Good morning. My name is Latonya and I will be your conference operator today. At this time I would like to welcome everyone to the 2007 Q4 Pentair earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. [Operator Instructions]. Thank you. Mr. Gleason, you may begin the conference.

Thanks Latonya and welcome to Pentair's fourth-quarter earnings release conference call. We are glad you could joint us. I am Todd Gleason, Head of Investor Relations. With me today is Randy Hogan, our Chairman and Chief Executive Officer, and John Stauch, our Chief Financial Officer. On today's call we will provide details on our fourth quarter and full-year 2007 results. As well as update you on Pentair's outlook for 2008. We also introduce first quarter 2008 guidance. Before we begin, let me remind you that any statements made about the company’s anticipated financial results are forward-looking statements subject to future risks and uncertainties such as the risks outlined in Pentair's 10-K as of December 31st, 2006 and Pentair news releases. Forward-looking statements included herein are made as of today and the company undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances. Actual results could differ materially from anticipated results. Today’s conference call is accompanied by a presentation, which can be found on the financial information section of Pentair's website at www.pentair.com. We will reference these slides throughout our prepared remarks. Any references to non-GAAP financials are reconciled in the appendix of the presentation. As is our custom we will reserve time for questions and answers after our prepared remarks. I will now hand the call over to Randy who will take you through Pentair's Fourth Quarter and full year 2007 results and highlights, provide his perspective on these results of our businesses, and the markets they serve. And provide an overview on how we're driving to deliver more results in 2008. Then John will conclude our formal comments with additional information regarding 2007 financials, provide first quarter 2008 outlook and wrap up with some more color on full year 2008 guidance. Randy?

Thanks, Todd. And thank you all for joining us today. Let's begin by reviewing Pentair's fourth quarter highlights shown on slide number 2. Overall, Pentair fourth quarter sales of $830 million were 12% above the $743 million generated last year. Our organic growth was plus 7% in the quarter or up 4% in local currencies. The diversity of our businesses and markets enabled us to grow despite softness in North American residential markets. Fourth quarter sales in our Water segment were up 13% versus last year or up 6% organically. Water sales were led by success in our key growth initiatives, such as foodservice and industrial filtration and strong sales growth in pool equipment and Water International. Our Technical Products business grew 9% in the fourth quarter as sales in our electrical business were up double digits, and our Asia and Pacific region posted over 40% growth once again. As the slide shows, Pentair expanded margins 330 basis points, both Water and Technical Products contributed significantly towards this margin expansion. Looking at total company margins year-over-year, the positive impact from volume and price coupled with solid productivity, foreign exchange, and a nice contribution from acquisitions provided 600 basis points of margin growth. This easily offset a negative 270 basis point impact from total inflation. The company delivered $0.48 per share of earnings from continuing operations on revenue growth of 12%. The $0.48 of EPS includes the $0.01 benefit from a non-recurring tax item as well as a negative $0.04 impact from additional restructuring and a legal settlement we had in the fourth quarter. Adjusted earnings per share were $0.51, up 65% versus the fourth quarter 2006 adjusted earnings per share of $0.31. Also in the quarter, the company significantly modified its long-term defined benefit and retiree medical plans. The change…

Thanks, Randy. Please turn to slide number 12. Similar to last quarter, we designed this slide to help reconcile full year and quarterly-reported or GAAP earnings to adjusted earnings. If you start at the top of the chart, you can see our reported EPS for the fourth quarter 2007 was $0.48. This compares very favorably to the $0.39 we reported in the fourth quarter of 2006, which is noted in the bottom section. Our 2007 adjusted EPS is found in the middle section of the chart. We delivered $0.51 of earnings per share in the fourth quarter when you remove the $0.01 benefit from non-recurring tax items and add back the negative impact of $0.04 related to restructuring and a legal matter that Randy mentioned. The $0.51 is up 65% versus 2006 adjusted EPS of $0.31. In the middle of the chart, you can see we highlight the benefit associated with the change to our long-term defined benefit and retiree medical plans. Here are the details of that change. In Q4, we announced a significant modification to these plans effective January 1st, 2008. New employees hired after January 1st will not participate in these legacy retirement plans. Pentair employees participating in these plans before January 2008 will continue to accrue the exact same benefits for the next 10 years at which time, the plans will be frozen. The change to these plans will dramatically improve the variability of the associated expense, but more importantly, significantly reduce the overall pension liability, driven by discount rates and investment returns. For 2008, these changes coupled with a higher discount rate of 6.5% is expected to lower pension related expense and reduced our liability by about $50 million for year-end 2007. The result of these curtailments was worth about $0.05 per share net of…

Thank you. [Operator Instructions]. Your first question comes from the line of Deane Dray with Goldman Sachs. Deane Dray - Goldman Sachs & Co.: Good afternoon, gentlemen.

Hi, Dean. Deane Dray - Goldman Sachs & Co.: First of all, the level of details in the slides and your assumptions is very, very helpful. So I appreciate that. And specifically regarding the '08 guidance, last quarter when you introduced the guidance, you talked about a 25% coming from growth investment and contingency, maybe your wording has changed a little bit, but does that contingency go away and how is that reflected into our guidance?

No. Deane, you are right. I mean we didn't mean to change it up too much. We just probably would provide further details. But the contingency has really changed into investments, and we have now got, I think a more conservative view of price. And nothing has changed in that guidance. We just thought the high-end and the low end would provide everybody to be able to choose their assumptions based upon their own view of the markets. And the other thing is we had quiet growth last time. Deane Dray - Goldman Sachs & Co.: Right. You split that that out. So just for the fourth quarter, the volume price lift for Water and Technical Products, so for Water, you had 2 percentage points. How does that split between volume and price?

Repeat the question please. Deane Dray - Goldman Sachs & Co.: For the fourth quarter, you grouped together volume and price as 2 percentage points. How does that split out? So I'm going to ask the same question for technical products so --?

Okay. Let me just grab this real quick. If you go to Water and take the volume and price component within water. Deane Dray - Goldman Sachs & Co.: Yes.

About 1.5 of that is price, 2.5 of volume and the technical products is about one point... it's about... let's say, about two points of price and three points of volume. Deane Dray - Goldman Sachs & Co.: Okay, good. And then over on the filtration side, what's the expectation regarding some of the CapEx spending of your customers, there was a pretty high profile announcement from Starbuck's is going to back CapEx. That's a big customer of yours. Will that weigh at all in terms of the growth expectations [inaudible] you've ever appear in your Ecolab joint venture?

I would say, not. Obviously we are intimately watching what our customers do. But the announcement of McDonald and a number of other customers who are actually investing in copy service, the penetration we are making in the restaurant space as well as the success in growing our other channel like Ecolab, I think, are much more important to us than what any one customer might do in their CapEx spending. Plus most of that business has replacement cartages once you get them placed I mean they have to replace the cartages, so that’s one of the beauties of food service. Deane Dray - Goldman Sachs & Co.: Okay. And last question on the pool business and the impact of the early buy in the fourth quarter. What was driving it, just better terms, better price, new products and then what was the EPS contribution?

Yeah, there were no... there were... we didn't get any benefits in terms of terms being better this year versus last year. As you may recall, last year we set our production rates at a low level, and in fact orders came in a little bit better. So we ended up carrying more backlog from the early buy program into the first quarter because we wanted to get stable production and we didn't allow the business to ramp up in the fourth quarter of '06. That's the biggest difference year-to-year. We actually… this year, we saw the orders a little bit earlier. So we were able to hold our production rate to a little bit higher level. And so it's about $15 million swing year-to-year. So there's no economic difference.

As far as your question, I mean, I would say versus where we thought Q4 would line up, that was probably about a penny incremental contribution from a little bit more in the early buy. And obviously as you know we take a look at those programs and manage what the earlier... try to understand what the earlier in the standard buy is... so it's hard to tell at any given time when you get a little more early how much impact it has in standard. And so we're looking at sell through data. We've worked with our key distributors and customers, and just monitoring that market every day. Deane Dray - Goldman Sachs & Co.: Got it. Thank you.

Your next question comes from the line of Curt Woodworth with J.P. Morgan.

Yeah. Hi, good afternoon.

Hey.

Hey.

John, I think I may have missed this, but in terms of the high-end of your guidance, what was the organic growth assumption built into that?

We would say, the high-end is probably closer to 4% all in organic growth.

Okay. And that's basically the midpoint of what you have in terms of what you're talking about on slide 16, the up three to five... ?

Right.

And in terms of looking at the Water--?

Curt, not to... I mean we are trying to give a guide with a goalpost here. I'd say, the mix of our businesses mean something. If electrical continues to have significant growth, that means a really lot to us. Right?

Because the incrementals are much higher there or yes --?

Exactly. And if we get some shift in pool and spa business or some are lower-margin business, so we're trying to give guidelines here. But to frame it, we still think organic growth for the company is closer to 3.5 to 4.5, somewhere in that range.

Okay. And… okay then I guess within that in terms of thinking about the incremental margins on the business lines, can you give us a sense for what you are thinking about for growth for Pump, Pool and Filtration for '08?

Sure, we're expecting all three to grow, but Filtration is our most global business and in next year, our global growth is really important. So I would say that global filtration and global flow technologies are the areas where we would expect to see the higher growth less so in Pool, it's the most North American. One of the reasons we gave the chart that we did in terms of the GBU split, the data on there once you get a chance to take a look at it shows you the present exposure to different markets by geography and also gives you some rough targets of what we think ROS would be. But I'm expecting flow technologies and filtration growth internationally to be higher.

And --

I think electrical is no… we see no evidence that electrical is going to slow. They're doing really well in petrochem and a number of other segments. We read the same things everyone else does. We certainly are not on a mission, but right now our momentum is good, so I would expect electrical to be stronger. And I've taken a cautious view of telecom. They tell me telecom is going to come back and wait and see.

Great. And you do expect the Pool markets to be up for you?

We've got --

No. No. Flat, flattish.

Flat, I got it.

Just around a tad.

Okay. And then just lastly looking at productivity in the fourth quarter for Water up, it's about a 450 basis point benefit on no low-volume leverage. So I guess the question is looking out to 2008, if you assume that you get no volume leverage and I assume you still get the annualized benefit of the productivity that staggered throughout this year, would it be fair to say under that assumption that margins in Water should still grow, all those being equal?

Curt, I mean when you take a look at Q4, it was the first quarter for both Water and the company where sourcing outpaced inflation. So a significant piece of Q4 was finally starting to get ahead on the sourcing pipeline versus where we've been behind all year on the inflation, so nice overlap there.

Okay.

If you extrapolate that into Q1, Q3 and four next year, that's why we feel confident we've made progress finally on the sourcing deck. And also in 2007 and 2006 as Randy mentioned, we were doing some significant investment in lean and rearranging our factory footprint and we are beginning to see some benefit of that in Q4 and we think we'll see further benefit of that in 2008.

Great. Thank you very much.

Thank you.

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

Good morning, guys.

Good morning.

Maybe just sticking with the Water Group organic growth, so it looks like you're looking for 3%, which is down just a hair from the 4% in 2007. Which group are your actually expecting to decelerate more? Is it the municipal businesses?

Well, year-over-year, it's Pool. If you take a look at Pool, you think about that, we carried $15 million of extra early buy from '06 to '07 that we got in the first quarter. And then we had that… and then we had… we were up 11% or so in Pool in the fourth quarter. A lot of that's share, but a lot of that is… a lot of that was just the timing in early buy. So if you think about that swing right there it... '07 was higher in volume and that reads out in the organic growth. So that difference is probably all of it, I would say, will you John?

Yes, I would. I think if you take a look at what we... by business I mean I think, we think North American residential pump experienced as you are aware, a double hit in 2007.

Yes, actually, in '07 residential filtration was worse than we thought, residential pump was worse than we thought, residential pools was better than we thought, and as going into the year, and then not surprisingly we understand why the markets were worse than we thought they would be. And we're still taking a pretty sober eye view of the North America residential market in '08.

Okay. Then on the North American pool business then because you benefited from a delayed buy in Q1 kind of a pre-buy in Q4, I guess give me your thoughts then just given the trajectory of housing renovation spending, why you believe pool could actually be flat in volumes and price?

Let me call it a little bit down, obviously we use that as the base expectation. Couple of things, our success with new product is extraordinary. The IntelliFlow program along with one of our other environmental focus programs are doing really, really well, they are growing double-digit. In fact we take a look at what the markets did versus what we did even factoring out the early buy, we gained a lot of share. We also had some major wins I'm not... rather not point out who they are yet. But we converted one of the largest distributors in the country to Pentair in '07, and we get the benefit in '08 and we converted one of the largest pool builders in the country. And I don't think there is much overlap between those two. So, the... that helps. The other thing is we saw a lot of momentum in commercial pool, and the content is going up. In fact what I took this out of the… as long as you asked about pool, I took this out of the script because it was a little long. So we launched a new solar guard control, which basically integrates all of the efficient products along with this new controller, which can control a solar heater for pools, which we think is pretty cool. So we continue to innovate there. And 60 to 65% of the business is replacement to begin with, so --.

Okay. And then just on slide 15 on the walk through on the guidance, John, maybe you can just address specifically the price mix line is $0.20 to the low end of it to the high end. In this environment, I guess can you give us some sense of where the price would be coming from, because there is sort of volume pressure out in the marketplace today, especially in residential. It seems optimistic to get $0.20 additional in pricing on top of the $0.40, you got in '07 and maybe you can drill down as the specific what business units drive that?

Yes, I would say I would actually look at the other way I mean I think I felt we are being a little conservative because most of our price agreements right now are done and concluded. And I put in a little bit of push in for if we have to go back and soften those reductions, which we have not had to do yet. But were we still getting prices, raw material prices have eased as far as change, they have not softened or been reduced, and we're still gaining material push through in some of our markets and channels. Certainly, the market you are aware of, which I would say is residential submersible pumps is not price gaining market.

That would be a net negative.

That would be a net negative. But most of other markets right now are holding in as far as our ability to gain price. And we [inaudible] we have the systems to track it and we keep an eye on it.

I think I mentioned before, one of the prima facie evidence that you're in a good market is what kind of pricing degrees of freedom you have. And so that we actually track, as John said, really closely what our business can do. And we judge our businesses attractiveness in terms of investments based on… one of the things we look at is their ability to control their own destiny with price. So, we think… we don't think we are being aggressive as John said.

So, Mike, I'll give you some quick ideas without putting our business at jeopardy here in their markets, but we gain price in electrical, we're doing well. We are giving up price in some of the electronics markets in which we serve. We are experiencing pricing difficulty from our European based businesses competing against China, sourcing and/or North American sourcing. But as you are aware, we also make a lot of those products that ship into Europe from North America and to have in some cases with some of our products duplicate, product to offer from a lower source of the United States and we are benefiting from that on the other end. And so, we would say that we are probably experiencing similar to what the rest of the world is experiencing that the high euro is impacting our competitiveness from localized businesses in Europe. But, given the fact that we can compete out of United States in China, we are finding alternate ways to win that product.

Okay. And then just by contrast. It seems like you are being conservative on the volume FX line on that same walk through basically down $0.16, up $0.04, if organic growth is going to come in at 3.5 to 4.5 for the total company, why wouldn't there be more leverage on the volume?

I think you would see more leverage on the volume. And I think just trying to provide you that would see a down sourcing of manufacturing line and I think what we tried to give you was identification of what we can see today and kind of what we can count on.

And the reason we added that was because, since we gave our guidance, it's pretty clear that the markets aren't better as I mentioned in the script. They are… they may come out a little bit worse. So, what we've been working on is to make sure that we have a plan that makes sense in the environment we see today. And these numbers are what I would call, as John called them a little earlier, guide posts that make sense. And this is not a 100% mathematically pure, right? So there is a tuck here and there and so, to Dean's question he asked earlier where the hedge go, it is in there.

Okay. Thank you again.

Thank you.

Your next question comes from the line of John Quealy with Canaccord Adams.

Good afternoon.

Good afternoon.

Going into Q4, just a quick question again in Water, North America residential water treatment, Randy, I don't know if you talked about it, how much was it down in the quarter and then also, what are your expectations for that piece of business in '08?

It was actually not down when you looked at commercial residential. Residential was down, commercial was up. The residential, again, it was weak and probably mid-single digits, 4%, 5% down residential.

And I would assume that is sort of the outlook for that particular residential line in '08?

Yes. I mean, we are not… in our assumption, looking forward, we are not assuming any kind of market moves, moving the number. They have to based either on one of our global growth initiatives or on market rates, but that are more positive like Latin America or Middle East.

Great. And my last question on the buyback, you mentioned that it is going to be enabled throughout the year. Any particular trigger points, evaluation or timing that you're looking out there?

We intend to do it all, to take the $50 million and we'll put it to work. But I don't think I would give any guidance as to what, where and when.

Thanks guys.

Thank you.

Your next question comes from the line of Jim Lucas, Janney Montgomery Scott.

Good afternoon guys.

Hi, Jim. How are you doing?

A couple of questions here. First, following upon something Michael touched on Fairbanks. With the growth you have seen there in the backlog, is that a share market dynamics, can you just give us a quick update on the municipal side and on the flow business, have you seen any signs of slowing in any pockets on the commercial side?

I would say on the municipal side, that we would counter the share but what I think we are doing is we are reaching into more segments that we might not have been competing in before. So, for instance we've had some nice wins on the some water reuse programs out in California. We have got more business that we are doing in the Middle East. So I would say that, I would say we have more add backs [ph] which is really encouraging and by the way and there is more add backs we need to go get. That I think… that's an opportunity, that business is one that we can globalize, we have begun to globalize and our Fairbanks Morse team has done a great job with that. So I would say that, I think we are growing in fact we have grown our backlog faster there but I would not say it is a win rate. I would say it's the number of add backs, that's the way I think about bid businesses. And then in terms of commercial, our commercial business has remained strong because they are doing more and more export and we have seen a moderating volume in North American commercial. But at the same time our export business has increased.

Okay. And the switching gears on the acquisition side, two unrelated questions. One, can you just, you have talked with regards on the capital allocation about the share repurchase, but if you could just give us the thought process of how you are approaching the M&A market going forward and secondly with your commentary about the acquisition being ahead of expectation, could you just talk briefly about where those expectations have been exceeded?

Yes, first your first question, acquisitions have always played a role in our strategy, they continue to and we continue to look in the places that support our strategy, which we have talked about before. In particular those areas are today can extend our reach globally and get us into new markets or to extend our reach vertically in terms of vertical markets that we want to be in or technical capability we want to be in. So if you look at Jung Pump, it basically extended our flow technologies business globally with a great brand and a great franchise position in Germany with a window on the Eastern Europe. And that in case of Porous Media it extended us into industrial filtration, raised our technology profile, gave us nice windows in the oil and gas and strengthen us in industrial filtration. So you can expect more of the same around technology and around global expansion would be my priority areas I would look at, but anything that supports all four of the GBU are investable. So anything that supports those four GBU strategies like McClain [ph] did a number of years ago for technical products would be something we would look out as well. The second part of your question was about --.

Integration and --.

Oh the integration of the two businesses. Right now, I would say Porous Media is beating on both bottom line and top line and in particular there is a number of growth initiatives that have frankly exceeded plan. One of them we have talked about is the pre-filtration product that basically they have invented for desalination plants, which we have in test right now. That product is called Aqualine and there is a number of other areas were their technology is applicable in food service and actually in some things in tech products that we are looking at right now, which is kind of interesting, but early on more the experimental stage. But they have also achieved the growth we expected them to achieve in the core markets that they are in which are oil and gas and medical. So in that case… and in the case of Jung Pump, I think they have exceeded it… about matted [ph] on the top line and they have beaten it on the bottom lines of greater productivity is the source there. And we are just beginning to get after the Eastern European opportunities that Jung presents to us, so. That's why I am feeling really good about both.

Okay. Thank you very much.

Thank you.

Thanks, Jim.

Your next question comes from the line of Francesca Mccann with Stanford Financial.

Hi, good afternoon.

Hi, there.

Hi.

Good year.

Thank you.

Looking at Europe quickly and kind of a break down of your business in Western Europe versus Eastern Europe versus the Middle East and then also what do you see when you're looking at those different markets?

They are looking up the numbers specifically. While they are doing that, just in terms of where we see it. For the Middle East it's largely for us the Turkey down through Saudi Arabia. We saw, as I mentioned, 20% growth. That business for us is growing very well in commercial markets and in what we would call municipal here, but I would call the infrastructure there, food service is a big opportunity and we continue to invest to grow there and I would be disappointed if we don't do another 20 plus percent in the coming year. Eastern Europe, we are growing well but it's still too smaller base. So one of the things that I would like to see from our GBUs is more resources deployed to grow Eastern Europe faster. The business if you look at it from a Water standpoint… from a technical product standpoint, it's probably 90% to 95%. It's still in Western Europe, and so they have a big opportunity. That's excluding Israel, actually they have a pretty good business in Israel. So it’s probably closer to the 90%. And then for Water, it's still probably about 80% in the Western Europe with the Middle East being 5 to 10 and Eastern Europe about 5.

Okay. And then if you can kind of go into detail on what you are seeing in Western Europe and even country specific, what the outlook there is?

I can't get any company... country-specific. Basically in Western Europe, we have some of the best growth we have ever seen in Western Europe in '07 but there is some moderating growth there and with the Euro where it is, you can be nothing but cautious. I mean, they are losing their competitiveness globally. So we... when we talked about having a cautious outlook on volume, I would say Western Europe is also one more cautious about not just North America.

Okay. And for both Water and Technical Products then?

Yes, although Technical Products did not have a great year growth in Western Europe. They actually had more promising growth now than they had in '08. So my comment about the greatest year... a great growth year was really a Water product.

Okay.

In '07.

Okay. So overall then again just to reiterate the Western Europe growth perhaps flat or perhaps kind of minimal growth in water and flat or maybe declining in Technical Products?

No, I would expect it is going to be up in '08. Because again they didn't have a good Western... they didn't have a good growth in '07.

Electronics and Technical Products is more project-specific, Francesca. And if you take a look at Water, it is more market dependant. So I think where we see it, we know kind of where our program wins are on the electronic side in Western Europe. Your comments about us being flat to modestly up in water are appropriate.

Okay. Great. And what about India? If you can tell us what you are seeing there and what growth opportunities and timeframe you see looking at that market?

Well, India is three things for us, it's our largest engineering center, which we continue to grow in Delhi, and they are integrated into our global product development activities. There is Goa, which is our factory and the base of our in India business. It's our global base for CodeLine, which is the vessels for our reverse osmosis. And then it is the base for the business that we are building in India. Actually both for Technical Products and for Water right now. Technical Products is growing very nicely from a very, very small base. And we are looking there at what we need to do in order to expand our capability in the country, but obviously country is important in the communication space as India is a big technical products market opportunity for us. And then in Water, we had very solid growth from a bigger base and in particular our focus is on commercial and we had good success with our rural water program that we have put in place. So, mostly the commercial arena and we are trying to get bigger than industrial. We pulled back on our residential activities in India.

Okay. Great. And then last question just some update on the Franklin Electric [inaudible] situation?

It is what it is. I mean it continues to be a tough battle in a market that’s down. We have over 90% acceptance rate on our Pentech motored pump and we are out there doing hand-to-hand combat. So it has gone according to oil and it's not what I spent a lot of time worrying about.

Okay. All right. Thank you so much.

Thank you.

Latonya, this is Todd Gleason, how many more people do we have in the queue?

Looks like we have two more questions in queue.

Okay. Let's try and answer those then.

Thank you. Your next question comes from the line of David Whang with Lehman Brothers.

Good afternoon. Actually it is Dan.

Hi, Dan.

How are you.

We knew that.

Okay. Well thanks for taking my question here. On slide number 10 you have the break down of the different business segments with their current margins and I guess you have [inaudible] 10% and a flow and filtration at 14%. So as you expect a 100 basis point improvement in margins in '08, I mean where will be… will we be seeing those margin improvements, is it primarily flow in filtration with the pool, I guess the volumes are still expected to be flattish?

Well, given then our business are listing, we clearly expect it from everywhere. If you think about externally, when we take a look at it, I think the biggest opportunities we see are continuing to expand the flow and those are global margins. So, clearly we think we have significant upside there. Pool and spa has been doing a lot of work on lean and manufacturing and sourcing enhancements. So, despite our view of a flat market, we think there is significant opportunity in the pool and spa side. And then filtration of water, we are getting the operational improvements, but to Randy's earlier question, it's also our most amount of investment on strategic marketing and R&D. So we are probably in the 20 to 30 basis points in filtration. And in the others, we are expecting 50 to 100.

Okay. And so in terms of Pool, I mean where it is the margin gap between the other two segments. Is there anything structurally different… backlog?

Yes. I mean the pool business… the pool and spa business is made up of basically pool equipment, which is the thing we all think about behind people's homes and in hotels. There is the Spa business, which is basically pumps and fittings for Jetted Tubs and Jacuzzi type Spas that everyone is familiar with and then there is National Pool Tile, which is our distribution business that sells tile and other related products in the pool industry. The margins are very different between those three. Pool equipment is really quite a bit higher than that 10% and the other two can't see 10% from where they are. So they have a mixed issue.

Does that answer your question.

It certainly does. The second final question is, obviously we are seeing faster growth in Europe and Asia in Pool segments, and I think particularly just honing in on Water, I think historically you've had more favorable margins in the European business and just wanted to just get a better feel in terms of the relative margins, the North American Water versus Europe, Asia and currently and kind of the trends expected going forward?

Well, Asia is the lowest. Just staying with Water, Asia is lower margins, North America is the middle and Europe is indeed higher in margins and quite well in the two biggest businesses there in filtration and flow technology. And our focus there is, we want to make sure that we grow. So we want to invest and I don't want to say, we don't want margins to go up in Europe, I would like margins to go up in Europe. But I really want to see us invest, to grow and I think our opportunity in the Middle East is vast. And one that we could put and should put a lot more resources against and Eastern Europe as well. So I don't necessarily project the margins in the Eastern Europe and the Middle East to be the same as in Western Europe.

And as we mentioned, Dan, I mean we have access capacity in North America, but quite frankly, we are proud of the way our teams have moved to take people out and we are keeping patience margins despite the softer value in North America. And I think we are going to be well positioned when the market returns with a much better cost position that we can continue to grow from.

Got it. Thank you very much.

Thank you.

Your last question comes from the line of Christopher Glynn with Oppenheimer.

Thank you.

Hi, Glynn. Chris Glynn – Oppenheimer: Hi. On the tech products, electronic side you got a pretty nice ramp in the margins, in the third quarter, maybe in the second half kind of the trough quarters, how much variability and dynamism is there still there or do you feel you are kind of… at a new sustained kind of stability even if it’s well below the electrical side?

There is still more margin improvement to get in electronic. Right now, if you look at electronics, actually our highest margins are Asia and our lowest margins are North America. So, we still have ways to go in terms of getting North American margins up. The trend is good, but North America in particular isn't close to what we believe they should be running at. So, and in Europe, I wouldn't mind seeing some more margin expansion there. Asia, good margins, let’s grow some more.

Okay. So you don't see much risk of market dynamics causing regression to those kind of trough quarters?

No.

Okay. And then, just on the organic growth again, I think that someone asked a question about the 3% or 4% guidance versus this year, and the delta was pointed to the interesting year with a strong thrust in fourth quarters for pool. Just another delta, it sounds like I think you called for softening in the commercial industrial North America markets, is that just something that's kind of factored… how is that factored in?

We have seen moderating growth, but not significant downturns there. And so, I'm not even predicting a significant impact to us, if that makes sense, but I don't think we're going to count a double-digit growth in those space even.

Okay.

I mean, just to summarize Randy's comments and Todd will certainly work this through with everyone. If you take a look at the growth by the three water businesses, we are highlighting that pool had a fantastic year and that's what we're trying to identify, that they had a great year with energy efficiency, the programs Randy mentioned and really growing share. I don't think it's prudent to expect that we continue to do that in this type of marketplace. So we are not expecting significant downturn, just moderating. Conversely, I think pump is going to have a better year than we had in 2007, primarily because I think they had a dual impact of a residential downturn and significant amounts of inventory out of the channel. And I think we would expect a little bit better North American flow here. And filtration has anniversaried on several customers issues that they had and are beginning to see momentum on their growth side as well. It's just the residential water treatment of their business is a fairly large impact to them. So I would expect them to be a little bit better as well.

Great. That's helpful. Thanks.

Thank you.

Okay. Thank you all. Operator, we will close it out now if you give the callback number, if anyone wants to listen.

Thank you. Give me one moment. Thank you for participating in today's conference. This call will be available for replay beginning 3 PM Eastern Standard Time today through 11 PM Eastern Standard Time on February 29, 2007. The Conference ID for the replay is 30447256. Again the conference ID number is 30447256. The number to dial for the replay is 1800-642-1687 or 706-645-9291. This concludes today's conference call. You may now disconnect.