Good day and welcome to this Martin Marietta Materials Incorporated Third Quarter 2008 Financial Results Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to the Chairman and Chief Executive Officer, Mr. Stephen Zelnak. Please go ahead, sir.

Thanks for joining us today. I have with me Howard Nye, President Chief Operating Officer; and Anne Lloyd, our CFO. We are very pleased with our third quarter results given the conditions in which we operate. The third quarter was our 10th consecutive quarter of down volume in our aggregates business, as compared to the prior year period. Shipments volume for the quarter was down 13% which was a product of a short pullback in construction activity based on credit market issues and the deteriorating economy. In addition, we experienced four major storms in our areas of interest which compounded problem. Aggregates pricing continue to meet our target expectations with an increase of 8% for the quarter and 6% year-to-date. The Midwest continue to be the bright spot as Heritage volume in Iowa and Nebraska was up 15% over to prior year period and year-to-date. The strong foreign economy and alternative energy projects were the main drivers. We also experienced positive volume in our operations that cover Arkansas, East Texas and Northwest Louisiana. This is the result of increased oil and gas drilling activity. The most negative volume comparisons were in the Carolinas and the Atlanta area, with shipments down 20% to 34% for the various market areas. On the cost side we're running most plants on reduced schedules with many of our plants scheduling recurring shut downs of one to two weeks as needed to control inventory. During the third quarter, we did an exceptional job of managing our controllable cost. Even with the reduced production tons per man hour [ph] was equal to the prior year period. We do this as exceptional performance in a very volumes sensitive. Our specialty products business continue to perform well with a record third quarter sales of $46 million up 18% from…

Thank you. [Operator Instructions]. I'll go first to Arnie Ursaner with CJS Securities.

Hi good afternoon.

Hey, Arnie.

My question relates to, I know Steve you probably taken the most aggressive actions of any of the aggregate companies to reduce your cost and really done a job of it. Given the current environment is... can you give us a sense of the types of actions you might be able to take from here, and is there some more room you have to lower your cost structure?

Certainly we're very focused on trying to bring the cost structure down even more. If you look at the SG&A area, where they typically viewed as the best operator and has the numbers to back that up with respect to SG&A as percentage of sales. But, clearly we're going to do more. We'll talk to you at the end of the year about what actions we'll take there. But we've got to bring the cost structure down more in that regard with respect to the environment that we're in. We're looking at all aspects of controllable cost and by that I mean the senior management sitting here in this room, going over this company line-item by line-item from we're looking at everything we do. And simply asking the question is it necessary in these times. And I think you're going to see us do things like reduce communication cost through renegotiation of contracts there. More judicious use of communication media that's one area we're focused on, or you going to see us focus very hard on purchasing. We think we have some potential opportunities in the purchasing side of our business and we're going to attack those from senior management level and down. So it's getting a lot of attention, these are the times that are very unusual, certainly the most difficult that I have seen since the early 1980s. And I think we have to respond accordingly.

All right. Second question if I can, can you speak a little bit about the energy side of your equation and perhaps high level, a little bit more about the structure of the long haul transport contracts you have in shipping and how that could be effective by lower energy cost?

Okay. Couple of aspects of the energy cost, I made the comment that as we look at 2009, we do think that we're going to be in a deflationary energy environment. We actually were making those kinds of comments well before oil prices came down sharply as they had in the last couple of weeks. Pretty clear to us that there was going to be downward pressure based on demand. If you take conception for us, and look at it just on diesel. Diesel next year, given reduced volume, we probably consumed somewhere in the neighborhood of 35 to 38 million gallons of diesel. And it would not be surprising to me that we would see reductions over the year of $0.50 to a $1 as we look at what we paid in 2008 versus what we're likely to pay in 2009, so there is some real opportunity there. Natural gas and our magnesia business, looks like it's going to come down sharply. It would not be unusual to see a reduction there that might be as much of third of our natural gas costs. So clearly, that would positive for us. And then with respect to the transportation contracts, we have the energy escalators in those contracts. So the railroads hit us with energy escalators. We particularly get hit on waterborne shipping; we have the barging escalator or de-escalation being very significant with diesel fuel going down, we would expect that we're going to see positives with respect to our transportation cost less of for the railroads but more so for the waterborne transportation. So, that should be another plus.

Thank you for that answer. That's great. Thank you.

Sure.

We will go next to Kathryn Thompson with Avondale Partners.

Hi, thanks. Could you give us a little bit more color that how we should think about your volume trends and pricing for aggregates and really specifically, what was your pricing at the end of quarter relative to your average for the quarter aggregate pricing? And then just the generally our regional pricing differences but with the regions they were able to get greater leverage with pricing during the quarter?

With respect to the end of the quarter versus the average, really no significant difference. If you look at the individual much, you would find that they were clustered very tightly around that average. With respect to regions, we let that out for you. The reality is that we have gotten better pricing in the Southeast. The areas that have been more pressured from a volume perspective, they have gotten less pricing and it's really pretty much what the economist would predict. As we go into next year I think we're going to see modest pricing across the board inline with the comments that I've made. I don't think you're going to see the degree of regional deference that you've seen in the last couple years because frankly you don't have the same opportunity in the Southeast that we had in recent years. So it's going to move back closure to medium price level, medium price, rate price increase. So I think you'll see lot of less disparity next year.

And so for that medium price increase going next year, would you still see it kind of generally in that mid to high single digit range or do you see pulling back one.

Too early to comment, we would just said moderate rate of the increase... moderate would be less than what we're looking at this year the range issue being 6% to 8%.

Well that would imply that you are going to still see some negative volume trends going into 2009. Is that a correct assumption?

Yes. We stead that. We certainly expect first half of the year to show negative volumes. The key to it is the credit market situation. What we're seeing out there that I've certainly never experienced and probably most on recall, is projects that are starting or actually underway in some cases where the lenders of pulling the funding and the developer/contractor are left hanging. That's just something that we've not seen. So the credit markets have got to fury up and get back to something that is more normal, not necessarily back to where they were because they are not going back there. But they need to be in a more function in a more business like manner. I mean we have seen purchase orders just disappear, where we got a PR in hand, we're getting ready to shift their project in some cases we would have run inventory for that project and all of the sudden the projects is not there. So that's the big thing that has to happen to get this construction economy back on a much more including.

Mid trend picked up I assume in the quarter. It's being quarter you are reporting?

I am sorry I didn't hear the question, Catharine.

I would assume that this trend is really came to ahead during the third quarter?

Absolutely.

You're purchasing orders just as appearing?

Yes absolutely. We... as we looked ahead, based on what we had in hand, what we thought we are looking at, we thought the third quarter was going to be an okay quarter in midst of a downward term line developed, but nothing like what we saw in terms of the volume decrease. And keep in mind, we also get our storm overlaid at certainly it was not helpful.

Just stepping back and looking at broader in terms of the whole cycle, I guess if you go back the early 80s you had about a 32% decline in volumes peak to try [ph], looks like right now you're tracking around 20% to 22% decline. Do you see the current cycle also tracking closer to that, at 30 plus percent decline in terms of just volumes?

I certainly hope not. You're correct by the end of the year we should be somewhere in that down 20% from peak area. It's difficult to know what's going to happen. Certainly, the fourth quarter first, first half is going to be very challenging on the volume side. The other side of that is energy cost is clearly going to be down. So with the cost actions we're taking outside of the energy, plus energy we should give some relief with respect to the cost lies underneath revenue structure. So, we'll just have to see how those two balance are. Can't be down 30% plus, I wouldn't say that it could because it's been there before. In the early 80s that actually was to back-to-back recessions that stretched out well over 40 years, but we don't have ten consecutive down quarter right now, so would not be surprising we're going to see three years of down quarters. So, I would roll without I'm certainly not looking for it but I wouldn't I can't say definitively when will happen.

Okay. And just final two questions. Could you speck to visibility as relates to volume and then finally just housekeeping, what are your debt in free cash flow targets for the current fiscal year?

Okay. With respect to visibility I don't think there... I think there is very little. It comes back to the credit markets so that something we don't control. We're operating after what contract to customers have in hand and when you get to a situation where purchase order disappear on you and you think you getting ready to shift up. That just gives you virtually no visibility. So I think it's extremely difficult to call and I'll let Anne to answer the question with respect to other debt for the cash flow

Yes free cash flow counting for the year we expect to be in a range of a $110 million or $130 million depending on final earnings. Debt estimated for the end of the year be around a $1.325 billion.

Thank you very much

Okay.

And our next question comes from John [indiscernible].

Hi good afternoon everybody.

Hi John.

I have number of questions. One, Steve could you maybe comment on liquid asphalt has that come down with oil and diesel and do you see that having any type of mitigating effect on tabbing [ph] type jobs?

It has begun to come down, in fact from the peak which was roughly $800 average and at few places were it got up into the 850 range. Based on current numbers that we are seeing with our customers as a last week, the numbers look to be averaging around 625 and dropping just like fuel prices were dropping. Some liquid asphalt is low as 550.

Okay.

So there is clearly strong downward pressure on that and the entity on the other side of that can purchase more asphalt pricing by still met liquid coming down because the price of asphalt to concrete should be adjusted down with it.

Right sure. Okay and could you may be comment a little bit more on I guess the strategic review that there was some expenses in the quarter were more about the nature that is and then on the reason for the change in the debt covenants. Thanks.

Okay. With respect to the strategic review, I would have gave you more than I wanted to. The fact was that, the column that was in it and it popped up and we felt like we needed to comment. Obviously, we're not going to comment in detail on any strategic initiatives. We had couple of things that we've looked at, worked on that, we saw good add value for our shareholders. We'll continue to do that what the key part of that statement is add value for our shareholders. We are not going to do anything that we feel just not do that and do it very quickly.

Okay.

So we continue to be very busy and very active and looking at opportunities. But we have stayed away from some opportunities that some others took advantage of that perhaps like; we used to have this one.

Okay. And that conveyance is there any additional information on that?

John, this is Anne. Essentially we felt like it was appropriate to give us more room and flexibility with that conveyance [Ph] as we move forward through the next 24 months.

Okay.

Just a prudent thing to do in this environment.

Sure.

And we got great cooperation in doing it which our understanding is that most companies out there who are trying to do those kinds of things are not getting great cooperation.

Right.

That's what differentiates us.

Good to have that flexibility. And then on the CapEx [Ph] due December 1st can you just talk about the plans for that at this point?

Well, continue to evaluate alternatives there including, access to the public market and other types of funding it think there obviously we have full capacity of our revolver of $325 million available to finance that.

Okay. And have you look at all or anticipate using any of these government programs on the commercial paper? Would that be anything that would be advantages to Martin Marietta?

The government papers I understand them only for A1, P1 commercial paper.

Okay.

That we... our commercial paper would not qualify for that program.

Okay. All right thank you.

We'll go next to Mike Betts with JP Morgan.

Yes. Hi, good afternoon

Good afternoon

I had two or three questions if I could. Steve the source firm [Ph] was returning to and also previously where I think you said that the aggregate prices were similar of the end of the quarter to the average. Does that mean the immediate price increases largely failed or this is it the case that because of contracts etcetera they are still to show any benefit? That's my first question.

No, actually the third quarter pricing improved because of the [indiscernible] end crisis. So we had a positive trend line there.

But I mean normally you have contracts in place that delays the impact or was that not the case? I mean given the way markets are changed, is it more immediate now the impact, those immediate price increases?

No. we always have contracts in place, that were quoted at different times, that have different prices. And those prices are typically going to be lower prices. So we've to roll through those... those would be commitments on public work, those in some cases would be commitments on large non-residential jobs and that's more than 50% of our business, so there is always some roll forward. We are quite pleased with what we saw our pricing in the third quarter, I think it validates once again that there is pricing opportunity in the business, after 10 consecutive down quarters of volume. And it gives us confidence in talking about a moderate rate of price increase in 2009 as we go into what's clearly on being another challenging year.

Right. You let this quite not jump to 2009 there I mean I think as we end the 2008 there was sort of a similar expectation that the first half would be difficult and then they would see some recovery in the second half, obviously circumstances have change. I mean the recovery that we're hoping for is very much going to be federal program based, or do you so expect take it from you're the direct so do you expect that you might see housing picking up later in the year or is another factor behind why you think it might be better in the second half of '09?

Yes, I do expect to see some improvement with respect to the demand for storm from the housing sector, don't confuse that with any pickup in housing stocks. The issue that's out there in certain markets is that there is going to be a shortage of build a lots in some of those markets and some additional subdivisions are going have to be developed, subdivision work has being non-existent last couple of years. We think by second half of '09 we're going to see some of that begin to comeback just to support the start level that's out there. We will see what the Democratic Congress is going to do. But I think any program they come out with is going to be designed to try to put at bottom under housing and to begin to move it back up all be it may not be sharply. I think they understand it; it is creating a significant downdraft on the economy. Likewise they're most committed to job creation and in long-term investment United States which is why they have to focus on infrastructure. So we have to... after the elections or in next January depending upon how the debate and the votes go in Congress. I think very likely that you're going to see something that will be positive for our industry coming out of the new Congress or the one that finishes up.

Okay. On the asphalt, obviously it doesn't impacted in terms of budget don't kind of fall up, were you caught at all with fixed price work at the much high rational prices or all of your contracts are flexible pricing where they were at flexible pricing?

We're not significant asphalt producers and we do very little construction. So it's negligible for us. It's not even a factor you have to think about, when you think about Martin Marietta. You have to talk to the other companies who have big asphalt presence, and the big contracting presence and you know who they are.

Okay, thank you. And the last question Steve, the weather hit in Q3, I mean is that just in reality gone or would you hope there could be some catch up with that over the next couple of quarters?

I think quite honestly in this environment Mike, it's an environment where there is no pressure on people to do work today that they might be able to defer because one of the things they see is they see a price of that work going down. If you are an asphalt contractor and more than likely your asphalt work is tied to some type of fixed price. You rather wait and do it next year, as oppose to do this year because your view would be that you're going to be paying less for liquid asphalt next year. Likewise you're going to be paying less for fuel, contractors are fuel intensive. There is steel in the job and they'll be paying less for steel. So I think there is a tremendous incentive to defer work and feel that... if you are contracting you make more profit or go at losses put it that way. If you are the ultimate buyer you're going to buy more for your money.

Okay, that's great. Thank you very much.

Sure.

We'll go next to Trey Grooms with Stephens Inc.

Good afternoon.

Hi Trey.

Just real quickly. You talked about your thoughts on federal stimulus help coming next year possibly. But can you give us an update on what's going on, what the status of some of the other big infrastructure projects that are kind of looming out there in some of your primary states?

Well we talked about toll roads in North Carolina and first letting the toll roads and the issue there comes back to credit markets. You've had the letting, now you have to do is finance it with bonds and when the credit market clears up that financing will get done and than the work can proceed. So that's 2009, even though the first round of work has already been left. You've got similar issues across the board that the states are challenged in two ways. They are challenged on the revenue that comes into their DOT because of declining gas taxes, and in some cases they have used taxes trends like that, sales tax on vehicles, vehicles sales have declined also, so where that's a factor in their revenue, that's declining. So, they have that factor they're trying to contain with and then where it is bond funded work; it becomes a matter of the placement of bonds. So, what I would tell you is we have some states that have stepped up to address revenue. But the biggest states for us have not done that yet. North Carolina is in the pros of looking at it. South Carolina is going to have to make a move, Georgia, very much, needs to make a move. They're programmed for next year, if they don't make a move, its going to be down sharply. Texas is short in their DOT fund; the turnpike part of it continues to be fairly strong. But I mean there is nothing out there that is robust right now, that's out of the norm. Its going to be dependent upon federal stimulus I think initially, and dependant upon the states following up with additional revenue measures.

Okay.

But now it is going to cost you more to drive period.

Okay. Also can you give us your thoughts regarding buyback looking out into '09?

Yes. Buyback in this environment from standpoint of share price obviously, we love it. But from the standpoint of credit dynamics, our first priority is to pay down debt. And it's going to be to continue to pay down debt. This is an environment where you simply don't want to take risk. And as you know, and I think, probably everybody on the call knows, we cash flow very, very well. But the same time we're not going to speculate on that. We're going to pay down debt. We get to a point where we're very comfortable than we can consider again but I think that's well out.

Okay. And just one last question. You've have been seeing some really good work come by way of some of these energy related projects. With oil coming down and natural gas coming down, would you expect to see kind of a follow up of that type of work, as a result?

Well, logically with the decline in the price of oil and natural gas in the last month or so, I would expect that that hard year [ph] that we talked about in East Texas and Northwest Louisiana, we're probably going to see a reduction of activity, that would be logical. What don't I think is going to come down and in fact likely will continue to trend line up is wind energy. We continue to see a lot of wind energy activity. My guess is at the federal level with whatever comes out of there you are going to see more emphasis for wind energy and an attempt to make sure that funding back up is there to move those projects along. So I don't think that's going to be impacted in a negative way. I think probably a positive way from the federal.

And could you remind us which states are your biggest states for the wind energy that you're seeing?

Yes. Texas is the number two wind energy state in the country. Obviously we're big in Taxes and that's become a very nice piece of business in South Texas, down in the North Carolina likewise other opportunities throughout West Texas. Iowa was the third largest wind energy state and we are the largest producer in Iowa, we're seeing a lot of activity there. And looks like there will be follow on projects to some of the ones that are already on they way. So, we're pretty optimistic about that aspect of energy.

Okay. Thanks a lot.

Sure. Just there are some of you that I have given this metric, for those who I haven't. We've got enough wind energy business now. So we've got round metric of that 1500 tons per turbine, that's a combination of the concrete pad and the roadways that go in there to crack the turbines, a pretty big business.

And our next question comes from Todd Vencil with Davenport.

Hi, Good afternoon. As we talk about volumes coming down and if we talk about costs coming down and all the things, you guys are trying to do safe cost. How much pressure does that begin to put on pricing, I mean do you think you potentially find yourself in a situation where energy comes off and competitors don't necessarily have that the work [ph] neither heals in terms to higher diesel cost that you could see people start to cut price? Or at least maybe be less disciplined about price increases?

Well, Todd don't make any mistake about it. There are people who cut price today, there are people cut price all of the time. But certainly over the course of last two years, on particular jobs and where people might be long on particular sizes, you will see price reductions to that. It's been measured but it's certainly there is more volume pressure; you see more of it and that's logical. If you think about where the right of pricing increases has gone, we peaked up at 13.5% in 2006 down to the 10% level in 2007 between 6% and 8% this year and below that moderate rates have increased next year. So in fact that happening and that's in our equation in terms of estimating what types of pricing might be available to us. The realty is that if you sit down with your pencil and piece of paper. It's pretty hard to volume your way out of this economic downturn because if you cut price and take business from a competitor, being the macho business that this is. The other party is going to turn around and do exactly the same thing. Based on my calculator that says that all the parties in the market have simply cut their price in traded volume and I don't think that lead just to particularly get outcomes. But that's for other people to figure out. We are running our business by size, by customer, by job and there are peritonitis on that basis to get some pricing increases but certainly not like what we had at two three years back. So it's already reflective of.

Okay. Switching views and just sort of expand on some of the things you said about, about government spending and especially settled government spending. We're going have to do something about either reauthorization or some other form of a federal plan after September next year. My understanding I guess is that what we're doing right now, we're funding federal however work to continued solution. And I guess everybody's probably waiting to see what happens in week. But can you tell us what you're hearing about the shape that people talking about the next federal programs might take and I mean from where I am sitting it looks like, how we trust fund, a sort of structure that we had unless you can convenience somebody to raise taxes some point you sort of tapped out in terms of growth.

If you go back to the commission that was set up to study the issue of transportation financing. They came out with a recommendation which was to raise the gas tax $0.50 a gallon. I think that one, was pronounced bid on arrival and I would agree it was dead on arrival. I think the bigger question is what is the form of financing going forward and increasingly what you are hearing as people focused on VMT or vehicle mass travel as the way that revenue structure out to be oriented. By mandate you are going to have increased fuel map of gasoline mileage for vehicle. So, that's going to cut fuel consumption. I clearly see changing habits on the party American Public. And I think even with lower gasoline prices that some of their changing habits you're going to stick, the younger generation that these times [ph] differently, and I think they are likely to go back to business in a more fuel efficient much less road intensive way. So, it get bags of VMT approach, whether or not that's actually what gets done I don't know, but certainly the politicians are focused on that. The collection of that would have to done in a very simple way. And, in fact, it might be at the state level, in North Carolina, what we're looking at is possibility is collecting the VMT at the annual safety inspection were the [indiscernible] the safety inspection anyway. And then applying the rate against that in collecting it once a year, that could be a vehicle for the federal government also. But they can't stick with gas tax. I don't think that's going to be parallel to big increases and clearly the tourmaline on revenues are going down.

Okay.

The only thing I would mention is that I can't recall that authorization of the new bill determine [ph] done all time. So you should expect that continuing resolution as they tried to figure it out. Hopefully it is a continuing resolution that follows behinds some specific stimulus action that has already been put there.

Got it. And then housekeeping, you mentioned $185 million of CapEx, was that '08 or '09?

That's '09.

Okay.

2008, we expect to be in the $255 million range.

Okay.

And we had come down shortly, we'll have a very good free cash flow generation next year and back to applying that to that.

Okay. Thanks a lot.

We'll take our next question from Jack Kasprzak with BB&T Capital Markets. Jack Kasprzak - BB&T Capital Markets: Hi. Thanks. Good afternoon everyone.

Hey Jack. Jack Kasprzak - BB&T Capital Markets: Steve, I wanted to ask about this, you mentioned credit disruptions and cancellations et cetera. Is that base... are you just seeing that across more or less all of your markets, or is it fairly... is it centered in one... in more prices than others.

Certainly we're seeing it in the Southeast, some on the Southwest. In our market areas, we're seeing more in South East than anywhere else. If you think about lending, you might draw the with Wachovia who was an aggressive lender into the construction markets both, res and non-restructuring. And you can kind of take it from there. Jack Kasprzak - BB&T Capital Markets: Okay. And you mentioned, housing, in an earlier comment, but I wanted to ask, or getting back to the Q2 call where you made... I guess what where we're seeing positive comments about housing, just looking at... looking forward around into mid '09 or so with not allowed subdivision activity having gone on for a quite sometime and maybe the need to pick that backup. Is the recent credit market disruptions is kind of put-off any hope that we might see even some stabilization in housing in ... by mid or later 09?

I don't think so, Jack. If the recent credit market disruptions continue the way that has been evidenced in the third quarter, you can jut kind of lockup shop and put-off everything, because, frankly nothing has happened in much of anywhere. Certainly, there is an expectation that with Federal government actions or rejection of liquidity into major banks and regional banks and insurance companies, that there is going to be some move to normalcy, grinded [ph] the party on the other hand, this is going to have to be able to pay it back. It's a noble concept. I think you will ... once we get some stabilization and then the money begins to flow, which suppose that started this week, the banks should get back into the lending business, or be it very careful. And if that is the case, they'll start making choices you they land to and who they don't. That in turned is going to be consolidation of players in various industries, probably including the housing industry. So, probably would be few out there but the ones that are there are more credit worthy, and likely to get credit extended to continue to go about their business, would be my view. Jack Kasprzak - BB&T Capital Markets: The Portland Cement Association recently updated their forecast for '09 they see a 30% decline in non-residential construction in '09. I realize you guys are in cement business, but they are just talking about overall construction activity of... or do you have an opinion on that 30% decline in non-res in '09? Does that seem too harsh to you guys sitting here today?

It does seems to be a number to me that would be formulated off of what is going on right now. And again, if what is going right now has been going on in the last six weeks or so continues, who knows what the number is. But I find it difficult to believe that we're going to go forward as we get into next year without some reasonable credit market functioning. If that's the case, one thing that we're already hearing, is that there are developers out there who are looking at declines in the price of construction, who are saying, and you know I've had this project sitting, now is actually a pretty good time to move on it because my cost of construction is going to be lower based on materials cost, based on the fuel component that goes into construction, and based on the fact that I have got a lot of contractor choices from contractors who have very little work and are hungry and are bidding with very low margins. So we are actually... its interesting that you ask a question, because in the last two weeks for the first time, we're beginning to hear those kinds of rumbles. So, a sort of contrarian view out of the developer community. Jack Kasprzak - BB&T Capital Markets: Great. Okay, thank you very much Steve.

Sure.

We'll go next to Ajay Kejriwal with Goldman Sachs.

Thank you and good afternoon. Just a question on...

Can you speak up Ajay, we can't hear you.

Can you hear me now?

You still need to speak up, very difficult to hear you.

Can you hear me now?

Yes.

Okay. Thank you and good afternoon. Just maybe a question on 4Q guidance to start with, the $0.40 range, one month into the quarter, does that reflect the uncertainty on volume or any trends in October that you think play out over the next couple of months? I mean I am just trying to figure why that wide range?

It's all about volume. Volume is going to govern that number. We certainly have our cost structure under control. Again, we're managing that, I think extremely well. So it's going to be what we can put up on the revenue line that will determine the profit number.

Okay. And maybe if you can give some color on what you saw in October versus September, it sounds like things worsened off in terms of construction projects getting pushed up. But just in terms of any numbers around shipments or contracts if you can help us?

Yes, not appropriate for me to comment on that with respect to fourth quarter, we'll talk about at the end of the quarter. The one comment I did make was with respect energy cost and the significant decline that we've seen at, I thought that was fair game but really not appropriate for me to frame the quarter beyond that.

Fair enough. Now about the lower CapEx for next year, maybe if you could give us the sense of how much of that $185 million is base maintenance CapEx versus any new projects that you're working and how much flexibility you have in with taking that CapEx down if think so if the situation deteriorates further with respect to the economy next year?

We normally frame maintenance CapEx is something around DD&A, that DD&A number for us this year is going to be around $168 million. What I would say to you with respect to next year is that given volumes that are off 20% from peak by the end of the year. We're going to have a lot less pressure on maintenance capitals than we typically have, so with the 185 you are going to have a maintenance capital number that is well below the 168. What we do have in there as we've got some strategic initiatives particularly as they relate to Florida. You will see us carry those out and we also have some strategic land purchases in there as they relate to long-term metal reserves. So even though we're in a difficult marketplace keep in mind this is a 50 year plus game, if you're not making the 50 year moves all the time you're going to get self in trouble and we don't plan to take that out with respect to the long-term aspects and that's the way we built our business. If in fact we were to see something that worsens beyond our expectations in 2009; we are fully prepared to tighten down on capital spending as tightly as we have to. And I'll tell how we are going play it. When we came in to 2008 based on the open authorizations for capital we had already proved. We had a carryover number of that $100 million of spending based on those open authorizations. We've spent the year 2008 buffering back, dampening down on authorizations some of which already existed and certainly limiting new authorizations. So as we go into 2009, our carryover number is $20 million or 20% of last year's. What that says as we come out of the chute, we have very little capital spending that we must do in Q1. We'll look at it by the quarter and we're going to measure it accordingly. So, we'll manage it very, very tightly. So I think we're in a position to do just that.

Great. Just continuing on that part a little bit, how much flexibility do you have in cutting costs at the quarry level? I mean could you postpone removing of the over burden or are there any other major cost buckets that you could take out at short notice versus dealing something the quarter and that comes back the next quarter?

Certainly, you take a look at your over burden needs. And you try to measure that in terms of efficient pit development. We had prices where we need to strip in order to be an efficient operator. And we have some significant stripping projects underway at those prices. But where we do not need to strip in order to have an effective pit cost efficient pit, then you don't do it in these times. You put it all into another day, when your volume goes back up and in fact you've got to remove it faster because you need to get to more rock. So we've gained that based on the marketplace, the biggest single cost we have at the quarries is in the labor component. And in fact our manpower has comedown sharply, over the course of this year we're down through the first three quarters, over 300 people. Again some base of about 55,000 beginning of the year. I would suggest to you that by the end of the year that's going to go down probably, but not be surprising it goes down 150-200 more just based on not running all the plants based on other initiatives that we have to make sure that we're limiting and controlling cost. We've cut overtime hours to the bond, we're managing overtime hours had a very senior level in this company. It gets senior level attention, not just operating level attention. So I think we're doing that and we have the reporting mechanisms that allow us to manage that real time. So those are the things that we're working very hard on. One of the things you don't want do is do short-term things that impact your ability to operate effectively and sometimes operators will defer maintenance. We will measure what maintenance we do, but I can tell we're not going to defer needed maintenance for two reasons. One, you're going to make yourself ineffective cost operator, but secondly when you defer maintenance you can create safety issues, we have no intentions to compromise on safety. That's the way we're approaching it.

Great thank you.

Sure.

We'll go next to Garik Shmois with Longbow Research.

Hi, good afternoon. My first question is you talked about some markets that had experienced some pretty sharp volume declines in the quarter. Did you see any pricing weakness in any of your markets, negative price?

Prices in those markets continue to move up. Certainly, we would not have a 6% to 8% pricing metric overall for the company if they did not. Do you see more price competition on some individual jobs because of declining volumes, its just what the economist would tell you. Absolutely you did. So you're set to pick and choose more carefully. You can't get away from the fact that with reduced volumes you're going to see some degree of greater price competition. The amazing thing about our business is that we're still seeing above average rates of price increase, above our long-term trim line coming into this last cycle, here in the third year of volume decline, and I guess it speaks pretty well for the business.

Are you seeing this with diesel prices coming down? Are you seeing new entrants coming into the your markets and potentially pressuring pricing? Or has the market structure still remains relatively stable?

It's tough for people to do that. We see occasional pot shots by particularly a couple of distant entrepreneurs trying to pick off a little piece of business down the road, 50 miles or so on occasion. But when you begin the look at how the quarries are laid out and remember the customer backs delivered cost. In most cases, we have such a significant transportation advantage over those folks, that it's just very difficult for them to cut a price enough to be an effective competitor. Yes we are cognizant of it, and there are a couple of situations where we've seen it take place.

Okay. And just lastly, just a little bit more clarity on your CapEx for next year, I think you're supposed to start several new projects along the fall line Fayetteville, Selma and Columbia, are those some of those... are those projects still on track to get started?

is moving along, that is a new green site location for us. And in fact we expect to be crushing rock and selling rock in 2009 out of the Fayetteville location, which by the way probably has significant hall of advantage of our nearest competitor. So we think we're going to do very well there, a lot of work at Wagon and the Fayetteville area. The summer project is not one that we are likely to crack up on in '09 we may do a little bit of ground scratching to get ready, it depends more on market conditions that is a green site. We've got some bigger projects that are in that five year plan in South Carolina and Georgia. And we may scratch the ground or break ground on one of those projects toward the end of '09 in Georgia. But that was the only one that we were planning on potentially starting in '09 materially a 2010 project.

Okay. Thanks a lot.

Sure

Our next question is from Chris Manuel with KeyBanc Capital Markets.

Good afternoon.

Most of my question have been answered very solid, but I want to tie back on a couple of pieces. One is if I can kind of piece together some of the things you said today it sounds like heading into 2009 towards the middle and of next year housing could get a little bit better but probably not appreciably so. On the public work side it sounds like... rather that's I really want to kind of circle around that we've seen significant slowness through the quarters, so starting in say July through August and into September on the public work side or is that kind of stay relatively steady, this is my question.

With the kind of volume decline as we're having everything is down. If you think about from the state standpoint, they have been very nervous about the state as federal moneys coming out of the Harvard Trust Fund, because they knew there was an issue there and the federal government actually cutoff funds to the state at one point during the third quarter, because they literally have run out of money. And that's when you got the short-term fixed that took place where there was $8 billion worth of revenue transferred to the trust fund from the general fund to fix that problem through the expiration of the bill in September of 2009. So the states are playing it somewhat cautiously because they don't know at this point how good partner the federal government is. If the Congress comes in and makes it clear that from a funding standpoint that the federal government is a reliable partner, then I think you'll the states began to move more aggressively because they'll know the money is going to be there. They have been a bit in a rumble. So it really comes down to what is the Congress going to do with respect to infrastructure stimulus as far as public works goes, that will be the big piece. And then the other piece is the bond markets getting to rational functioning. So that bonds that are already authorized for both road projects as well as particularly school projects, can be issued and those projects proceed. Now, we talked about it before but I would just remind you that with construction cost declining, the federal government, the state government are all looking at that aspect to which certainly had some of them consult us, wanting our opinion on, whether or not declining construction cost were likely to be the trend in '09. And our answer to that is we think so based on materials cost coming down, other than aggregate which we told you is going to go up. And pressure on contractors because there is limited work.

Okay. That puts it, I bet I can, guess for you where some of this federal money is been going to. I hear that they have been bailing out a few banks.

That's where we're.

Okay. So, the last question I had was when you look at the specialty product business, I know there is a chunk of that goes to for steel. And when we look at steel production at least some schedules for what steel production might be in the fourth quarter. It looks like many of these folks now are going to be running at 50%-60% utilization, yet this maybe... from that kind of hold that you're projecting for the full year your strongest quarter in the year for steel. Can you give us a little, a little color there do you have the maize [ph] contracts in hand or have you seen any deferrals or things in that side of the business as well.

No we are... I mean we're not immune to steel business pulling back for any shut downs. We certainly know what the steel mills are planning in Q4. We confer with them in order to understand what the demands on; I don't know the climb will be. In fact we saw some of that in Q3. What we do expect in that business is that we believe that overall we're going to have record shipments of dolomitic lime for the year. We think we're going to have a good solid dolomitic lime in demand in 2009, probably not as high as it was in 2008 from a tonnage stand point. But we think we'll see some improved margins based on reduced energy cost that should be a nice positive for us. And then there is the other side of the business which is the MagChem business, the Chemical side that business is growing substantially. And in fact from a profitability standpoint we have some significant additional profit coming in '09, one piece of it is going to come from contractual obligations to forest heat resistant materials and the second piece would be the acquisition that we announced early in the year ElastoMag. We have been total manufacturing the product this year as we get ready to move the production facility to our location, into 2009 we will produce that product in our location and we will have margins that go with that production. So, there are some moving parts here underneath the surface that causes us to be pretty confident in terms of our performance in specialty products in 2009.

Okay, very good. Thank you.

Sure.

We'll go next to Owen Gibbs with Austin Fires [ph].

Hi there. I was just wondering is there a level of volume decline that you have in mind where you can see your pricing at zero, potentially negative?

I really don't. Our view is that as we go into '09 given the state of the economy that we're going to see some Federal stand of us, do we get to that... I mentioned before back to the 1980s, 30% or so volume declines from the peak. If we get some where in that range certainly there is going to be a lot of pressure, even more so than it is today. But I bring you back to the fact that it's not very productive to just sit there and cut price because you may take some volume away from another company but they're going to turn around and take it right back from you in the same marketplace. The bigger concern was already mentioned and that's people were trying to come in from way outside the market because of declining transportation cost coupled, associated with gasoline diesel prices and that's just very limited. So I think, it would be a scenario that at this point I just can't envision that is going to take you to flat or negative pricing for this business.

Okay, thanks. And one other point just on your renegotiated covenant, what was the liquid procured for the increase in that?

We increased the facilities fees and at the current credit rate that would be LIBOR plus 225.

All right. Thank you.

And we'll go next to Katherine Thompson of Avondale Partners.

Hi. Just one follow up question I wanted to ask was, what gives you confident that you will see as a stimulus package passes, excuse me, late in the current calendar year or early next year. What gives you confidence that you'll see benefits by Q2? And what type of numbers have you seen floating out there in terms of the magnitude of that infrastructure spend?

The confidence that I would have with respect to Q2 is that the conversation about infrastructure funding and the stimulus package is very much oriented to our jobs on the ground as quickly as possible. And what has been asked of the states is what magnitude of work do you have that could be started within 90 days? And the answer that is comeback from the states is a number that's 8 plus... $18 billion. So, they have committed that if that money is there they that can get that magnitude of work started that quickly. So, whether we have a stimulus package late this year or early next year, it's likely going to hit it in the second quarter. But this year it's just whether that are precluded. If its next year, by the time the season opens which on average across the country is about 1 May, they deal within in January or February, nine days out, you are in the mud. So that's the way I would look at that aspect of it.

Katherine, [Indiscernible] this part was something on those statistics, if you want to go out and find those.

he size...I talked about $18 billion. There have been numbers as they had have arranged higher, it's hard to know exactly how Congress is going to approach this. You see some economist throughout; they are talking about $300 billion total packages as needed to really pull the economy out of the current doldrums. You've seen a $150 billion as a target number floated by some of the key congressional democrats with the infrastructure piece of that being somewhere between that 18 billion on it [ph] into 25 billion plus. It's a floating number. But, pretty clearly substantial money stored infrastructure if they address this. So, I think that's encouraging.

That does conclude our question-and-answer session. At this time I would like to turn conference back over to Mr. Zelnak for any additional or closing comments.

Okay. We thank you for your participation, a lot of very good questions. I wish we had a totally clear crystal ball, we tell you what was in it, but we're trying to do best, were the circumstances we're in, and hopefully the commentary we gave you was helpful. Look forward to talking to you at the end of next quarter. Thanks

That does conclude today's conference call. Thank you for your participation. You may disconnect at this time. .