Greetings ladies and gentlemen and welcome to the Lincoln Electric Fourth Quarter and Year-end 2007 Financial Results. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions]. As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Mr. Vince Petrella, Senior Vice President and Chief Financial Officer for Lincoln Electric. Thank you Mr. Petrella, you may begin.

Thank you, Latonia. Good morning and thank you for joining Lincoln Electric's fourth quarter conference call. Results for the 2007 fourth quarter and the full year were released this morning prior to the market's open. Copies are available through the Lincoln Electric website or by contacting Investor Relations at 216-383-4893. Lincoln's Chairman and Chief Executive Officer, John Stropki is joining the call this morning and will provide commentary on the quarter and the year in a moment. But first let me remind you that certain statements made during this call and our discussions may be forward-looking and actual results may differ from our expectation. Risks and uncertainties that may affect our results are provided in our press release and in our SEC filings on Forms 10-K and 10-Q. Let me now turn the call over to John Stropki.

Thank you, Vince. Good morning everyone and thank you for joining us. We had a solid fourth quarter and completed our fourth consecutive year of record sales, record profit and record cash flow. Our global management and associate teams achieved these results despite challenging conditions in several key markets and geographies. Although there is still much uncertainty, in several key sectors and markets, we believe Lincoln Electric is especially well positioned to continue growing sales and market share. As such in 2008, we will continue to focus our efforts and investments in the areas of higher growth potential and continue to build on the momentum of our record 2007 performance. Vince will cover the financials in details later in the call but I'll cover the high level results and the review our operations and the economic environment as we move forward into 2008. First let me begin by reviewing a few key economic measures that we follow as indicators of the strength of our business. First, US industrial production increased 0.1% in January from the prior month but increased 2.3% year-over-year. Durable goods production was flat in January compared with December and increased 4.1% over prior year. The January US purchasing managers index increased to 50.7, up from 48.4 in December; mostly good news but clearly less positive than in past periods. Returning to Lincoln, our overall sales increased 14.7% to $580.3 million in the fourth quarter. Operating income excluding non-reoccurring items increased 29.8% to a record 65.8 million in the quarter. Cash flow generated from operations increased 236% to 45.7 million. Sales for the company's North American operations rose 8.1% to 345 million in the quarter. US export sales in the quarter increased 11.2% to $46 million. Sales from our European subsidiaries grew 25.2% to 142 million, while our…

Thank you, John. I'll take a look at some of the details of the fourth quarter and the full year. As John mentioned in his comments, our fourth quarter consolidated sales were up 15% over the prior year with North American sales increasing 8% and sales reported outside of North America up 26%. Foreign currency effects increased reported sales by 5% in the quarter and volume increases contributed 6% to the sales dollars in the quarter. Pricing contributed 2% of the increase in sales dollars year-over-year. Acquisitions contributed about 2% as well. The percent of gross profit in the quarter was 27.7% of sales, compared with 26.6% in the prior year same quarter. The increase in gross margins as a percentage of sales was attributable to favorable operating leverage caused by increased volumes, partially offset by a shift in sales mix to lower margin geographies. SG&A expense was $95.1 million in the quarter or 16.4% of sales up 160 basis points from the prior year. The higher SG&A as a percentage of sales was primarily driven by a prior year's non-recurring gain associated with the sale of a property in Europe. Excluding this non-recurring item, SG&A as a percentage of sales actually decreased 10 basis points in the quarter. Fourth quarter operating income was 11.4% of sales down 30 basis points from the fourth quarter of 2006. Excluding rationalization items and the gain on the sale of the property in 2006, our quarterly operating profit increased 130 basis points from 10% in 2006 to 11.3% for the fourth quarter of 2007. The income tax provision for fourth quarter reflected an effective tax-rate of 28.8% compared to 16% in 2006. The prior year's tax rate was affected by certain non-recurring benefits. Now turning to the full-year results. Full year consolidated sales…

Thank you. [Operator Instructions]. Our first question is from Walt Liptak from Barrington Research. Please proceed with your question.

Hi, thanks. Good morning, Vince and John.

Good morning.

Hi Walt.

Congratulations on nice end to the year. And my first question is about the volume growth, the 6%. It looks like it accelerated and I wonder if I could get the details of what volume was up in North America, Europe and other, and I apologize if you went through that already. But I didn't catch you.

No, we haven't and by the way, well, we will be filing our 10-K on Monday or Tuesday and you will be able to find these details in the MD&A section of our 10-K. But for the quarter, North America had approximately a 4% volume increase, Europe was about 8% and the other countries segment was roughly 13.5%. But I mentioned that in the aggregate for the consolidated company, we were up in pure volumes, 6% as you can see that the break down which show that the rest of the world including Asia, Latin America and Europe are still putting up year-over-year volume numbers quite a bit better than North America.

Okay, yeah and so your volume in total went from 3.8 to 6, so it improved mostly... was there something one-time about the quarter in North America because it picked up pretty substantially from basically down a little bit to up 4%, did you do something to try and get the market to accelerate volumes?

No, we didn't have any... no special programs or incentives or anything along that line.

Okay why do you think you picked up?

Well, I think again some of the sectors that we're historically strong in were stronger in the quarter and I think we, as I said in my remarks, I think we are continuing to capture market share in those sectors that are stronger than our competitors are and we positioned ourselves particularly well for those sectors that we view to be strong.

Okay. Are you... we are 7 weeks or as into the first quarter, are you still seeing the same kind of volume trend or something happens so far this year in North America?

I would tell you that through this week that our volumes in North America are relatively steady, with what we experienced in the fourth quarter.

They are still growing in that 4% or so volume?

Walter, I wouldn't tell you... I can't give you a number like that. But I tell you, mid to low single-digit type of volume growth.

Okay. I also wanted to ask a question about... you mentioned the working capital account. Working capital in the fourth quarter was extremely good. What happened there to get the receivables down, the inventory down et cetera?

I would tell you Walt that... this was perhaps the first year that we really emphasized and put a focus on working capital management and particularly, inventory management. And I think towards the end of the year, we started to see some traction in our supply chain initiatives and our working capital focus and I think the easy part of it perhaps is over now and it's going to be a little bit more difficult going forward to achieve the same kind of improvements that we achieved in 2007. But at the end of the day, the improvement is squarely the result of focusing on improving our working capital management.

Yeah, Walt and I would add that I think 2008 is going to be a very interesting year on working capital because we are focusing on the supply shortages that are occurring in some of our primary inputs of raw materials and we just not going to take any risk in that area. So we are liable to bump up our inventories a bit, until we get more comfortable in that area.

And I would also add to that Walt, it's not only the tightness in supply, but our view of the key commodity input cost that we have in our business are likely to accelerate in 2007 more than what we've seen in the last 2 or 3 years. And so, we think it will behoove us to perhaps have a better inventory and days in inventory position on raw materials than what we've had in say 05, '06, '07 and I am sure you are reading all the same things that we are reading about ore costs and steel costs rising, and so we're going to be a little bit more cautious when it comes to our inventory quantities throughout 2008.

Okay, yeah, that makes sense. And I guess one follow-on to that, okay, so you are generating a lot of cash, you are in the net cash position, how big is the share repurchase? Can you refresh on how much more stock can you buy back?

Well how much more, we have almost 10 million shares available.

Okay.

And we have a lot of capability to buy shares.

Okay, is that going to be the primary use of your cash going forward because... how aggressively you'd be on that thing?

We hope the primary use of our cash as acquisitions. I think we've said that all along and we go into 2008 with a nice queue of opportunities that we are reviewing.

Okay. Okay thanks, I'll get back in queue.

Our next question is from James Bank with Sidoti & Company. Please proceed with your question. James Bank - Sidoti & Company: Hi, good morning.

Hi James. James Bank - Sidoti & Company: Hi. Yeah, Vince, I guess I caught the tailwind in that. You repurchased shares in this past quarter?

Yeah, for the fourth quarter, we repurchased 15, we spent 15.5 million on shares for 222,000 shares and then during the course of the first quarter up to today, we repurchased $18 million worth of shares and took out of the market $298,000 in shares. James Bank - Sidoti & Company: Okay.

For a total of about 33 million. James Bank - Sidoti & Company: Okay, and there is roughly... okay, I am sorry, there is 10 million shares left authorized.

Actually, I had that the other way around. We actually have close to 4 to 5 million shares available on existing authorization. James Bank - Sidoti & Company: Okay. So 4.5 million left in the kitty?

Right. James Bank - Sidoti & Company: Okay. And what was the average stock price you're buying in at?

In the fourth quarter, it was 69.50 and in first quarter, it's close to $60. So on average, since we started to reinitiate our share buyback, it's about 64.30 on average. James Bank - Sidoti & Company: Okay, terrific. And could you split Europe and other countries sales by absolute dollar for me?

For the fourth quarter? James Bank - Sidoti & Company: Yes.

Yeah. Total sales in Europe were approximately $142 million, and other countries was approximately $102 million. James Bank - Sidoti & Company: Okay. And then for all three segments, can I have operating income?

We report EBIT not operating income. But, for North America $54.8 million, Europe $14.2 million, and other countries $1.5 million. James Bank - Sidoti & Company: Okay. So, the margin erosion in other countries then continues.

It did through the fourth quarter. Looking at January we are starting to see in our opinion a bottoming of that and we believe that we have some programs in place in other countries segment that should start to turn that around as we run through 2008. James Bank - Sidoti & Company: Okay. And the tax in 2008, should we still look for 29%, on average?

I would tell you that we're going to be higher than that, we are likely be somewhere over 30%. James Bank - Sidoti & Company: Okay. And you have taken the interest expense in the quarter, and I apologize, if you had gone over that, I would have missed it?

I didn't go over that James, but the uptick is two-fold. There is some higher interest costs in our borrowings from non-North American business units and also we have during the course of 2007 the amortization of some previously terminated interest rate swap agreements that is now running out on us. So we have credits that have been recorded through interest expense, so they are starting to disappear out some terminated interest rate swaps. James Bank - Sidoti & Company: Okay.

And then we have finally, thirdly, swapped out some of the existing debt, variable rate debt and that has actually gone up a bit this year as well. James Bank - Sidoti & Company: Okay. And lastly, your optimism seems to be a bid on the sense and I know you went over some macro data in your prepared remarks, John. Looking at GDP in the fourth quarter of 0.6%, you guys really on a GDP plus, you're practically at GDP 0.8, when just considering North America. So I guess, if I could may ask, what is it really about that's kind of causing a bit of trepidation, where you don't want to kind of give overbearing optimism heading into '08 especially when you do are involved in an infrastructure and the energy sector and the capital spending that's going in those sectors.

Well, I think you hit it on the nose. I think we'll hope to be too optimistic with... our objective is to under promise and over deliver. I think there're just certain uncertainties that is very difficult for us to predict. As we said before, I think the company is a much different company than we've been as we went through other cycles like this that were not so tightly aligned durable goods as we have been in the past and the global aspect of our business as well as this huge build out of infrastructure around the world as relates to energy or mine either or the other, the other things that we talk about, is still very, very robust. So the challenge is trying to look at what the blend of may be the downside of durable goods and the upside of that is in... what does it end up being in terms of that blended equation. James Bank - Sidoti & Company: Okay.

And I would also add to that James that till then, if you've been following us during the course of 2007, we've seen a fairly consistent pattern of our year-over-year comps are falling from first quarter of 2007 to mid sort of teen, double-digit volume improvements and dropping down in the second quarter and dropping down again in the third quarter. It has as Walt pointed out, some of our volumes have been bolstered ever so slightly in the fourth quarter. We continue to see that stabilization in the first quarter of 2008. But I would describe ourselves as somewhat cautiously optimistic that the trend line of year-over-year volume comps has slowed and flattened out and we are hopeful that it stabilizes itself and actually see some improvements going through 2008. But we're speaking from some experience during the course of '07 where volumes continually decreased from a comp a year-over-year basis, and only in the fourth quarter and starting into the '08 first quarter, we're seeing some stabilization. James Bank - Sidoti & Company: Okay, that's helpful. And I understand the 2006 is a remarkable year in its own at 23% sales growth. I understand that '07 had given you a little bit of pause, but that... those comps were very helpful. Thank you, both.

And the last thing I might add on volumes is, we've been very focused on North America, Walt's questions and your questions, I think have centered around that. But if you look at our European business, the volumes there are continuing to fall. For example, in Europe the full year's volumes were up 15%, in terms where the comps are falling. And the fourth quarter was up 8%. And if you were to look at the first quarter and second quarter, the volumes would have even been higher from the European standpoint. And so when you look at the whole picture, we have stabilized in North America. Europe's volumes on a comp basis continue to come down from high double-digits to single digits. Our other countries; Asia and Latin America seem to be holding up with some consistent volumes, but the mix is... leaves us to be a bit cautious on our outlook. James Bank - Sidoti & Company: Okay, no, I understand. Thank you.

Our next question is from Steve Barger with KeyBanc Capital Markets. Please proceed with your question.

Good morning.

Hi Steve.

Good morning.

I would like to dig into that Asian or other country margin a little bit more. Is it a function of less pull-through, more competition, rising material prices. Can you just give us a little more color on what's going on there?

Well, I think it's a factor of all of the things that you mentioned, with the exception of volume. We really don't have a significant volume concerns at this point other than we maybe a little bit behind the curve in getting some of our capacity build out to engage in some of the ongoing rolls in China. But I think we are rectifying that pretty quickly, I talked about the early acquisition and we very quickly ramping up production of submerged arc flux into the marketplace. We are a little bit behind on MIG wire, addressing that as quickly as possible and I think we are well positioned on cored wire. We have the currency issue in Australia that we talked about. We talked about that in the third quarter. We had some changes that we could make in the fourth quarter that captured a little bit of momentum there, but we're being much more aggressive in that in 2008 to address those currency issues that we had. But as I mentioned, we will also be challenged with Australia from an export basis, will be very challenged, where they are selling in U.S. denominated dollar because of the roll up of their currency issues that are associated with that.

Just from a competitive standpoint, are you seeing new entrants over there or more aggressive move by some of the legacy players in China, as they kind of jockey for market share?

Yeah, I think some of both, I mean, I think we said very early on that until the consolidation process becomes more mature in China that there're always going to be the smaller local players that are fighting for survival and they fight for survival based on price dynamics. I think the other interest dynamic that's taking place in China is steel prices in China are ramping up at a pace that's even faster than that of some of the other world markets.

Right

As the Chinese steel companies try to capture some share and also with some of the lesser efficient operations were taken off stream and then the capacity challenges pushes a bit. So there is going to be some give and take in that in terms of the timing, but where people are on the steel price increases and when they implement consumable price increases to be reflected with that.

Yeah. And you talked about potentially increasing your inventory position to offset some rising steel prices, but is there anything else you can really do to hedge on a global basis or are you just kind of at the mercy of prices then you have to pass through?

Yeah, there is... other than buying forward in inventory, there is really no steel hedge market. There were some talk about it, but I think with what's going on now nobody is going to enter into that this particular point in time. And I mean if you're following with what's going on in steel pricing its almost everyday there is a new announcement of some other kind of an increase, driven by again material cost. I mean, just this week, several of the large countries and or companies settled on a 65% increase for iron ore and the talk is the coking coal will be a 100% increase. And if you do the math on that, that will translate into anywhere from $150 to $200 return input cost increase for the steel companies and that's they are clearly going to pass that through.

Sure.

And it will be our ability to execute our price increases, both from a time and from a magnitude that will determine a big part of how successful we are. And I think we demonstrated the last time we went through robust steel increase cycle that we were very effective with that; we plan to do the same thing this time.

I guess the difference would be that you have more international exposure potentially with more competitive markets on that side, which potentially that hinders that process or do you think that naturally that those local players will have to pursue the same aggressive tactics in terms of pricing.

We think that we are very well positioned from a steel price side of things because of our global spent and the relationships that we've build up over the years. We think that some of our competitors, both domestic and internationally, are not so well positioned. We are hearing of people having to buy in the spot market, may be even have a supply, supply kind of issues. And I think that that gives us a bit of an advantage. Obviously, we can't control what competitors do and the Asia market is by far the most competitive market and by far the most diversity in terms of the scatter of competitors in that marketplace and I am sure, we will see some irrational behavior in that market.

Okay. Coming back to the U.S. market, are you seeing any increase in imported consumables from low cost countries or low share countries, I should say, and what you sense in terms of those market share potential for those new guys, if any?

My gut reaction is we are seeing less of it, not more of it because again as I said, the steel which used to be a very low price commodity in places like China is now globalizing to more of a much more world view. We operate in China and we are seeing bigger and more frequent and rapid increases in the fuel cost there than what we are seeing in our more mature markets. That obviously, has a big impact on there capabilities there and I think we have said a number of times that welding consumables are not labor-intensive kind of products. They are raw materials intensive products. Transportation costs are becoming increasingly challenging from that part of the world and I think that some of the channels that we are looking at those options have taken a look at the challenges that presents from the supply chain situation and recognizing they don't want to be in a risk of putting their revenues at risk and their customer relationships at risk over unreliable supplier base.

Right, that makes sense. Okay, one last and then I'll jump back in queue. Can you talk about your inventory levels of your North American distributors right now, maybe sequentially or year-over-year, what's your sense on where those guys are?

My gut reaction is it, it's a fairly black line kind of situation, I don't think that we have any field of distributor's increase or decrease inventories throughout the year for any particular reason. And if we announce the big price increase, there may be a small forward buy, we may have got a little bit of that in January, but we already see that level are off because they don't have the space or the cash or really the appetite and as long as they feel that they can raise prices in the market and I think everybody is, because everybody is going up, there is just not a lot of appetite for heavy inventory build ups. So I don't see... we've been asked that question a lot of times and as such no evidence of any kind of an inventory build or any kind of inventory reduction on the part of the distributor either.

Okay, thanks gentlemen.

You're welcome.

Our next question is from Mark Douglass with Longbow Research. Please proceed with you question.

Good morning gentlemen.

Good morning

Good morning.

Hi. I have a question about the North American market again, it kind of went opposite of what I thought it would do. Exports did not grow as much as I thought they would have, and the signs exports, it actually did quite nicely. Any particular reasons you attribute to exports slowing in the fourth quarter?

Exports are still very strong. There is a... any slowing is the slowing in the rate of growth that we had during the course of the first three quarters of 2007. We still have a very strong order intake and sales level going into 2008 from an export standpoint. So, we don't see them slowing per se, but we did... might be put up some very significant year-over-year comps during the course of '06 and '07 from the export line standpoint. So we're still optimistic that our export business will grow and grow rapidly in the double-digit type of pace arena for sometime to come. But admittedly, the fourth quarter was not quite high from the year-over-year perspective as what we've been seeing over the course of the last two or three years.

All right. Do you think there was some timing?

I think it's always challenging on the export side around the holiday seasons.

Right.

Lineup, containers and shipping and the holiday fell in the middle of the week and that would be the only thing that would be impacted from a timing side. As Vince said, I mean we have a very good backlog of export orders and we expect that to continue throughout the year.

And I can say through the middle, or tail end of February for the first two months, we are seeing somewhat higher year-over-year growth than what we've booked in the fourth quarter, so.

Okay, okay good. Yeah and then the uptick in North America was a pleasant surprise, it's your seasonally weak quarter and sequentially, you beat the third quarter, so at least with the... not including exports?

Again, I think that those are being focused on those segments that are strong right now and the fact that we are stronger in those sectors of high technology products, rentals was build very strong. Again oil and gas, those areas are things that Lincoln has a very strong competitive position and I think as other competitors have and will report their results, you will see that we have captured some nice share in the quarter.

Would you say a lot of that is in submerged arc because that certainly is a key?

I call it more heavy fabricating than just submerged arc, I mean submerged arc is part of that but the heavy fabricating sector right now versus the lower end commercial or the retail sectors that are doing better and we'll get stronger in those areas.

Right, right. And secondly on the euro, your North American EBIT margin has a nice uptick. The European EBIT margin slit a little bit. Is that --were you experiencing some cost price reasons that you didn't say North America or obviously, it won't be the same type of problems that you would have say in Australia trying to ship to the dollar denominated places and capacity expansions or...?

Well, Europe's fourth quarter tends to be slowest with holidays occurring in the fourth quarter. So we would, it's not unexpected that the third quarter would be a bit better from an EBIT margin standpoint in the third quarter or any quarters during the year, running up to the fourth quarter.

Okay.

Nothing new... great, well thank you.

Okay.

Our next question is from Greg Halter of Great Lakes Review. Please proceed with your question.

Good morning guys.

Good morning.

I wondered if you have any input on what kind of impact currency may have had on your operating income or net income or both in the quarter.

Well, hang on a second Greg; let me look that up for you. For the quarter, operating income benefited by about $800,000 and net income by about $600,000 from the translation of the results this year compared to the prior year's range.

Okay. And looking at some of the markets specifically in North America, I wondered if you provide any commentary you may have on the auto, construction housing, things of that nature.

Well, I guess I would... and I would cover this a little bit, but may be define it as best as I can. And the factors that we see is doing quite well now and I didn't forecast it for 2008, Ag equipment is booming, I heard where Deere has very extended deliveries, they are adding capacity to address the growing markets in the backlog type situations. Again, the pipe mills are extremely strong, running maximum capacity and expanding. Transportation vessels, ships and barges are in the same kind of situation and then any thing that has to do with power generation, whether its wind towers, LNG, power plants, again its all they could to try to keep up with the demand. Steel building seems to still be relatively strong, although the trends look to be flattening, not growing, but still pretty strong faces. And then on the weaker side, obviously, we have the automotive situation, which everybody follows, who follows closer than us I would say. Construction equipment as it relates to retail or housing is slow, but construction equipment as it relates to mining, commodities and big products are still doing quite well. Commercial products, water heaters, anything inside the housing, HVAC, obviously is quite weak and I think it will stay week throughout at least this year and the retail side of our business is I would say somewhat flat, although I think we are doing much better than the retail sector in total is doing because we have a new product reduction there that's it's doing quite well, sales are still fairly good.

Okay. And percentage of your business between equipment and consumables is it still falling around the 40-60 split?

Yes, it is around 60-40, it hasn't changed much for quite sometime.

You may see some distortion of that again this year, the steel prices continue to escalate up, obviously, we will be accelerating the revenue side of the consumables that are much faster pace than the equipment side. And that could move the needle a little bit, but it generally settles back in once that's rationalized.

And talking about price, you discussed a price increase on February 1st. Can you discuss the magnitude of that increase?

Boy, at equipment side I would say it was in the 3.5 to 4% range. On the consumables, it was much higher and much greater dispersed. Our welding flux is an example that primarily chemicals went up 15 to 20% and welding consumables were probably in the... the other welding consumables were in maybe say, 5 to 8% and there is more of that coming.

On top of the February 1st?

Yes

Okay

I would expect something I guess the second quarter of the year, if not sooner.

All right and what proportion of your debt is at a fixed rate and obviously the other piece being variable and what's your average interest rate in the quarter?

Most of it is fixed. And Vince is looking up the numbers.

Okay.

And I think the blended average is somewhere around 6%.

Yes, actually the weighted average effective rate on our debt after taking into account our swaps is approximately 6.4% for the year.

For the year, okay. And...

And so the bulk of it is still fixed, but we have swapped out a fair amount as well.

Okay. And on your balance sheet, I know historically you've had long-term investments, you just have a selected balance sheet data here. Do you have anything in the long-term investment category currently?

Yes, we do. We have long-term investments that are of a non-operating nature that in that long-term other asset category.

Okay.

That the income or the gains that are generated off of that are reflected in other income, below the operating profit line. So does not aid or serve as a detriment to our operating profit.

Okay. And last one, you had mentioned the capital spending for '08, but I am not sure you indicated a range that that may fall into?

Our range to start of the year is going to be fairly broad one, between 60 and 70 million.

Okay great, thank you very much.

And Greg, I think I realize on your question concerning Europe, appreciate that the European geographical segment did have the $9 million gain on the sale of property in the prior year.

Okay.

And so that's what you might be looking at from year-over-year quarter basis in terms of Europe's EBIT profit was aided by... almost half of that associated with the gain on the sale of property.

In the prior year.

In the prior year and so if you review that from an apples-to-apples basis; actually European EBIT has risen a bit on a year-over-year basis, excluding the gain on sale of property.

Okay, great. Thank you for clarifying.

All right.

Our next question is from Seaver Wang with Utendahl Capital. Please proceed with your question.

Hi good morning. Just want some details on what's going on with European rationalization of the orders you have, certain projects I guess you guys are completing, details there. And then I guess, the second question is just about retail in general, it's coming back, a little bit about the new product you mentioned, if you can give me growth rate?

All right. Steve, this is Vince. To start on, the rationalization program and in Europe, it's all but... been wound down with the finalization of our move from Ireland to a new plant in Poland for our cutting apparatus business. And you see a small credit in the quarter because we recognize the partial supplement on a pension scheme that we're winding down in Ireland. We have no other programs that are active from a European rationalization standpoint that Irish to Poland rationalization has been going on now for the better part of two years and the Polish plant is up and running and the Irish plant has been sold as debt to our gain that we recorded in the prior year. So we still need to completely line down the pension program so there might be some additional credit that we book during the course of 2008. But everything associated with that rationalization program has been completed except for finalizing the pensions and there are no other active programs that we are working on or have been approved to move forward currently in Europe.

Okay. And the... just details on retail?

I don't... I didn't quite understand your question when you say the details.

We refreshed our machine product line in the retail group.

Home Depot, Lowe's.

Yeah, I mean... I think that's been stated. I mean we've had a product line that is in... for both of them on the shelves for probably close to 5 years and we totally redone that product line and modernized the look of the feels and the features of that. We've added some additional products and some cases gained additional space in the larger, more active stores, and we're quite optimistic that that will give us pretty good result.

Okay. But... I mean you attribute the lack of new products, that's the reason why it kind of faltered a little bit?

Well I wouldn't say that it faltered, but I mean... we have the great run up, and while retail sales in total were doing very good, we were going quite well with it. When retail sales started to slow, we were fortunate that we were ready with this new product line and that stopped any slide and held us, I would say, equal with where we had been.

Okay.

Focus and continue to grow.

Thanks.

Our next question comes is from Holden Lewis with BB&T. Please proceed with your question. Holden Lewis - BB&T Capital Markets: Thank you. Good morning. Can you... you are going back... the last time raw material were spiking and then we saw... I guess given a little history lesson and what should... we can expect this time. If I remember in your last time obviously it was good for revenues because you could accelerating your pricing piece and you kind of indicated that would happen. On the other hand, it tended to erode the gross margin just as the math worked out. So dollar wise, it was largely unchanged. So, I guess, can we expect to see the same things that in percentage terms, the gross margin comes under pressure as the revenue accelerates. Do you think that you can fully offset the raw material stuff pretty quickly or is there going to be kind of a meaningful lag, I believe there was last time.

Well actually Holden your memory is fairly accurate. What we did have happened and first time we would have to say that our compression and margin will largely be dependent upon two variables. One, the significance of the raw material price increases on their own. Now you might recollect in 2004, the price of the steel that we purchased went up in one year approximately 80 to 100%. And in that particular year '04 we saw almost monthly prices increases from our steel vendors and we were behind the trend during the course of 2004. So we did lose certainly a bit of margin and quite a bit more from a compression standpoint as raw material prices rose dramatically and we tried to keep up with it with quite a few price increases as well. So it wasn't until fourth quarter '04 or running into 2005 that we believe we caught up and we are able to deliver the same gross profit dollars to our bottom line that we are able to deliver on a consistent basis prior to the dramatic increases in steel prices. Now we do have a bit of experience under our belt. It wasn't that long ago that we went through 2004. So I would tell you that the organization is better prepared and poised to more rapidly raise our prices as steel costs rise. However it remains to be seemed how rapidly those steel costs may rise and how often. So if we get into a situation where steel prices are rising again on a monthly basis it will be a challenge for us to keep up with that but we are certainly experienced in that dynamic running out of 2004 and '05. But we... to remind you, we had a margin compression in '04. We estimated of upward of 300 basis points simply by grossing up the P&L if you will by raising prices to try to match and stay on top of raw material cost increases. Holden Lewis - BB&T Capital Markets: And if memory serves, I think that you had price increases back then of like 8 to 9% annually. I mean you wouldn't expect something of that magnitude at this point and so any sort of weakness with gross margin obviously wouldn't be of that magnitude either.

Well in some... we had price increases far exceeding 8 or 9% on our consumable side of the business. We rose... we raised prices double digits a couple of times during the course of that year. But again, Holden, it's... the variable, it's dependent upon our price increases or what will raw material cost do and we plan on being fairly active and aggressive and passing those costs through to our constituents. Holden Lewis - BB&T Capital Markets: Right.

What I would also say, Holden, that as I mentioned earlier, I mean all of our domestic and international competitors were faced with the same or worst situation and we are seeing evidence all around the world of primary competitors increasing their selling prices which we didn't see the early evidence of that back in the earlier period that you were talking about the 2003, '04 period. Holden Lewis - BB&T Capital Markets: Okay. All right, great. Can you also comment, I guess, about... you... in your writing and in your dialogue you sort of mentioned that you are going to focus on investment with higher returns in 2008 and I guess I presume that you are always focusing on investments with the highest returns of course and so I guess I am curious about since the statement's there, are you changing how you're looking at any of these projects?

No. Holden Lewis - BB&T Capital Markets: Have you sort of taken some off the table, changed the mix of what you want to do, any sort of changes in where you've been and how you've been approaching it so far?

No, I think what I said was we were going to continue to focus our efforts and investments in areas of higher growth potential. Holden Lewis - BB&T Capital Markets: Got it.

And not necessarily the higher returns. And we recognized what markets are growing and we are taking a very long term view towards those and making the strategic investments in those and it goes back to our story that we tell many times as... that we have to build the infrastructure in those growth markets in order to capture the long-term return and that's where our focus is. Holden Lewis - BB&T Capital Markets: Right. And to that point I am trying to kind of asking is that just kind of a boiler plate statement or does it reflect that you have made or you have been taking some stuff off the table, given what you have seen in the macro. Are... is there any changes in your investment sort of philosophy given what your --

We haven't taken any good investment opportunities off the table. Holden Lewis - BB&T Capital Markets: Okay. And then I guess lastly can you give a little bit of color, you referred to steps you are taking to improve the Asian margins. Can you give a little bit more color on sort of what those steps are and how quickly they should begin to brighten and move the margin up again?

Well, let's say there's 2 or 3 primary initiatives that we are working on in our Asian theater and the first... it is better price realization and we've taken actions to raise prices on certain product lines that we have strength in market share and strength in end-user markets. We are working at balancing our production requirements better against our market needs. And the third is we continue to look at areas of cost reduction and improvements and efficiencies to help our cost profile in the region as well. But as I have mentioned in the past and certainly in our third quarter conference call comments, we are going to continue to be expanding our manufacturing, and our distribution, and our selling capabilities in the region. So we will clearly for some time become... be faced with the headwinds of adding cost ahead of a pricing and a margin dynamic that will deliver the kinds of returns that we've come to expect in other parts of our business. But I would put at the top of the list, Holden, the managing of the... pricing a little more aggressively and actively than what we had seen in the third and fourth quarter. As far as your question on timing, as I said in some of my earlier comments, I think we are starting to see what I would view as the bottoming out of the decline and EBIT margins from this region that we experienced during the third and fourth quarter and I think we will start to see during the first half of 2008 a restoration of somewhat slightly higher margins in that other country's segment. Holden Lewis - BB&T Capital Markets: Okay. And then just lastly the better pricing you are referring to, that's obviously... you expect that to be above and beyond what you need to do from a raw material standpoint?

Yes. Holden Lewis - BB&T Capital Markets: Got it. Great, thank you.

You are welcome.

Our next question is from Walt Liptak from Barrington Research. Please proceed with your question.

Oh, thanks. I am glad I made the cut, we are [ph] a little bit long. But --

Walt... this is your last question Walt.

All right. Can I do a last one and then a follow-on? The... let me take a shot at this. About Asia, what... for the full year, what was the EBIT margin? We don't know it was 1.5 for the quarter.

I am sorry, could you ask that again?

Oh, for the... in other countries, what was the operating profit margin for the full year.

Okay. Hang on.

And then the question for you and for John. Given the pluses and minuses, the expansion, et cetera in Asia, how many basis point improvement can we expect or would be reasonable to expect in 2008? 200 basis points, 300 basis point of operating profit improvement?

The answer to your first question, the other country's segment delivered 4.9% EBIT margin for the full year.

Okay. And can that get up to 7 or 8, 9% in 2008?

I am not going to make those kinds of forecasts.

Okay, I thought I would try.

But, yes, try and try again. Look what I will reiterate and what we have said on a number of occasions on the past is that we have a track record of strategically penetrating geographies where Lincoln has little or no market share. We have a track record of building our infrastructure, importing our products into those markets and steadily but surely gaining market share and margins as we grow our footprint and deliver to the marketplace the full suite of Lincoln products across the consumables and machine spectrum. So I... as much I like to make predictions, I can't say when that may occur in the other country segment or Asia for that matter or China more specifically. But we are confident that our model works and we've shown and demonstrated over our history in penetrating Latin American markets, European markets and last of which Asia and the subcontinent that we are able to gain share, fill our complete product portfolio out to end users and distribution and drive that operating profit margin up to what you see in the rest of the business.

Okay. All right, that's great. And then if I do a follow-on to earlier another question.

Last one.

Cash... with the cash on the balance sheet, what kind of interest income can we expect? What kind of rate are you getting on that?

Well right now I'd say it around 4.5% is what we are getting.

Okay. All right. Thank you. Operator: Our next question is from James Bank with Sidoti & Company. Please proceed with your question. James Bank - Sidoti & Company: Hi guys, a real quick one. The... if I could take a cumulative absolute dollar for J.W. Harris in the soldering and brazing, that goes into HVAC more than residential area, as well as the products that go into the Canadian automotive sector. Could you give us a ballpark as to the breakdown percentage of revenue that those two items are on a cumulative basis?

Well we don't report that publicly James, so I'd be remiss to provide you with those types of figures. But I would say that it is clearly less than 10% of our aggregate business. James Bank - Sidoti & Company: That's perfect. Thank you.

There are no more questions in queue. I would like to turn the floor back over to Mr. Petrella for closing comments.

Thank you very much Latonia and we do appreciate your participation in this fourth quarter and full year call. We look forward to seeing those of you that are coming to New York for our NASDAQ conference on March 7th, and hopefully we're... if we miss you there, we will talk to you on our next call for the first quarter 2008. Thank you very much.

Ladies and gentlemen this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.