to capture that business. But yes, it is fair to say that certainly in the U.S. chemical sector, primarily in our Seal division, we’ve seen the impact of them taking this capacity down. A lot of that is already in our numbers.

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

I just wanted to look at, on the Pump Division, when you look at the sales mix, the OE and aftermarket, obviously it went against you by about 5%, which normally would be a negative on margins, but clearly that’s not the case in this quarter. So I guess I’m trying to understand the old rule of thumb aftermarket to OE, aftermarket being maybe three times better on a gross margin basis. Looking at this, is it fair to assume that over time that that spread between OE and aftermarket has narrowed, so maybe that rule of thumb of 3X is not valid because the OE side, particularly on a pricing standpoint, has gotten better?

Yes, and the execution on the OE has gotten better. I think everybody needs to understand that’s probably one of the most important thing. We were years ago having trouble realizing margin on projects, as much of that was our fault as it was the environment. But you’re right. We’ve used the rule of thumb of 30 basis points for a 100 basis point shift in the mix, and so your point is well taken. I think this goes to Mike’s question perhaps earlier, is what you’re seeing is our ability to execute very well on these projects, and our discipline around price and that’s what supported the margin growth, so despite a mix shift against us in the Pump Division and overall.

Right. Just speaking generally on margins, can you give us a sense of how much of this margin improvement, which was stellar, how much of that is price and really how much is execution on the margin improvement?

Yes, it’s a consistent story that we’ve been talking about for a while. Most of what you’re seeing in the improvement in our business is around operational excellence, cost initiatives; you’re starting to see some of the beginning benefits of the realignment. It’s really around the platform, and that’s why we highlight the platform so much in our discussions. We are certainly, relative to a couple of years ago, seeing the benefit of price in our margins as well. That’s why continued improvement of our platform is critical.

If you look at the bookings coming in today, given that raw materials have come down and there’s been some deflation, has pricing pulled back at all?

Yes. Again, at the beginning of the year we talked about it. We certainly were starting to see pressure on pricing. A lot of it was driven by raw materials. Project managers see raw materials costs go down 40%, 50% and they look to their suppliers to pass some of that benefit through. But when you take a step back, something you need to think about is a lot of what we get paid for is the engineering, and we don’t necessarily discount our engineering capabilities. But in a large pump, for example, 30% of that can be the motor. A lot of the price of that motor can be impacted by commodity prices out there. But historically, we haven’t made lot of margins on just passing through a motor. A customer won’t let you do that.

Your next question comes from the lines of William Bremer with Maxim Group.

I thank you for providing some color on the installed base coming out of warranty. This is something that we’ve been highlighting to the Street since our initiation. My colleagues did a great job on firming up bookings and backlog, etc., there. I saw some news recently regarding the oil sands projects, particularly a pretty large one opening up, first one most recently coming to the forefront here. We do know that you play into a few with those two customers there that are working on that. In particular then, a deepwater drill going down approximately 7,200 feet has been announced. I just want to get a feeling of how this falls favorably into your mix.

It’s opportunity. As you saw towards the end of last year when oil dropped precipitously, a lot of people were questioning the tar sands. Some people announced that they were halting future projects at that point. But a lot of that started coming back online over the last couple of months, because if you look at it, it is a viable source of the resource and they are able to cost justify it going forward. You’ve seen that with some of the pairings, Total and Suncor. They are really focused on driving investment going forward, and that’s where we are very well positioned. As we’ve talked about, we have some specialty equipment that goes in there that really helps reduce the cost in the overall process.

Can you give us an idea of how many competitors are at those tables competing in that highly engineered activity?

It’s relatively few, about three. When you look to some of these complex applications, as you go up the complexity curve, the competitive landscape tends to narrow. But it’s about three in the tar sand area.

Okay, great. Then possibly a little color on the deepwater drilling?

That certainly is an opportunity for us on the deepwater drilling side. If you’re talking about the offshore, one mile to two miles down to the subsea platforms, those are very complicated platforms. They have to be designed not to fail. Again, that plays right into our sweet spot. So that’s opportunity for us in some of the deepwater platforms that are going to go down, very expensive platforms.

We have a follow-up question from the line of Mike Schneider with Robert W. Baird.

All right, guys. On the pricing question, so pricing is coming down with raw materials and just slack capacity. So if we look at the pump orders basically being flat year-on-year, if pricing is even down 10%, it implies that volumes are up an equal amount. I guess is that accurate? I guess what would explain the volumes actually being up year-over-year, given that a year ago was obviously a very peak period?

Share gain, Mike.

Okay.

That’s it.

Okay. Then in terms of just pent-up orders, so Q4 and Q1, the world was locked down. I know this is a qualitative question, but do you have a sense of, are orders today just expressing what would have been booked over the last six months such that this is kind of a misleading period where we are booking six months of orders in three months? Or does your global database of projects show that this is really a sustainable level of projects and orders?

Yes, when we look across the project opportunities, there’s good project opportunities out there. The question is, are we kind of seeing a backlog of opportunities come flushing through? They don’t come through on large projects like this. What they tend to do, when they delay them is they delay them and they kind of stay in the queue over a regular period of time. Now, what does change is their delivery dates. Again, I think that’s been part of the opportunity as to why we have been successful in gaining share. So, no, you are not seeing kind of a wave come through that has been pent-up demand. That doesn’t happen in large projects; that doesn’t happen at all in large projects.

Okay. Then a final question just, is there anything unusual in the Q2 orders, like the thruster orders of a year ago, that we will be talking about a year from now?

No, there’s nothing really that we will be lapping in terms of unique items. The reason we highlight those thruster orders is those were very event driven opportunities. We hadn’t really seen opportunities like that in 10 to 15 years. So we just wanted to call them out as helping people understand that really you capitalize on some capacity we had in Germany for a very specific need.

(Operator Instructions). Your next question comes from the line of Scott Graham with Ladenburg Thalmann.

I just wanted to ask one follow-up question, because as I’m sitting here listening to the Q&A, I am also doing some modeling. You guys have this great problem of liquidity on your balance sheet. I know that you’re looking for acquisitions and I know you want to invest inside the core businesses and what have you. But you can kind of do all of that with change to spare. I’m wondering if we start to see, with the credit markets a little bit more stable now, perhaps a lot more stable, if there is a share repurchase acceleration that’s being contemplated. I know that now you’re not going to answer that question specifically, but obviously you don’t want to end 2010 with $400 million to $500 million of cash on the books. What’s the thinking?

You’re right. I am not going to answer your question on the share repurchase. You know me well. But I think, again, think about how we look at a share repurchase. It is a good systematic way to return value to the shareholder along with the dividend. It’s only six months ago that if we would have told everybody that we were going to have whatever you mentioned, $0.5 billion of cash or $0.6 billion on our balance sheet, it would have received a round of applause at the end of the year. So market conditions have changed. Our credit markets, specifically to Flowserve, are good and along those lines, but it’s the way we think about our cash and our balance sheet going forward. We definitely want to use it strategically. Along our lines of thinking, if we thought that the best way to use that was to return more value to the shareholder, we would do that. But also keep in mind that as these markets start feeling the impact and as companies out there start to differentiate themselves, as we’re doing, that really raises the level of strategic acquisition opportunities. We don’t really want to foreclose anything. One of the things we’ve learned from our past is when we are highly leveraged or we don’t have a flexible balance sheet, it really does limit our options. We don’t want to be in that position again.

You have no further questions.

Okay. Then I would like to remind everybody that this webcast will be available on our website for a replay in approximately two hours. Thanks everyone for joining us on the call today.

Ladies and gentlemen, this concludes today’s Flowserve second quarter 2009 release conference call. You may now disconnect.