Welcome to the ITT fourth quarter and year-end 2008 Earnings Call. At this time, all participants have been placed in a listen-only mode. The floor will be opened for your questions following the presentation. (Operator Instructions.) Hosting the call today from ITT headquarters is Mr. Steve Loranger, Chairman and Chief Executive Officer. He is joined by Denise Ramos, Chief Financial Officer, and additional speakers. Today’s call is being recorded. I would now like to turn the floor over to Mr. Tom Scalera, Director of Investor Relations. Sir, you may begin.

Thank you, Nicole. Good morning and welcome to ITT’s fourth quarter 2008 investor review. Presenting this morning are Chairman and CEO, Steve Loranger, and Chief Financial Officer, Denise Ramos. Today, Steve will highlight fourth quarter and full-year 2008 results, and Denise will provide a detailed review of the fourth quarter performance and the 2009 earnings outlook. I’d like to highlight that this morning’s presentation, press release and all non-GAAP financial measures provided during the call can be found on our website at itt.com/ir. Lastly, please note that any remarks we may make about future expectations, plans and prospects constitute forward-looking statement for purposes of the Safe Harbor provisions. Actual results may defer materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in ITT’s Form 10-K, as well as our other public SEC filings. And now, let me turn things over to Steve.

Thank you, Tom. Good morning, and thanks to all of you for joining us today to discuss ITT’s fourth quarter and full-year 2008 results. It is with great pride that I can open by saying that during this challenging quarter, our dedicated business teams at ITT made difficult decisions in the face of adverse conditions, and we delivered solid results in a very responsible way. In order to do this, we required a balanced view of our past and future to guide our actions in the present. I believe that at the core of ITT is the concept of balance. It's about our portfolio, it’s about our products, it’s with our people and it’s in our results. Despite a global economic environment that progressively deteriorated as the year 2008 unfolded, our business continued to perform on the strength of our portfolio; our teams met these challenges in their markets head-on. And while we expect 2009 to be much more difficult, we take great pride in having achieved yet another record year of revenue, cash flow and earnings in 2008. Looking at the specific fourth quarter and full-year 2008 highlights on slide 2, we delivered very nice results across the portfolio. For the fourth quarter, we grew organic revenues 5%. We delivered earnings per share growth that was $0.04 per share better than the midpoint of our previous guidance. We invested $94 million in restructuring and realignment action, and we strategically aligned key business processes. For the full year 2008, we grew organic revenues 7%. We grew total revenues 30%, to a record $11.7 billion. We grew EPS 23% and we successfully integrated over $2 billion in acquisition. We generated a record $871 million in free cash flow, 112% conversion of income, and we delivered strong year-over-year fluid technology and defense results that set us up very nicely for the future. In this environment, I'm also pleased to confirm that we are maintaining our previous 2009 EPS guidance range of $3.60 to $4. The challenges ahead will be significant. But we are confident that our leaders are taking the necessary actions to best position the company in these difficult times. And while we’ve made some tough choices in recent months to manage cost aggressively, we remain committed to our long-term strategy and we are going to continue to invest in our future success. And now let me turn this to over to Denise, who’s going to provide a more detailed review of our strong fourth quarter and full-year financial performance.

Thanks, Steve. Let's start on slide 3. In the fourth quarter, total revenues were 17% on solid 5% organic growth. The organic growth was driven by 7% improvement across the defense and the fluid segment. In performances, did exceed our internal expectations. However, the decline in our most and in flow control businesses was more than anticipated, due to extended customer production closures in December are merely in the automotive and marine markets. Total revenue for the year improved 30% to a record $11.7 billion on strong 7% organic growth. All three segments contributed to the organic growth, and our EDO acquisition added nearly $1.8 billion in incremental revenue. Total organic orders in the fourth quarter declined 8% on weakness across all segments. Full year organic orders improved 9%, led by fluid and defense. In the quarter, segment operating income decreased $9 million to $280 million. Our earnings per share increased 1% to $0.82. Fourth quarter results were negatively impacted by $59 million of additional restructuring and realignment actions. The fourth quarter results benefited from recent acquisitions, operation improvement and lower taxes. Full year segment income improved 24%, and EPS improved 23% to $4.04. These improvements were due to net cost productivity in contribution from the EDO and INC acquisitions that more than offset additional restructuring and realignment charges in growth investments. On slide 4, we have provided a full year 2008 EPS go-forward from our previous EPS guidance. In total, we exceeded the midpoint of our previous guidance by $0.04. From an operating standpoint, we exceeded the guidance midpoint by $0.01. This performance was led by strong defense results that included additional crude delivery requested by the customer. Lower corporate cost and taxes generated $0.10 of favorability, compared to the guidance midpoint. Lastly, as we have been discussing, we…

Thanks, Denise. Let me offer one final thank you for all the hard work performed by the thousands of ITT employees around the globe. Challenging times clearly lie ahead, but we all are very proud of not only the results that have been produced in 2008, but also the manner in which they were produced. So with a record 2008 performance in book, we now fully turn our attention to the main challenges ahead of 2009. Our 2009 operating plans strategic plans and contingency plans have all been hardwired and I feel that we have properly identified the risk ahead. But more importantly, our leader has detailed the aggressive proactive actions required to confront economic conditions that we don’t typically encounter in our traditional planning environment. These actions are grouped into four main categories of focus, outlined on Slide 10. Our philosophy is that no matter how 2009 unfolds, our teams will be successful if we continue to focus on these four categories: the current needs of our customers, focusing on cost control and working capital improvement, deploying our capital in a disciplined manner and executing our operational initiatives. Let me just walk through some of the activities responsive to these strategic focus. Our customers are central to who we are at ITT. And we know that the quality and criticality of our products make us a central figure, and in these volatile market conditions we are going to focus on delivering exactly what matters. We are going to focus on vital service, and maintenance offering to their current needs. But we’re also including a lot of additional emphasis on improving the product lifecycle cost through energy, efficiency and total cost of ownership reduction. We are also working on giving some opportunities with respect to the fiscal stimulus that’s in…

Thanks, Steve and Nicole, we are ready to begin the Q&A. If you could just ask everyone to keep their question to one per analyst.

The floor is now open for questions. (Operator Instructions.) Your first question is from John Inch of Merrill Lynch.

Good morning. So, first question is on the restructuring actions you took in the quarter. It looks like there were some charges for the dispositions of the business that bottled in at about $75 million, and I think that 61.6 was the actual number. My question is, is there incremental restructuring that you had intended to do in the fourth quarter that you are going to be doing in 2009, and if so, in what areas?

Let me answer that question, John. When you look at Q4 in total, we have restructuring and realignment charges of $94 million. Now, when you look at the financial statement in the restructuring line, you'll see about $52 million in there. So the difference is $32 million. That falls within G&A, and it has to do with those three dispositions that I talked about in my remarks. It has to do with the distribution, with a sale of the Spa & Whirlpool business, with the European distributions business that we had, and it had to do with a manufacturing our facility in fluid. So, those three things together; because we're far down the process of selling those assets from an accounting perspective, it was included in G&A calculations. So, we basically did what we said we were going to do from the base restructuring with headcount. It's just that those three items added to that incremental $32 million that hit us in Q4. We have included that in the EPS numbers that we've reported and talked about on this call.

61.6, what you probably were going to do, or is that little bit less?

That was basically what we thought we were going to do, flat 2 or 3 million in there, but it was basically very close to what we had articulated and that had to do with a lot of the head count reduction that we felt in Q4. Now. for Q4 2009, in the numbers that we have, we're assuming $15 million of restructuring. We think that 60% of that will happen in first half and the reminder in the back half of the year.

Next, then as a follow-up of fluid, the organic number is down, I thought you said it was inline with the orders that we thought. It seems like the first quarter could be down significantly more, maybe in the 10% range. So my question really is, is there confidence that fluid is going to ultimately improve as the year progresses? I know you called that municipal customers waiting for stimulus, but is there something else, maybe timing of order shipment, compare it with something else, that sort of wait the fluid business to the back half?

Yes John. We believe there is a solid rational for a modest sequential recovery due to the year in the fluid technology. It's a combination of the factors. First of all, you did mention the stimulus that's in there. We also have had very, very significant de-stocking in the third, fourth quarter. We think it's going to continue in the first quarter, and that is not a sustainable inventory to sales ratio. Further, there were a number of what I would call unattainable projects delays that occurred with the lack of customer confidence and municipalities and another water-related industries just simply can not exist. We thought at some point of re-addressing some of these projects, and very necessary repair and overhaul. So adding that all up together, we do believe that we'll see a moderate but sequential recovery through this time period in fluid. Keep in mind, however, that every quarter is still going to be down from the prior quarter of 2008.

Steve, how important is China to that equation or that formula of improvement, as this year progresses?

It's not significant, but we're still maintaining a focus on this emerging market. Our emerging market growth last year on the end was in the 20 to 20 plus percent range, even though China is down from the historical highs in the 8% and 10% GDP range. We expect China to be in the 5% to 6% GDP range, which is still a nice place to participate in this economy. The other comment I also want to make, John, with respect to your question, is that we're also seeing some nice improvement through the second half on the operating performance as well.

.:

So not all the operating performance that you're seeing is going to be attached to these revenue increases that I just mentioned. I did not mention the fact that the defense revenue is also up in the second half. But on the operating performance side, we expect that we have calenderized our material cost. The recent benefits will be stronger in the latter half, as well as the productivity flow through which, we're right in the middle of transition cost right now, will actually hit on operating basis more in the second half, plus we have the benefit of the lower year-over-year restructurings. So, when you add all that up, we've got confidence in the calenderization of both our top-line and our bottom-line.

Thanks very much.

The next question is from Jeff Sprague of Citi Investment.

Thank you. Good morning, everyone.

Good morning.

Good morning.

Can we, Steve, get a little bit further into this sum of the dynamic that you are seeing in fluid, in particular? I was just interested in the continued strength in industrial process. I think, Denise, did say you expect some cancellations and delays there, but are you seeing customers communicate that now? Is it starting to happen underneath the surface, or is it still just the situation where you're anticipating if that happens but it really hasn't started yet?

Yeah. I would say, Jeff, we're starting to see early indicators of it. A good example is, several of us were just recently visiting a very large copper mine, where a huge capital infusion has been put in place. Even though the capital improvements, which included some of our dewatering equipment, were at this point on track, the mine manager was saying that, given the current price of copper and given the situation in terms of private equity, liquidity which has funded the mine, he was anticipating the slowdown. So, I think that's a good example of the fact that we are starting to hear it. We're seeing a little bit of the orders, but we think more are to come, which is not surprising in the industrial cyclicality of the marketplace.

And then on defense, I believe Denise characterized some year-over-year margin pressure related to EDO. I was actually thinking EDO might have been a year-over-year positive, given that you're going through the initial digestion in Q4 '07, and it had some run rate and volume improvement there. Is EDO better than last year, but still just below your certain average? Is that what you going to comment?

Yeah. I think you're right on both cases, Jeff. If you look at the non-CREW EDO performance, I agree, you would agree that the digesting of the integration creates positive benefits compared to last year. Because we did have a lot of transition costs and integration activity even before we see those operating benefits. But on the fourth side, remember in 2008 we produced approximately 10,000 CREW orders, which was a substantial Q4 fully responsive to our customers' need for accelerated demand on those products. But what that did was slide some of the plans from 2009 into 2008, which means the CREW shipments are in the 7,000 range for 2009. So, you add all that up, and I think you see a minor dilution with respect to EDO, but the operating performance of the integration is still solidly on track.

And just finally from me, can we get a more complete picture on pension? In just the funded status you report on any contribution in '09, any changes there and, again, if you could just reiterate what the headwind was. I didn't actually catch that, I'm sorry.

So from a pension perspective, when you look there, they would turn on the assets. We were down about 31-32%. The discount rate where we ended up a year in '08 is at 6.25. At the time we did the guidance call, it was about 7.5 is what we're assuming. So, when you roll that all through, the headwind that we have, the incremental headwind from guidance, was about $0.10 to us. In terms of funding, there are two different metrics there. So, when you look at it from a GAP perspective and when you look at our funded position, we should be down around 72-73%. So, when you look at the ratio that you look at for funding and the cash that we're actually going to, if we have to put any into the plan, we're going be around 78 to 80%, with time to finalize that number. So, when you think about 2009, we do not have any mandatory contributions in 2009, and we've not currently modeled any into our assumptions for 2009. And so that's where we are at this point in time with the pensions.

Thank you.

The next question is from Shannon O'Callaghan of Barclays Capital. Shannon, your line is open to speak, Ma'am. There is no response from the line. The next question is from Nigel Coe of Deutsche Bank.

Nigel, can you hear us? We have a little bit of technical problem. We'll try to …

Nigel, please go ahead, Sir.

Can you hear me?

Yes. Now we can hear you, Nigel.

Great. Just one pickup. I think the question that Shannon was going to ask. The defense plan looks a little bit more back end than we're used to seeing. Can you just talk about that? I understand that some of the international shipments we pick up towards the end year, but could you just address that, and has the transition, and what is causing some pushback on some of the shipments?

On the back-end loading, you are right. As you know, the defense business has multi-cycles with respect to program win. The permanent factor in there is the one you identified, which is our international sale plans right now would expect to be strong in the second half and less strong in the first half. So that's the primary deal. With respect to the new administration, I think we're all watching this very carefully. We do understand that the new administration would like ultimately to reduce the defense budget. But that activity in sort sight will directly offset is a clear fact that we are in two worlds now. We have under replenished or an under nourished, if you will, troops and equipment out there, which are going to need continued support. The fact is that the overall defense and aerospace business is a very, very substantial compound in to the U.S. economy. And so, there are a number of factors that play, that would moderate any sort of reduction. As you know, the budget cycles are going through right now, and with the most recent budget reduction discussions that we've seen in the press, we are expecting the FY`10 to be essentially flat with the '09 budget. That's a way of seeing that, at least in the short cycle, we are not seeing or experiencing any budget reductions. That's why we feel good about our '09 backlog.

In terms of your model and when you are laying [a defense for the quarterly thread]. Think about 40% roughly of defense occurring in the first half and about 60% occurring in the second half. And that's from an income perspective.

EBIT rather than revenue.

Yes, correct.

Yes.

Okay. Thank you.

And next question is from Steve Tusa of JPMorgan.

Hi, good morning.

Hi, Steve.

Just a quick question. On the margin front, you don't usually give margin targets by segment. But could you just walk through what you expect for each of the segments in the first quarter and ramps, and maybe on fluids, since you already talked about defense?

So, in total, when you split it by business, what we're basically seeing from a defense standpoint is that we expect defense to be roughly flat from a margin perspective. So that's how you think about defense. When you look at what's happening with fluid technology and motion and flow control, you have got some impact of happenings with restructuring, you have got some pension impacts, and then you have also got what's happening on the top line and the closure for that. So when you look at their margins, their margins are going to be negatively impacted by those factors in the first quarter. I don't to want give a specific guidance at this point; there are still some moving parts on some of the restructuring numbers. But they will be down on a year-over-year basis, largely again due to some of the volume issues that we are dealing with.

And then for the full year for these segments, I think you just talked about the first quarter. Last year, I think we did get segment margin guidance, maybe looking for second half. But on the full year, we don't quite have margin targets yet?

Yeah. Again, we have not provided that yet because that is on a full year basis; there is a lot of volatility in figuring out what's going to happen from a sales perspective. So when you look at defense, we are going to be slightly up from the margin perspective. Then with fluid and motion, and flow control, we expect that there are going to be some benefits that we should be seeing from a restructuring standpoint, a little bit of an offset with pension, and then the margins will be impacted by the top line slightly.

Got you. All right. One last question. I am not sure I got Jeff Sprague's question about, was that on the mining side? Sorry to repeat the question, but could you talk about what you expect the industrial business to do? It was a great comp this quarter. How does it work out through the course of the 2009?

Yeah, Steve, the comment was that we are starting to see some order reduction in the oil and gas and then the chemical. So we're going to see some tough compares through the year. What we are seeing is order rates that could be down in that double-digit range at this point in time, and we'll be watching that very, very are carefully. I will tell you that these numbers are, in fact, the numbers that we have modeled in and incorporated in our plan, so we already planning for this in the bottom line that we are giving.

So I would assume that the fourth quarter organically was up in industrial process that really fell off towards the back half of the quarter?

Yes, that's exactly right. And you expect some volatility in there, but the trend of order reductions on some of the very long cycle are activities, as I mentioned, oil, gas, mining to some degree, chemical process, we expect are going to slow down. It always does slow down, one to two years after we start to see some general GDP slowdowns.

All right. Thanks a lot. Very helpful

Yeah, it's important to note that backlog. I see we're actually up on a year-over-year basis by about 45%. So we are headed into the year with these backlogs. Now these factors that Steve talked about will impact what will happen in 2009, but we were starting off in a pretty good position.

Right, thanks again.

Our next question is from John Baliotti of FTN Equity Capital.

Steve, I guess if you look at first quarter, I think that's probably holding stock back little bit this morning, relative to the full year. I think people are pleased with the full year stay the same, but I would imagine that, given your portfolio and the history of the company, that if you felt that doubt in the first quarter coming out of the full year, you guys will have made a change. And I'm just wondering, I think, historically, that the confidence would come from the fact that over 55% your company is defense. Why you are expecting budgets to be flats? Its seems like even including, you win yesterday that you're getting additional peer, even more than that your fair share of contracts, and is that part of your confidence in how you're looking at the year?

Yes, John, without a doubt. We are forecasting a really tough Q1, but keep in mind that significant components to that is a flat distinct quarter. We have continued de-stocking and customers' low confidence, we think, is artificially depressing it; plus, we are still on the operating line. We're still having transition costs that are in the system associated with all this enormous amount of restructuring. So when you flow forward in the year, you see several positive factors. One is these transition costs start going away, as we complete the line moves and the headcount reduction and so forth. Then we also see there is slight modest sequential recovery on the commercial. But the defense business, which is essentially in backlog for the year is very well understood. If half of our business is building some strength in second half, it gives us the overall confidence. So, Q1 is the tough quarter. There is no doubt about it, when we see the calendarization of some of these benefits, both on the operating side and the defense strength, and on the commercial productivity side, which gives us confidence in our range. When we obviously are very aligned to the sort of top level point, we make it to something that was dramatically adverse to this. We will be the first ones to communicate. We're monitoring this commercial side very closely and, right now, we forecast these declines. But if we see further deterioration from the economic environment that we are describing now, we will most certainly take action.

It seems that, I know that you're probably not pleased with that performance in MoFlow, but obviously, given its visibility and its end markets, and the fact that defense does marginally better, given that its over three times the size of MoFlow, you could make up the difference there. Is it, would you be looking at that as a net basis if defense starts to come out a little bit better, and maybe some or the other less visible business slows down a little bit. On the net basis that, how things could flow?

Well, I think these components independently aggregate in the overall sum of the business. If what you are asking is, did we see a substantial defense upside that would show further MoFlow deterioration, at this point, I wouldn't acknowledge that. But I think I would say you can count on this team to manage the balances inside this portfolio, so that we can assure that we have an overall good operating result. Remember that this defense platform gives us a wonderful hedge in this environment. We are proud of the fact that half of our portfolio is growing at 5%, and at an earlier point we alluded to, that is in a flat rugged environment. We have continued to perform well on our programs. We have some very high run rates, and we continue to gain some market share in this environment throughout defense. So, the quality of the team and the leadership that got us to here, I think gives us good confidence for the future.

Okay. Thank you.

And next question is from Shannon O'Callaghan of Barclays Capital

Good morning, again.

Good morning.

Yeah, welcome back.

Sir, I don't know what happened there. So just a few more thoughts on the stimulus, I mean, what are you expecting at this point in your assumptions and what are you not, and what could be opportunities that possibility that haven't baked in?

All right. We really have not got any specific stimulus money into our forecast, just simply because of the volatility, the debate that's going on. What it does do, however, is gives us some confidence, particularly in U.S. market, that as the new administration is advancing, our stimulus activity has been, I think in parts of Colin Sabol and Gretchen McClain leadership here, has in part been including some opportunities in water and waste water infrastructure. So, we're hopeful that the stimulus package, as it unfolds, will give us some opportunity, but we have not essentially factored that into our outlook, other than giving us a positive confidence. The other thing that I mentioned is that we're obviously actively working, in fact I'm leaving here in the few minutes to go visit with the Secretary of Transportation to talk about some needed infrastructure development with respect to next generation FAA technology, so we're working that very, very hard as well.

Okay. And just on the inventory de-stocking excluded, it sounds like this actually has been going on for a while, in terms of what you've been seeing. Do you have a sense of when that finishes out and what you're looking at?

You know it's a trend, and as you know we have tens of thousands of customers in the fluid technology business, and there is no way for us to put our finger on it. I talked with a number of distributors, and the number of distribution and customers, and it's very volatile. But the one thing we know is that, when we had customer response to the mid-September revelation that we were going into a global economic crisis, people chose to take that moment to really improve in terms of their buying. So, generally we know it's going on and we can't really put a quantity on it. You also have to keep in mind that impact, we have done some of that ourselves. We own 70% of our waste water distribution and, quite frankly, the response to this environment, I'm pleased to say, that we took our inventories down in the fourth quarter, which is, quite frankly, hard to do with the decline in sales. But the waste water team did a nice job of focusing on working capital and making sure that they have inventory levels that were responsive to this low fourth quarter we're expecting.

Okay, great. And a last one from me. I know these pieces of defense can be pretty lumpy with the orders, but you had some big jumps in a couple of areas, there in AES systems. Could you give a little more on what (inaudible) of those big order quote is for those businesses?

I don't have the details on it right now. We can surely give that offline as far as the specific orders, but we did have some program wins. We got some minor order rates that I'm aware of on a large GAAP program and, what we're seeing here is a lot of these programs' activity is increasing, as we have expected in this defense budget environment.

Okay, great. Thanks a lot.

The next question is from Scott Davis of Morgan Stanley.

Thanks and good morning, everyone. I just have a couple of follow-ups; most of my question were answered or asked. I don't believe that you talked about M&A at all. If you did, I am sorry, I was having trouble hearing the whole presentation, but I know water assets or something, you were interested in most of last year. I would imagine prices are starting to get down to levels that are a little bit more realistic. Can you talk a little about your appetite, your ability to finance deals at this juncture, and also are you actually seeing these multiples come down to the area if interested?

Scott, we are staying very focused on the M&A marketplace. We continue to work very aggressively our M&A pipeline and our overall strategy. With respect to looking in the fluid, particularly, the global dimension has not changed. That said, we are also watching valuations. It depends a little on regenerated marketplaces. I think it's safe to say that, at this point in time, its hard to trend valuation simply because buyers and sellers, as well creditors, are all having difficulty understanding assets valuations. So we all know that volatility is in the (inaudible). But as time, progresses we expect there to be a separation of those who are in good shape and those who are devalued disproportionately. If you follow through the conservatives, I mean that discipline that you are articulating in this plan, we clearly believe and plan on being in the winner's circle with respect to that, which gives us nice opportunity in acquisitions. One of the reason we were focused on liquidity right now, and maintaining the great balance sheet, is because we want to preserve our capacity. I am proud to say, remember right now, we have almost a billion dollars of cash in Europe, which is a nice fuel for acquisition. Plus, as you know, we are very under-leveraged with a solid credit review in our balance sheet, and so we still have nice access to a long-term destiny. Add that up, and we've got a lot of balance sheets willing to execute our strategy.

Great and just a quick follow-up. I didn't see in the release, an updated CapEx number. Is it still the same as your prior guidance or has it changed?

It's basically the same, it's what we've added to this one.

Okay. Okay, thank you.

Yeah, and I just want to add finally on that M&A component. We said we're watching this market very carefully. But the first thing you can all count on, is our continued discipline and conservatism with the respect to the subject. I just wanted reaffirm that while we do see opportunities, we are managing to make sure that we've got a nice position in this economy; discipline prevails at this point in time.

Yeah, I think we have time for one last question.

Thank you, Sir. The final question is from Mike Schneider of Robert W. Baird.

Good morning, everyone.

Good morning, Mike.

Good morning.

Wonder if, and I apologize again if I missed it, as we all had a hard time hearing some of the stock, but in defense, just the forecasts were of flat Q1. I am wondering if you could just dive a level deeper and give us some greater color on what exactly the moving cards are plus and minus in the Q1 in defense related to some of these order delays, etc.

To which order delays in defense are you referring?

Not order delays, but just the push out into first half from second half that I thought I heard. If that isn't the case, then again, greater color by product and service segment. Why do you expect that division to be flat in the first quarter?

Yeah. I think one of the things that we've not mentioned is that we do have a tough compare, when you look at Q1 versus what we did last year. So from a year-over-year perspective while we are flat, we have got that real custom care.

The other component is there are two macro factors. I apologize, I didn't catch, Mike, the nature of your question, but there are two macro factors that unbalance the defense compared to prior years. One is, I did mention, that we had some CREW pulling from early '09 into '08, as a result of customer needs for these wonderfully effective roadside bomb jammers that we made. And so that created a bit of a reduction in the first quarter. And then the other thing was that the timing of our international sales are essentially back-end mode just enough based on just when we expect orders from the international customers.

Okay. Any particular sub-segment of defense you expect to actually be down harder than they might anticipate?

No, not in any [sub-secured] way, Michael. We have obviously normal program volatility, but, other than the CREW which I mentioned from '08 to '09, I would say that the other value centers within defense would just be normal program variation.

Yes, we've tested it and we have no issues at this point, but obviously in this environment from a governance standpoint, we would be testing good will throughout the year in all of our segments.

Okay. Thank you.

Okay. And with that I'd like to thank everyone for your attention today. There were obviously some robust questions. We've got a solid plan ahead of us in a difficult environment. With the actions that we're taking, I'm convinced that 2009 will yet turn out to be another good year for ITT. So, thank you very much and we'll talk to you next quarter.

Thank you, this does conclude today's ITT Corporation fourth quarter and year end 2008 earning conference call. Please disconnect your lines at this time and have a wonderful day.