Good morning ladies and gentlemen and welcome to the 2008 4Q Financial Results Conference Call. At this time, all participants have been placed on listen-only mode and we'll open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, David Hannah. Sir, the floor is yours.

Thank you. Good morning and thanks to all of you for taking the time. Once again, we'll listen to our conference call for the fourth quarter and fiscal year ended December, 31st of 2008. Gregg Mollins, our President and Chief Operating Officer, and Karla Lewis, our Executive Vice President and CFO are also here with me today. This conference call may contain forward-looking statements relating to future financial results. Actual results may differ materially as a result of factors over which Reliance has no control. These risk factors and additional information are included in the company's Annual Report on Form 10-K for the year ended December, 31, 2007 and other reports on file with the Securities and Exchange Commission. After completion of this conference call, a printed transcript including Regulation G Reconciliation will be posted on our website at www.rsac.com/investorinformation. Okay, now I want everyone listening out there to smile. I'm sure many of you haven't done that in a while. But we're smiling here. We just completed the best year we've ever had in terms of revenues and profits. We grew the company substantially. We had record cash flow from operations. We've paid down a substantial amount of debt. We have outstanding people and we're well positioned for the improvement in business conditions whenever and wherever that occurs. In the mean time, we will honker down and do what needs to be done in this environment, just as we have one before. No one ever promised that demand and prices will only go up, so we need to stop complaining, manage intelligently and make the best out of the existing condition. We've been here before. For the 2008 year, our net income amounted to a record $482.8 million. That was up 18% compared with net income of $408 million…

Thank you, Dave and good morning. I am pleased and proud of our record performance in 2008. The first ten months of the year was very busy in most of the markets we support and November and December have turned out to be very challenging. We completed our largest acquisition today with the PNA Group that is made up of six standalone companies with annual sales of about $2 billion. We also continue to emphasize our internal growth initiatives which helped increase our market position and add to our earnings. Overall, it was quite a year. Our fourth quarter posed some operational challenges that we met head on. We attacked our expenses and eliminated close to 800 jobs in the quarter, roughly 7% of our workforce and we continue to do so, as we speak. In addition, we've reduced the number of hours worked in many of our operations both in the plant and office. We've also closed a couple of small facilities and may close a couple more soon. This is certainly the toughest part of our jobs, but we do what we have to do. Simultaneously, we've focused on inventory reductions throughout the company. We've reduced our inventory in the quarter by about $500 million of 23% of our inventory orders. The Reliance family of companies worked very closely with one another in an effort to help the entire company reduce inventory. We were all very pleased to see the spirit of cooperation that took place within our company in a short period of time. Reducing our inventory certainly had a very positive effect on our cash flow. But the reverse was also true on our gross profit margins, margins that will be one of our biggest challenges going forward as the push to reduce inventory throughout our…

Thanks Gregg and good morning. In 2008 our record sales of $8.7 billion included $888 million of sales from the PNA Group that we acquired on August 1, 2008. Our tons sold were up 12% in 2008, and our average selling price per tons sold increased 8%. On a same-store basis which excludes the sales of our 2008 and 2007 acquisitions, our tons sold were down 5% and our average selling price per tons sold increased by 14%. For the 2008, fourth quarter on a same-store basis comparing the 2007 fourth quarter, our tons sold declined 16% and our average selling price per tons sold increased 19%. Comparing the 2008 fourth quarter to the 2008 third quarter, our same-store sales included a 17% decrease in our tons sold and a 6% decrease in our average selling price per tons sold. Our 2008 increase in tons sold occurred because of the tons sold by the PNA companies we acquired on August 1st. Considering that the U.S. economy is technically in a recession beginning in December 2007, we believe our same-store tons sold declines of only 5% is a testament to our diversification strategies and our internal growth activity. For the first ten months of 2008, we experienced an overall weakening in our end markets for 2007 levels but beginning in November the decline in demand became much more dramatic. From a pricing standpoint, mill pricing for carbon steel products increased rapidly in the first half of 2008, almost doubling. We were able to pass these increases on to our customers through increased selling prices during that time, causing a significant increase in our 2008 average selling price per tons sold over 2007 level. Then in the fourth quarter, carbon steel prices came spiraling down, ending the year at a level approximately…

I'm going to hop in here because Karla has got a bug and it's turning into... a little bug turning into a big bug thing. So, anyway what she was going to say was that our average accounts receivable day sales outstanding for 2008 was 41 days compared to 40 days in 2007. Our DSO rates trended up slightly due to the PNA acquisition. As many of the PNA companies have slightly longer payment terms than the Reliance Companies. We're very comfortable with our current DSO. However, we have noted some increased closures and bankruptcy filings in the customer end markets that we serve, as reflected in the increase in our accounts receivable reserve the $22 million. Our total 2008 accounts receivable write-offs were $8 million or less than one-tenth of 1% of sales. Our 2008 inventory turn rate was 3.9 times, compared to 4.4 times in 2007. Excluding the PNA companies who turned to 3.1 times in the five months that we own them, our '08 inventory turn rate was 4.2. Our inventory value has increased significantly during the year, mainly due to the carbon steel price increases which negatively impacted our inventory turn rate when demand fell. Our inventory quantity on hand decreased 23% and our FIFO inventory amount decreased by over $500 million in the 2008 fourth quarter. And that's continued to decline in 2009 due to our efforts to reduce inventory quantities to better match demand and because we are refurnishing the inventory with lower cost items. Our outstanding debt at December 31 of 2008 was $1.8 billion, down over $500 million from $2.3 billion at September 30th. In addition to payments against our revolving credit facility, we also paid down $19 million against to our term loan and $25 million of maturing notes in the…

Thank you, ladies and gentlemen. The floor is now open for questions. (Operator Instructions). Our first question is coming from Timna Tanners. Your line is live.

Thanks. I think that the result as you point out really solid for Q4 let some of us to want to ask a little bit more about how sustainable some of those results might be. I think specifically if I look at the quarter-over-quarter same-store cancelled (ph) and bond selling price compared to say what the MSPI data shows, but just trying to understand maybe if you could just give us a little bit more color on how that would have been sustained? And then when you talk about the outlook and talk about January and February being kind of sustained with recent levels, that's not quarter-over-quarter, right? That's really just compared to what December levels, if you could just clarify?

Well then give me that last part again Timna.

Sure. So you make the comment that on the outlook that January-February environment doesn't look to be improving. But I just want to know is that versus the fourth quarter, because you did talk about October being better than the November-December environment or is that compared with the November-December environment?

That's really compared with December.

Okay.

And actually in January, our pound or ton whichever you'd like to talk about, were up about 5.5% compared to our December levels. And February seems to be going along at least so far at about the same rate as January. So we've seen a 5.5% improvement in tons, a very slight improvement in gross profit margins in January, again over December. So what we were hoping and we may be hoping against hope is that March turns out to be like October. But as we get closer to March, it looks like that's not going to happen. So as a result, we certainly expect to be profitable in the first quarter. If by chance March did turn out to be like October, then the results could be similar to the fourth quarter. But we don't expect that March is going to turn out that way. So we would expect our results in the first quarter certainly to be profitable, but something less than what the $0.90 is that we just reported for the fourth quarter.

Okay. That's very helpful. And then on the pricing side, you reported a 6% fall in selling price on a same-store basis, fourth quarter from third quarter. But if we look at some of the indices, it looks like especially in areas where you're pretty strong like plate and structural, those are continuing to fall on a quarter-to-quarter basis and naturally on a flat-roll side, it looks like they sell much more than 6%. So can you talk us through kind of what you are seeing also a little bit more detail on the pricing side?

Yeah, at least through January Timna, we can talk that, we have mentioned that the turns went up in January 5.5% and our average pricing in January came down 5.5%. So we are seeing, despite the fact that mill prices seem to be relatively steady, although as you pointed out, a break can come in on the freight prices primarily maybe some other longer product perhaps. But what we're seeing more than the softness is the middle level is we're seeing just more intense competitive pressures in the marketplace, in the markets that we're selling to as opposed to being driven by mill price increases or decreases.

What we're finding is that many of our competitors are selling below the current replacement costs. That's problematic to say the least and prices have fallen. I think the plate was at a high about $1,500 a ton in December and is somewhere in the $750 a ton range and who knows, maybe it could down further. Probably will, but plate was the last product to really be affected in the carbon steel and it really carried its way all through until the fourth quarter of last year. So, where is pricing going? I guess it's anybody's guess. I would have to say flat will got be pretty damn close, it's around $510 a ton. We don't see it really going any much further than that and who how knows what's going to happen with plate, bar and structural.

The difficult part for us and probably others in the industry as well as more than the large drops in the mill pricing, which really put pressures, devalued our inventories. And we're... to a certain extent we are in the inventory business. So, that was the most painful part, with the large and rapid price decreases in all the products as Gregg pointed out in the fourth quarter. And that's for the most part, that's behind it. As Gregg just mentioned there could be some downward pressure on some other prices. But the worst is certainly behind us. And I think we can deal with the fluctuations that we're going to see in the marketplace. Now, better than certainly we could deal with those large mill-driven price decreases in the fourth quarter. So, if we want to look for a bright spot, I think from a pricing standpoint, we do believe that the worst is behind us on that.

It makes a lot of sense. I'm just trying to clarify because from the fourth quarter to current levels, it sounds like there is still a lag down. But from January to December less so than what you've already seen.

Yeah it's kind of flat now, this year in 2009.

Okay. And then final question for Mr. Mollins really is, can you talk about when you think your peers and when yourself might start to pick up your buying patterns to be more in line with underlying demand?

Hopefully by the end of the first quarter, the inventories will be more in line with demand. I just don't think anybody realized how quickly and how dramatically demand dried up as it did. For the mills, it was October, for service centers it happened at very first week of November. It happened immediately and the impact was dramatic, as much of inventory as we took out, about $500 million in that fourth quarter. We still didn't improve our turns because demand wasn't there.

Okay, great. Thanks a lot.

Thank you.

Our next question is from Michelle Applebaum. Your line is live.

Hi.

Hey Michelle.

I'm smiling.

Good, keep it up.

I am a happy shareholder and stock analyst. Okay, that's today. Okay few things; you're calling about in the still market, but can you be a little bit firmer here and tell me why, where is it coming from?

I think it's because of the production curtailments that the mills have made, number one. They've showed extraordinary discipline in their production reductions which frankly benefits the entire industry. So, we are very grateful that they have exercised that discipline. And I think for the last... since 2004, they have had the discipline to draw the lines and expand in certain areas. Flat roll for example, we don't see it going much below $500 this time and now it'll be at 10,000 tons throughout. If you get something, yeah you probably could, but I don't know anybody who's got --

I guess, I am sorry I am asking a different question. You're giving me the why it will have bottomed at these levels, but what makes you think it's a bottom? What are the entrails you are reading?

I think it is just exactly what I said. I think that they draw a line at certain levels. And they... and it's not a scientific guess, if that's what your question is?

No, I mean, your import price is higher. Are you seeing more order inquiry? Are you seeing... I'm noticing certainly prices overseas seem to be at much higher levels in lots of different product, which is unusual.

I think it's all those things Michelle that... but we look at our business and we see what's going on in the industry and certainly the great point about the mills. I mean if they have not... have the discipline that they have had, then prices would definitely be lower and they seem committed to that and we expect to still continue to be resubmitting that. When people reduce inventories, whether it's us or anyone else, the items that you tend to reduce are the ones that you can sell more easily than some of the slower moving items. So with that also there's going to be holes in people's inventories in the better moving items and that's why we believe, as Gregg pointed out, that orders should start moving towards the mills again towards the end of this quarter. And when that happens, I think you will see that's another reason why prices could and should stay firm at that point. So we just really haven't seen the typical things that would pull prices down.

Lots of imports.

Right it's just not there.

Okay, alright and then two more quick questions on the import front. What are the offerings look like and are you seeing any export inquiries anywhere?

No one on the export inquiries for us.

I don't mean you. I mean your supplier side?

Don't know. You'd probably know that better than we do.

No, I don't.

But with the dollar where it is, I don't think we're probably going to be seeing anything like we saw in the first half of last year...

Any import inquiries, I mean is import offers?

Yeah, there's import offers and there has been some material in certain products, used in... by of way beams and some plates. Not significant, okay but it's there. But I think that the domestic producers have done well in encouraging a true pipe pricing mechanisms that the domestic service centers did quite well.

Okay if I may ask, they got their freedom fighters?

Yes.

Okay. And do you still need corporate approvals for these import price that you talked about last quarter?

Absolutely.

Okay Gregg. Now one more quick one for Dave?

Couple of questions there.

Dave I don't see any mention of the word acquisition in your press release?

Yeah I was wonder, who will be the first --

You knew who's going to be. It's the same question every quarter. You're very easy to cover.

Yeah.

You have been... let you queue you up, you have been saying no acquisitions now for six months.

Yes.

So you pay down $1 billion in debt. Now you got $1 billion of liquidity again. So now what are you saying?

What we're saying right now, we've still got some debt payments to go. I can't sit here and tell you we won't make any acquisitions during 2009, but I think right now, we're still focused on reducing our inventories, we've taken a lot of dollars out of inventory but we have ways to go. And so we're focused on that. We're focused on the cash flow really resulting from that on paying down additional debt. So it's not on the top of our list. We are continuing to have discussions with people as we always do. But in terms of our desire to get something closed in the first half, I don't think it's going to be there.

Carefully answered. Are you getting more incoming?

No, not really. There is very little activity out there right now, which is not untypical of periods like this. When we first moved into that 2001, 2, 3 periods, the activity level feels as they're really slowed down and then it started to pick back up again really in 2005.

Okay, great. Less than great quarter. Karla, take care of yourself.

Thank you.

Bye.

Our next question comes from Sal Tharani. Your line is live.

Good morning guys.

Hey Sal.

Just give us some color on your gross margin side. You... the impact was primarily from the sharp drop in pricing. As you've said that you go through your high price inventory in first quarter, no matter where the price is, your margin should improve in the second quarter from the first quarter. Is that correct if the prices remain stable?

Yes. We would think that. I have to tell you this okay that the competitive landscape in today, as we are sitting in this room certainly January and through February so far, it's pretty extreme. Personally, I had never seen nor have I think I can speak for the whole company. I have never seen it this competitive out there. I haven't seen people selling below replacement cost when replacement cost has dropped $100 a ton. And not just an order here and there, this is large quantity tons charge. It's almost likely, I had one mill tell me that one of our companies that, no I don't want to need to buy that 100 tons of beams because if I buy the 100 tons of beams and bring it in, I'm going to have to sell it below what I paid for it. So, I'd rather not have. Now that's an extreme, I'll tell you what that's not the actual story. So it's very, very competitive out there. I think if you're looking at your model and wondering if margins are going to go back up to where they were in the first quarter, then you can have.

I think Sal from your comment on the second quarter being better margin-wise than the first quarter.

Yes.

Because as Gregg said earlier that, most of this inventory de-stocking if you want to call it, that will shake out by the end of this quarter. And we would expect that taking that pressure off of our selling prices would result in improved margins in the second quarter. Yes.

About this competitive pressure there, your competitors and probably lot of weak competitors are doing this because they need cash, can also improve your market share because some of these may shake out during this time?

That's true and that's very possible.

Okay, just a housekeeping question. Do you think you have the breakdown of your three products by percentage of sales? Can you quickly give us that?

Sure.

Do you want it for the quarter or for the year Sal?

Both, please.

For the year, we end up with 16% aluminum, 55% carbon, 14% stainless, 8% alloy, 2% tool processing, 5% other and for the fourth quarter of '08, it was 14% aluminum, 61% carbon, 12% stainless, 8% alloy, 2% tool processing and 4% others.

And that's based again, Sal I think you remember, that's based on revenue dollars that's not based on ton.

Yes.

And I think we can also tell you, you didn't ask but we get asked this all the time. How many tons we sold in total for the year and usually, it's a number that because of acquisitions and we always have acquisitions. It's always hard to track and we don't have the same-store kind of number for you. But we sold about 4.2 million tons of metal last year and that's excluding the tons that we processed on a total processing basis, for example through our precision stress operation.

You've talked totaling is what about the couple of million... 1,2, 3 million tons?

No, its three-plus. Precision stress, we had about 3.7 million ton last year. Tool processing just they did and then we have some additional tool processing in another parts of the company. So, it would be close to 4 million ton of tool processing in addition to selling 4.2 million tons of metal.

I think it is first time you give out some kind of volume idea.

That's how we make your day, Sal.

Thank you very much. That help us lot.

That was kind of an ace.

Yeah it was getting... trying to get this kind of a mix for five year and haven't gotten.

Yeah, well the problem is that you have got PNA in there for five months and that's why we've trimmed a lots in giving in the past but if not now there words the big enough number that you should now.

Also stock is up 21%, that makes you little happy and...

Yeah, finally. I mean yes.

It gets fired in the space. We got to place to go there too.

Okay. One more quick question, a last question is you mentioned that you are... on the corporate level, your different facilities are working together to reduce inventory. Can you just give us some color on that? Are you moving inventories around between the service centers?

Yes, we are. And so rather than if we... if we're overstocked in line and let's say we are overstock in plate at a particular facility rather than our facilities buying that product from the mill direct. They are there going to that facility that have dollars and buying that product from there. So we are doing that more and more and more probably more and probably, definitely more in the fourth quarter than any other time in our company's history. And there has been a tremendous amount of what I call spirit of cooperation within the group, which has made us very proud.

And was a big contributor to being able to bring our total inventories down by 500 million?

And it also impacted our margins too because if we are overstocked and our prices are high and our costs are high, I should say okay and then we're selling to a sister branch. We're not going to refer with expensive inventories. So we take it down to replacement cost levels.

Thank you very much.

Thanks Sal.

Our next question comes from Bob Richard. Your line is live.

Good morning. Thanks for taking our call.

Hi Bob.

Quick question, tax rate little lower than not much probably about a nickel benefit. Any reason for that or was that covered?

Yeah, the main reason for that Bob was we were booking at sustain rate during the year as last year. The acquisition of PNA and really the stake rate went down, so we acquired PNA because of the composition of where they are located geographically and then there were also some available deductions inside the step we took this year that also helped bring our rate down.

Okay, thanks for that. Net debt to total cap 41%, reduction is laudable. Is there a target in this environment guys? Is there a number you'd throw around?

We'd like to get down into mid-30s, Bob. That I think in this environment you know that would basically mean that our revolver has paid off which we expect to do in the near term. So once we get to that point that will be about 35%.

Okay and how much more... I don't think you gave a number but how much more cash do you think you can ring out of inventories? Is that something your willing share right now.

I am looking at Gregg and he loves it when I get these questions. But I think that based upon... and the answer is qualified answer and it's based upon demand staying where it is. So, certainly if demand gets better, then we would expect our inventories to comeback up. Assuming demand kind of constant to where it is today, we should take another $200 million to $300 million of inventory at least. And I'm being kind to Gregg with that.

Okay. And one quick follow-up; you discussed in earlier calls you feel that maybe PNA could get a little better on their inventory turnover, kind of set the gauge there in that fourth quarter there but if you still consistent what that belief?

Yeah and that additional 200 to 300 million is a little more heavily weighted towards those PNA companies than it is to rest of the group.

Okay. That's helpful. Great quarter and thanks a lot.

Thanks Bob.

Our next question is from Brett Levy. Your line is live. Brett Levy - Jefferies & Company: Hey guys. Is there, as you guys look at potentially 200 to 300 million of additional debt reduction, do your bank covenants allow and are you bid on claim towards taking out any of our 16 maturity bonds that you are somewhere like around 73 or 36 maturity bonds that you are somewhere around 59%?

Yeah, that's certainly that we thought about that and there are effective reasons to do that. But right now not really knowing how long, some of the credit issues are going to continue. We're saying right now focused on paying down our revolver because that continues to provide availability to us. At the point that we get debt paid downs that I think will do a deeper analysis undertaking out some of that fixed rate bond debt or term loan that's payable, so certainly or other alternatives that are out there for us to seize our or cash. Brett Levy - Jefferies & Company: And you guys had previously stated, you were going to stay out of the M&A market until you hit target debt levels. Could you use you are now $5 a share higher equity for a potential tuck-in acquisition or are you sort if you thinking a little bit more about M&A and now that everything is kind of looking pretty troughie?

Still don't like our stock price. So we have got ways to go before we would think that was a fairly priced currency. In terms of just using, certainly we have cash available to do some things. But again because of the uncertainty that's still out there that's not our focus at this time. Our focus is on reducing depth and managing our working capital and as Gregg pointed out earlier, we're really managing our expenses. So, we still have some work to do in those areas. That's where our focus is and we'll see the second half of the year how things are falling out and kind of address things at that point. Brett Levy - Jefferies & Company: Thanks very much guys. Take your Karla.

Thank you.

Thanks. Operator: Our next question is come from Mark Parr. Your line is live.

Thanks very much. Can you hear me?

We can, hi Mark.

Hey Mark.

Hi guys. Congratulations on the great numbers, really the testimony of good discipline and your consistency. I had a couple of questions, a lot of really good questions have been asked, but Gregg I know that back when you had acquired EMJ that you've had some goals and that it seems to opportunities to improve the profitability of that if not some. I think you had some progress. I was just wondering if you could... to what color you could give is as far as what's you are seeing at PNA and how that might possibly impact profitability for the company in '09 and 2010?

That's pretty difficult to quantify given the uncertainty in the marketplace Mark. I will tell you this we were very, very pleased at their progress. They're listening to our model and Reliance which is different than the PNA model until the world turned it what in the November, December. But I think once things level off and we get into more of a normal demand situation that we are going to see some pretty darn good improvements in profit margins, certainly inventories turns, okay, from that group. We are already seeing some improvements on the inventory turn side, okay? In spite of the fall off in demand and we are puffed up about that. But I'm not going to sit here and tell you that we are excited about their profit margins or anybody's profit margins within our company, because it's a dog fight out there. Certainly not there fault I mean or other guys off who are just trying to make money in a difficult market. But I think what we did with that their product mix just for the record is a much richer product mix than that of the PNA Group. I think that's fair to say, so the improvement in margins at PNA I think would be unrealistic to even compare them to what we did with Jorgensen.

Okay.

But I think their inventory turn, I know their inventory turns are going to improve rather dramatically.

Alright. If I get... by the competitive situation that you guys alluded to, I'm wondering as to what extent do you think this situation might be exacerbated by the amount private equity ownership in the service center sector and I'm not asking you to name names or anything, but I just wondering if you think that in a normal demand like recovery environment, the industry you may react there relatively quickly. But given continued pressure on debt repayment schedules, could you see the competitive marketplace to linger well beyond the fix up in general momentum?

I think Mark, that regardless of the type of ownership of these places, I think there is the credit side this a big factor and how people are acting in the market. Because they may need cash they may and I am not I don't know if anyone specifically, but I am sure there is folks out there that are looking to renew credit facilities or they could be because the business condition near the false status where they stuck the covenant or something like that which would make them want to generate more cash than in a normal scenario. Back in 2001-2 and 3 it was pretty ugly too, but we didn't have really this kind of... we had competitive pressure, there's always competitive pressure. But it wasn't like this because the credit market was quite a bit different then. There was credit available and people really weren't worried about busting covenants or because they could get credit and refinance what they've done. That's not the case today. So I think that's driving a lot of the action out there. To your question, could it last longer? It could certainly, but I think it is going to decrease as people work through their inventories, you can only do so much, and then you have to start ordering some metal. And with prices, certainly with the mill prices pretty much flattening out and then service center inventories adjusting to more replacement task level, I think it will slowdown if not reduce significantly, by the end of the quarter.

Alright, that's helpful. If I could just ask one more, the... and I think sales cuts on this, given the more realization of bottoming out pricing, but this matches the first quarter of the last, because you had in the fourth quarter. And I just wondered if you could give us some sense of the where the first quarter margins might fall out in the context of the differential that between the margins in October versus your margins in November and December?

As far as... we don't know where the margins are going to fall out in the first quarter. If we did, we can probably give you some guidance that we felt fairly confident about, because that's really what drives our profitability. In the fourth quarter, we lost about 2 to 3 percentage of points of margins in each of the month in the quarter from September to October, October-November, November-December. So, it was pretty substantial now in January as I mentioned earlier, the margins, and these are margins on a FIFO basis which is kind of how we operate the company on a daily basis. The margins were only slightly better in January than they were in December. And then we do expect that we will have some FIFO income, unless prices somehow start going back up again significantly which we don't expect at least at this point in time. So, on a regular operating basis; we are not seeing the drop in margins that we saw month-to-month in the fourth quarter.

Okay. That's really helpful. Karla, I hope you get better tuned and congratulations. Just keep up the great work.

Alright. Thanks again.

Thanks, Mark.

Our next question is coming from Tony Rizzuto. Your line is live. Anthony Rizzuto - Dahlman Rose & Co.: Thanks very much. Hi guys.

Hi, Tony.

Hi, Tony Anthony Rizzuto - Dahlman Rose & Co.: It's great to see the strong cash-flow, and I think you comment too on the volume metrics that you broke. I think it's great, I think you should do it on a quarterly basis it might help your valuation, because you guys do not get the valuation that you deserve. And I think one of the things that I hear from people who would love your story on a whole, would love to see a little bit more transparency to help model the company better?

Well, looks good. Anthony Rizzuto - Dahlman Rose & Co.: Just to start I've got some questions to... a lot of good questions have been asked. But, I was wondering if you guys could provide some color on the prospects of your various end markets that you serve, now more of a qualitative feel. For, how you see these markets given the metrics that specific supply demand or the stimulus program. How that make the impact, if you see certain markets being stronger sale a bit of balance of the year than others?

Certainly from a stimulus standpoint, whenever that kicks in, that will be a benefit. We just don't know when or how much, but certainly it will be a benefit to the industry and also to us. From the other end markets standpoints, I know that in January and really in the fourth quarter, we were looking at each other saying; thank goodness for aerospace, thank goodness for energy, and thank goodness really for the equipment, add equipment-type of business that we're involved in, and also thank goodness for LIFO. But that does tend to give back when you need it. So, I think from what we've seen so far in January and in February we would say the same thing that you look at our different companies that are involved in these things and those markets are still really driving the company. Which one has the most hope for us, I think probably the aerospace side. That part of our business we feel very good about at least through the first half of the year. So the aerospace side, we think has the potential of being better in '09 than certainly it was in '08 with all the different things that ways the Boeing strike that happened in 2008.

So and bear in mind on the aerospace side about 50% of what we do in aerospace is defense related.

Right.

And that's holding up very well and we expect that to continue to hold up well.

So, and then on the energy side, that's still pretty good for us right now. It's not for us at this time or mid-year last year, but it's still pretty strong. We're still doing well in the Dallas, Houston, Louisiana Tucson markets as...

Western Canada. Yeah, we're struggling a little bit in the Western Canada, they've talked to Oil Sands projects are because of the price of oil per barrel. It's either at breakeven point and we're not making any money of it. So those projects have not been absent in our, that slowed up a little bit. But, energy sells up pretty darn good. Do we expect at some point in time the cost of oil per barrel is remains in the 30s that that's going to add up potential spend down a little bit. Sure, I mean common sense tells you that that certainly is a possibility. But as we speak, our backlogs are still good in the energy sectors. Certain parts of the energy wind towers as that we were pretty busy in it last year. We are seeing some delays, okay in the wind towers and so there will be in cost to barrel. So, but overall as we speak at least through the first half of this year energy is going to be very good for us. And the ag depending on what business is you are doing with, okay we do quite a bit with and gearing and what on and our type of products are in place that we sell into those companies that industry, the large turbines and what not. They are all doing well. So we are making good money there also.

On the non-res side, Tony certainly if you take the infrastructure piece out of that then yeah that's slowing down. But, and most all of the other as Gregg that energy is good. We expect, could have slowed. Yeah, we're actually expecting it to slow some. The only thing that we think really that we sell into that again help the potential to improve would be the aerospace side. But there is so much focus on the decrease from where we were to where people think you are going to be, especially like a non-res. I have read things that new... private non-res construction projects, so take the public side out of it. Is that first decreases are estimated at about 11% somewhere around there for the value of new projects place and service in '09 versus '08. Well, if it only drops 11% we'll be damn happy. And 11% is a big drop and all the other industries that we sell to, there's such a focus on the decrease again from where we were to where we are or where somebody thinks we are headed. We're trying to look at the absolute numbers and the numbers are still pretty darn good. We're still... even though people think there's no business out there we are still shipping over 300,000 tons on metal a month. So, there's still activity out there. It is competitive. That's okay. That, we can work through this and we're trying to change the focus of the people that run our businesses and hopefully you guys to more focus on what we can do with what we have as opposed to where we've lost 15% of volume or whatever that number might be in these different industries. Again that is a non-res side which is the largest…

On that Tony, I think you're right. We only know what we read; we're not really deeply involved in dissecting these bills, when we had the 1400 pages of bills or whatever it is to find out what's going to benefit us. So we read the... probably the same things you do. Anthony Rizzuto - Dahlman Rose & Co.: No, I haven't read that either, David.

Yeah. So, we certainly know that it's not going to be the salvation. But if in fact we what we can get an attitude change in the marketplace or some improvement in the confidence level, even if people aren't spending money on steel or aluminum or stainless steel, or brass or copper, if they are starting to spend money on other things, than that's going to... that improvement in attitude or confidence is going to help kind of the overall business environment, which to your point probably will help us more than that stimulus package. Anthony Rizzuto - Dahlman Rose & Co.: I'll note down. And I'm going to ask this question, I asked it every quarter. Gregg, I want to know about the aerospace, the heat treat market, what you are seeing there? Are the inventories, are they still in tune with the Airbus situation? You guys picking up any inklings that Boeing might be cutting back some more production? What are you kind of hearing out there?

As from the Boeing point of view, with the delays and what not, we're hearing the same thing you are. We expect to hear a delay every month, okay, on this project unfortunately. Inventory; yeah, there is more inventory out there, even on the commercial side 60 to 61 fleet side. There is lot more availability, lead times have dropped from 12 weeks down to 6-day weeks. So there is much more availability out there and we're seeing price erosion on the heat treat side, the aerospace side. It tells us fairly well. So there is no complaint. We're doing well on aerospace. It's kind of odd because we here some of our competitors of that. But they try to contract very honestly that the product is not doing at all, okay. Our contracts by the mercy of god, okay, are related to that the defense-oriented military works, and our contracts are doing very well. So, we're still showing a lot of heat treat play, and Boeing and aerospace, and Tony, we think we're going to continue to do that and eventually Boeing is going to get on track, and aero business is going to get on track and things are going to get even better. Anthony Rizzuto - Dahlman Rose & Co.: Gregg, you mentioned the 60, 61 on that...with the stronger year on. Are we seeing more material coming from offshore?

Yes. Anthony Rizzuto - Dahlman Rose & Co.: From where? The typicals.

The typicals, Russia being one of them. Anthony Rizzuto - Dahlman Rose & Co.: Okay. And then the question about... when you guys in defense, are you mainly armor plate?

No, no. It's 217. We really don't sell any armor plate. Anthony Rizzuto - Dahlman Rose & Co.: Okay. So you're basically in the heat treat of 217 series and you would be in the military aircraft and things of that nature?

Yes. Anthony Rizzuto - Dahlman Rose & Co.: Okay. Alright guys that's great. Karla, I hope you feel better.

Thank you.

Thanks, Tony.

Thanks, Tony.

Our next question is coming from Yvonne Varano. Your line is live.

Thanks. Actually most of my questions have been answered. Karla, I just wanted to ask about the tax-rate though going forward. I know that PNA lowers that a little bit, should we looking for something lower in '09 than typical 37?

We ended up at by 36.9 for the year. So, I think that's probably a reasonable rate, and certainly it's not going to be down at the fourth quarter levels. So I guess 37.0

Okay. And guys it looks like a great quarter. I guess the other thing that I'd like to try to get I know you've talked about a bit but you certainly indicated that 1Q is going to be not as good as 4Q probably, but certainly breakeven that's a wide range. If you look at it, is there of anything that you can tell us that would now write down a little bit?

You've just extrapolated a range for our, from non-guidance of 0 to $0.90. I guess we gave guidance between 0 and $0.90. It's not going to be breakeven, Yvonne. It will certainly be better than breakeven and how much? We truly don't know because in any normal year March is really the month that makes the quarter. Its kind of just like in the fourth quarter, October is usually the month that makes your fourth quarter and we just don't know if we're going to get any kick up and demand in March. More important heavy task with the this pressure that we have been talking about quite a bit in our marketplace on pricing, is our people going to have more of that resolved by March or partly through March. And those little changes can make a significant difference in our numbers. You talked about half a percentage point on $2 billion of revenue or there about and it's a big number. So, we really just don't know, but I don't know if this helps but I wouldn't have a zero on the bottom end of that range. I guess something is better than that.

Also LIFO is probably going to be a reasonable part of our results in the first quarter, because we have put so much expense in prior years with prices declining and quantities we expect to see that come in. But depending what happens to pricing our costs for the rest of our quarter, what happens to demand in the quantities, it's really hard to gauge what that actual number will be.

Sure. And I guess my feeling from some of the things that you've said is that your gross margin could actually be below 4Q?

I don't know. Not as we've reported, Yvonne.

Our price is stable.

We wouldn't expect margins to be below the fourth quarter.

Okay to just comment in regard to the continued pricing pressure and our ability to work through that inventory and I know that the year is even more difficult to get your arms around but is there a general feeling that 2Q gets better and we continue to improve that or do we pull back again towards the end of the year?

A nice general feeling that we would have is that if you look at... let's say the fourth quarter that we just completed, if we had a year that was made up of four fourth quarters which we really can't imagine. We would expect things to be better than that certainly in the second half of this year. That I mean you can look at that and figure out kind of what kind of numbers we're talking about. But you're still going to have a fairly descent year and that's one of the things that really kind of drives us nuts with respect to the valuations on the stock prices is that people are expecting earnings levels below whatever drop bottoms we've had in the past adjusted certainly for our growth over those years. But still putting in a very, very low multiple on very, very low earnings estimates. And we don't really understand that, we understand if people think that our earnings will be lower in 2009 than 2008. And we expect that too. But assigning such low multiples is really we just don't understand that. So we would expect not to have a year that looks like four fourth quarters I don't know if that helps you or not.

No, actually it is very helpful because if you do think 1Q were proved to be your weakest quarter and hopefully get better as the year progresses.

That's what we would hope.

Okay. Well, thank you and Karla, do feel better.

Thank you.

Thank you. Operator: Our final question is a follow up from Sal Tharani. Your line is live.

David, just wanted to confirm; you said that the first quarter margin... gross margin may not necessarily be worse than the fourth quarter?

On a FIFO basis, I don't think we know yet Sal, because again, if you are comparing to November and December, gross profit... FIFO gross profit margin levels, we think that we should be able to hold at those levels assuming demand and pricing stay kind of where they are. The big unknown as we've been saying is March because the fourth quarter we had October in there which was still a much strong or down a little bit, but it was still a strong gross profit margin dollar month for us. So that brought us the fourth quarter margin. If the full first quarter on the FIFO basis stays at current levels, we probably will be lower for the first quarter margin than the fourth quarter margin on the FIFO basis.

Got you. But you were breaking even all positive territory in December also and January. Is that correct, on FIFO basis?

In November we were. December that there is a lot of adjustments, in January, yes, we are just right around that breakeven point.

Okay, the question on operating expense Karla is...

Now that is, sorry Sal to interrupt, that's on a FIFO basis. So that was if that month was the end of a quarter and we had to book, as we report our LIFO then and yes, we were quite a bit of above breakeven.

Yes, that's fine. Karla, on the operating expense, any guidance of where we should think of as a percentage of sale advancement up, obviously your sales have come down a lot. But where should we look at going forward? Is that a steady rate we think we should assume?

Yes, I think it is a little tough depending on pricing volume and as we continue to cut. But I think where we have ended up fourth quarter at 15.9... about 14% is the reasonable level for us.

And the absolute number is 300 million, a good number to look at?

It will probably be down a little bit, but somewhere close to 300 million.

Okay. The other thing is that you have a significant amount of goodwill on your balance sheet. Is there any reason we should think that you may have to take some write down? Have you done the impairment test on those?

Yeah our annual impairment testing date is November 1st. We certainly did all of our work then and did a little more work and we factored here in prior years based up on just the macro and the general outlook out there. We're comfortable and so our orders that we do not have any impairment charges to take at this time and we feel that's mainly based up on our outlook and some of the cash flows or discounting cash flow scenario, because certainly they support a number well above our book value. I mean certainly above our current market cap numbers. Certainly we will have to continue to monitor that, is there any type of structural or fundamental change in our outlook for the industry or our business, then we may have to revisit that. But given our current outlook we do not anticipate any impairment charges.

And you will revisit it again next November?

Lastly, unless you guys get our stock price up for us and a lot more, then we are going to have to be looking at it every quarter, just to evaluate whether or not our outlook has changed. If there has been any change, any significant changes and then kind of the overall testing as again next November.

And lastly on inventory, is there any chance of write downs over there? Are you pretty comfortable in that?

We think we flushed through that. We've cleared out most of our inventories by the end of the year and it's not a direct connect. With all of the $400 million LIFO reserves, you have to really look at your net LIFO cost to evaluate a lower cost of market number. So we do not anticipate any lower cost or marketing charges.

Alright, thank you very much.

Thanks Sal.

There are no further questions in queue. Do you have any closing comment you'd like to finish with?

Sure, just thank you for your attention and thanks for your questions and giving us the opportunity to get some information out there in front of all of you. We look forward to talking to you again in April. And in the meantime if there is anything of significance that happens, we will certainly let you know between now and then. So thank you very much and see you in April. Bye, bye.

Thank you ladies and gentlemen. This concludes today's teleconference. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.