Good day ladies and gentlemen. Thank you for standing by, and welcome to the Emerson Third Quarter 2008 Results Conference Call. During today's presentation all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. [Operator Instructions]. This conference is being recorded today Tuesday, August 5, 2008. Emerson's commentary and responses to your questions may contain forward-looking statements including the company's outlook for the remainder of the year. Information on factors that could cause actual results to vary materially from those discussed today is available in Emerson's most recent annual report on Form 10-K as filed with the SEC. In this call, Emerson management will discuss some non-GAAP measures in talking about the company's performance, and a reconciliation of those measures to the most comparable GAAP measures is contained within a presentation and is posted in the Investor Relations area of Emerson's website at www.emerson.com. I would now like to turn the conference over to Ms. Lynne Maxeiner. Please go ahead, Ma'am.

Thank you, Jamie. I am joined today by David Farr, Chairman, Chief Executive Officer and President of Emerson; and Walter Galvin, Senior Executive Vice President and Chief Financial Officer. Today's call will summarize Emerson's third quarter 2008 results. A conference call slide presentation will accompany my comments and is available in the Investor Relation section of Emerson's corporate website. A replay of this conference call and slide presentation will be available on the website after the call for the next three months. I will start with the highlights of the quarter as shown on page two of the conference call slide presentation. Third quarter sales were up 14% to $6.6 billion with increases in 4 of 5 business segments. We had solid underlying sales growth of 7% in the quarter with strong international growth and solid U.S. sales. Operating profit margin improved 30 basis points to 16.6% and earnings per share from continuing operations was $0.82, up 15%, operating cash flow of $827 million and free cash flow of $672 million in the quarter. Order growth continuing to show strength up 10 to 15% in the quarter. The balance sheet remains strong, average days in the cash cycle improved to 65 days from 67 days and operating cash flow to total debt ratio was solid at 64%. Moving to the next chart, the P&L. Again sales up 14% to $6.568 billion. Underlying sales were up 7%, currency contributed 5 point and acquisitions/divestitures added 2 point. Operating profit dollars in the quarter were $1.092 billion or 16.6% of sales; the 30 basis point improvement mainly driven by cost containment programs and volume leverage. Net earnings from continuing operations were $647 million, up 13%. We re-purchased 4.6 million shares in the quarter. Diluted average shares outstanding were 787.8 million which gets into…

Thank you very much, Lynne. Good afternoon everybody. We just finished an excellent Board meeting, covering what's going on around the world. And for many of you that have been following us for a while, you might not know or might know that this is... I am about to start or finish my eighth year as CEO of Emerson, as we go into this last quarter of the fiscal year 2008. It's been a lot of fun, it's been quite enjoyable. I also want to welcome everybody on the conference call today and I appreciate your time as we talk about the quarter and what we see happening in the next couple of months. First of all, Q3 results were excellent, both in sales growth, reported growth of 14%, underlying growth of 7%, continuing ops EPS of 15%, operating margins, as we talked about from beginning of this year, will be in 16 plus percent range and we did 16.6% for the quarter, and operating cash flow remains strong for the quarter and year-to-date were up 13% at $2 billion. And this morning, we did approve our dividend. So it will be our 53rd year of increased dividends per share. So, as we look at this year right now, we are looking at very strong year. I want to say that our global orders remain strong, as we reported, on a GAAP basis 10 to 15%, on a fixed rate basis in the 10 to 5%, driving very solid underlying growth rate. As we said in the press release, around 6%. I would say it will be slightly better than that, but we are real close to that 6% plus or minus a couple of point two or point three basis. The global operating team of Emerson is doing a…

Thank you, sir. Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions]. Our first question is from John Inch with Merrill Lynch.

Thank you. Good afternoon, Dave.

Good afternoon, John.

First question, I guess, on Network Power, you called out the fact that acquisition dilution was 150 bps. And I think it was 100 last quarter. And it's a question Walter is there something else going on? Is there a seasonal component, may be Motorola's revenues were a little stronger and that diluted a little bit more, what's going on there?

[Indiscernible] acquisition in Network Power sort of impacted the margins. It's... both are doing fine and according to plan, but the overall level of the business is such that when you acquire with the margins without acquisition, you acquire another small company, it is tend to be dilutive.

Yes, we bought a software company up in Boston that has margins significantly lower. So that's what really drove that down.

Dave, with... I mean, you called out sort the telecom CapEx environment, does that make you or give you a little bit more propensity to want to do acquisitions like this; Network Power deal that you just did just to kind of take advantage of the environment or how do you think about that?

I think we are being very cautious. We are buying this acquisition with more tie to reliable power; it's part of Liebert. And as I look at it right now, I am more focused on a reliable power type acquisitions than I would say a telecom type of acquisition. We currently have, I would say, enough assets in the telecom space. We are still going through nationalizing what businesses we want to be in and what businesses we don't want to be in. And people who constantly run that business under Ed Pheeney's [ph] doing a great job of getting that fixed. And so I think at this point of time I'm happy with that pace. You will see any acquisitions in Network Power side more in the reliable power and more on embedded computing and embedded power side with Jagal Marker [ph].

I mean just lastly on HVAC I mean you talk about regulatory changes and I think last quarter you talked about regulatory changes in China specifically is there any kind of an update there, I mean how significant could these HVAC changes in China actually be to the business and when do you start to see some of that?

They will be very significant. We approve today close to $70 million of capital for expanded capacity and scrolls, I mean as I look at right now we will start seeing the benefit in I would say mid-2009. We don't know for sure because when they go in and some people... our key customers are already starting to make the product into more efficient product, level 2 and level 1 products and we will see some benefit in 2009 on a calendar year basis. And we are adding over a million unit capacity in China and Thailand right now to serve this more efficient compressor demand for the air-conditioning, I would say the run rate will be within 12 to 18 months around 1 million and... or within a couple of years 2 million. It will be significant.

Great, thanks very much.

You're welcome John.

Thank you. Our next question is from Jeff Sprague with Citi Investment Research.

Thanks. Afternoon Dave.

Afternoon Jeff.

Yes, I thought when you got going on the stock price there, the FCC was going to have to come in and bleed something out but you --

I never sweared one time.

...maintain your composure. Congratulation.

Yes, I mean I... I'm a very intense guy Jeff. You could probably see the juggler coming out of that one.

You have strength outside of HVAC and appliance continues to be very interesting and I just wonder if you could shed a little more light on what's gong on there. Is it... I guess somehow it would be directly U.S. energy infrastructure related activity. But is there... is there a kind of science, or may be a broader resurgence in the US, maybe dollar agreement export driven, what do you think?

I think the underlying economy for the US continued to weaken, non-res growth in [indiscernible] vessel will continue to weaken. You are having a benefit of the dollars we talked of before, there's no doubt about it. It seems... it slowing down but it's been pushed out and so the benefit is there so we are still seeing some growth. You have seen good growth from our process businesses, the dollar from the standpoint is weak, so a lot of the Middle East infrastructure type of business are coming out of our US operations in Texas and things like that. You are seeing US competitiveness being very good right now with the weak dollar. There's some negatives about the weak dollar because of inflation but that's driving that. I do not see a resurgence from the standpoint of the underlying economic environ of the US, I still believe there will be very weak next year in 2009 both in non-res and residential. The one exception to that will be... in my opinion will be the process business and as I said earlier this year I thought that we might see a little bit of benefit from HBSC in the second half of this year. The heat has come, inventories are very tight out there and we are seeing a little benefit from that at this point in time. So underlying growth rates have improved in that space the now it will help us as we finish out this fiscal year.

And could you elaborate on what you mean by "normal cycle in Network Power," you were talking about kind of a gradual deceleration or what exactly --?

I am talking gradual deceleration. As we talked about is I look that space it's acting very normal this time unlike the last cycle which just kept on growing going to a drop. When we started out the recovery, we're looking at 25% plus underlying growth rate. You shift down into that... the 14, 15% range. We're now shifting down into the 10, 12% range. As I look at going forward here the next... out to the next 12 months, you're going to see that range go more in the 8, 9... 7, 8, 9% range. That is a normal cycle for us as we look at that. Mineral price stepped down in the 5 or 6% range. That is typical cycle that we would see in that business is a long cycle, usually lasts 8, 9, 10 years and that's where we are right now; I mean versus the last cycle which was very, very strong and then just went cold and dropped [ph] dead.

And finally from me. A little color on how big appliance controls is in revenues and I guess the charge was an impairment charge, as you think about it?

As we look at it... I mean you are talking about the business 150 million.

150 million.

150 million approximately size of sales.

Annual.

Annual sales and the charge as we look at the balance sheet, as we look at everything based on what is the evaluation of business, we felt that we needed to fix that and do these tests on a quarterly basis especially as you look at something like this. You have to take action, you can't ignore it and so we felt that the goodwill was based in the acquisition from that company several years ago was overstated by 9 million so we took the hit.

Great, thanks a lot.

Thank you. Our next question is from Deane Dray with Goldman Sachs.

Thank you, good afternoon. Just a follow up on Jeff's question. On your point on the normal network power cycle, how long do you think it takes before you get to 5 to 6%. And is that a bottoming there in your expectation?

No. A cycle usually goes negative. I mean I think you are going to be looking at a couple more years of... I mean right now you could either be the 6 to 9 range for several years and go down to 4, 5 years. I think you are probably looking at 2010-2011 time frame; we see that. It will eventually go negative, it will turn negative, its hard to say Deane when exactly that point is but I... is it 2011, is it 2012, is it 2013? It's hard to say.

All right, that's helpful. Then on process management we had some mix signals in the quarter in other competitors more likely discrete versus process or flow type of distinction. But can you comment on where you stand today in terms of backlog visibility because this really was the quarter, I think, you've been working towards in terms of margins, incremental margins and so forth?

Yes. I think at this point some of our backlog is quite significant, I mean it's sitting out there. We have very good visibility for at least 12 month right now. As we move into 2009 we feel very good about it but the world... unless the world dramatically changes... these are long-term program sites [ph]. Our backlog is still building and we feel comfortable about it. It... I mean in my opinion is right now the global industry is short of resources be it people, be it material, and I think you're going to see an extended cycle here cause we can only do so much at one time which is good from the standpoint of getting things systematically through your plans but I think you are going to see a extended cycle here for the next couple of years and we have very good visibility in the process side right now.

In the release this morning you made reference to investing in process management. How much did that impact the quarter and what type of payback over we would see the benefit from that?

Well I won't... I mean I won't talk about a quarterly in type impact. It's... this is long-term investments we are making from next generation technology, the wireless program and also our global infrastructure of people per solutions in service. We have a very strong program internally to expand our plant web presence coming out of Delta V and the whole plant web program and so we are being very aggressive relative to investing in that and we have the capability right now with the strong sale that we see in our instrumentation and device businesses to allow us to still expand margin and make that investment exist. I mean it's something we are going to do for the next couple of years. It's not something that we are going to end, end of '08. As the comment said we're basically building into significant new product type of programs for late '09 and going to 2010. We've done this before and we will... and this a big program for us and we are making the investment necessary to continue winning this... in this business here.

Then just last question from me, your comment on not being happy about recent stock price for Emerson raises the question about buybacks, you re-up the program, you are expected to be opportunistic here?

We have a very systematic program. We will spend somewhere around billion dollars this year. It could go up based on what's going on right now. Clearly as the stock price goes down, we buy more; as the stock price goes up, we buy less. And so, as you know, we have a... it's a very systematic program. I am not going to go out and double program just because we are out a day or two to stock price. I take a very long-term perspective, as you well know. And I intend to be around here a long time and so I will look at this as unique opportunity for us right now.

Thank you.

You are welcome.

Thank you. Our next question is from Mike Schneider with Robert W. Baird.

Hi, Dave, Hi, Lynne, how are you?

Hello, Michael.

If we can just stick to the growth rates, Dave, the comment that you can sustain 5 to 7% growth even in this environment, I think, is admirable and success certainly relative to your competition. So if Network Power is going to slow, are you anticipating at least in process you can maintain these low double digit organic growth rates?

I think we could see 10% type of growth rate in process. You are going to... in my opinion, you will see a little bit of better improvement in our Climate Technology growth rate next year. You will still see Industrial Automation, it will slow down a little bit, but still be pretty good for us next year. And Network Power still will be helpful. It's a mix going on. Our emerging market business remains strong. As you saw in the quarter, I think, it was around 17%. As I look at next year, I think our emerging market, if I was going to pick a number, it will be around 15... 13 to 15%. So I still see... even though the global economy is slowing, the mix of businesses and our presence around the world gives us a pretty good growth rate. My visibility right now is probably about nine months out, nine to 12 months out, and I feel reasonably comfortable in that five to seven based on the order trend and what I see going on. There is a lot of the economic things that could happen out there with... as I mentioned the geopolitical or even the political environment here in the U.S. could change those things a little bit.

In Industrial Automation, I am curious, the business is growing high single-digits, but yet orders are running 15 to 20 and even accelerated to 20 in June, which implies you had an even bigger month of June. When do we see those type of growth rates flow through the P&L or the orders stretched out so long at this point that you are booking in several years out now?

We are starting to book out beyond 2009 in a couple of cases here. It's driven on our power generation area, and so you have seen that happen. The order rate in the power generation is continuing to be strong and that space is... both in the process side and the power generation and support area, you have seen a lot of long term orders being placed to make sure that we gotten the capacity in place and make sure that we have the material coming out. And so that will be a... it's not going to be lumpy, it's going to work its way out over the next couple of years.

But do you actually see Industrial Automation growth accelerating on a core basis?

No.

-- quarter?

No, I do not see... I do not see Industrial Automation growth accelerating. I mean, right now it's had a very good year this year. I think it will have a very good fourth quarter, but I would say at this pace or I see right now, the underlying growth rate for Industrial Automation will be slightly less next year than it was this year.

Okay. Then final question on Europe, last six months it's grown 3% and 1%?

Yes.

The deceleration is definitely underway. Are you anticipating that goes negative in fiscal '09?

No, no. I maintained that our underlying growth rate in Europe in sales will exceed the U.S. next year. Yes, Europe has slowed down a little bit, but our businesses which are in Europe are being pushed into Eastern Europe and they are pushed into Middle East, we will continue to be okay. It will be less, but it will still be okay next year.

Okay. Thank you.

You're welcome, Mike.

Thank you. Our next question is from Nicole Parent with Credit Suisse.

Good afternoon.

Good afternoon, Nicole.

Just following up on Network Power, could you give us a sense in terms of orders and what you're seeing the difference between precision cooling, computing equipment, and network power systems?

I would say that our what I call the real reliable power businesses is more in the 12 to 15% range. And the telecom business would be closer to, I would say, the 8 to 10% range.

And how should we think about those just longer term? I mean, as we see Network Power decelerate, is it more on the telecom side?

I would say that you're going to see the reliable power trending down towards that 10% range. I mean, I would say the telecom stuff would move down in the, I would say, six to eight... I think it's going to move about the same, may be plus or minus 1% delta between them, Nicole.

Okay.

Not much different. They are both going to come down a lot, they react the same way.

Okay. And knowing that complacency is in Emerson's vernacular, what do you tell John Baird [ph] that due on the process side to keep the truth motivated given how high margins are?

Keep growing and keep investing.

Okay.

He is trying to figure how to get the $10 billion. So that's the goal and he has got to invest to get that $10 billion. And there is a lot of very important programs here you've heard me talk about before. I will be very careful about how far that margin will go because we have to make sure that we are investing to the long-term and not worrying about a quarter or two about margin. But if keep growing, we keep the productivity going as we have right now. We should continue to see margin improvement. But the mix will definitely hurt us as we continue to make those global investments in... for the solutions and service business.

Okay. China PMI was weak in the last month, not too surprising, I guess, in light of what's going over there. But I guess relative to your expectation as we roll through the rest of the year, how do you think about China?

I think China will do okay. As I have said, I think it will continue to step down. I think you will see a slowdown as Olympics finishes, as the government sorts out where they want to invest. I think you have to be very careful with it, one or two months of PMI... it's fairly new number. And so the quality data is not that good. There is a lot going on as the government shut down industry to try to take care of the pollution. So I think there is lot of, what I'd call, non-business, non-economic things going on. But I still feel good about China as go out of this year, the growth rate will be slower because we have been growing quite significantly there. I still feel we will be okay in 2009, but again a slower growth rate. And then we have the benefit coming in in 2009 of our Climate Technology efficiency standard changes and also the telecom investment in G3. So that's gong to roll out more in 2009 and 2010. So there's a lot of good things happening, they will probably give us still pretty good growth next year.

Okay. And just one last one on restructuring for this year, I mean, it was still in the 70 to $80 million range or given kind of the shifting macro environment, is it a little bit higher?

I would say it's going to be 85 to 90, Nicole.

Okay.

85 to 90, and we are pushing it pretty hard given some of the shifting... when things slow down, we go for certain restructuring. I would say you are going to see as we move into the first half of next year, we have some restructurings we have to get done from the Motorola acquisition. Jay's getting that tied up and working at pretty hard right now. So that's going to start happening in the first half of 2009. And then we have a couple of other programs that we have in Europe right now in early part of 2009 that will be hitting the P&L. So we'll be strong in the second half of this year restructuring and we'll probably be pretty strong in the first half of next year and may be it will slow down in the second half.

Thanks, Dave, that's helpful.

You are welcome.

Thank you. Our next question is from Bob Cornell with Lehman Brothers.

Hey, man [ph].

Hey Mr. Cornell.

I am glad I wasn't the first to say how you [ph] yell at me for the stock going down, but --

I didn't yell at anybody on the phone --

Don't have that well.

I was yelling genetically and I thought I did very well not to swear you guys.

Absolutely.

I mean, I get a school start [ph] on that one, but we are not finished yet, so I got to be careful.

That's right. You covering a lot of ground. One thing as a follow up, the Embedded... I mean, the Embedded Computing business you are restructuring. I mean, outside of the actual integration of the units, how they are doing in the sales, the profitability, the market share, new product development, streamlining of the business, getting it ready for '09?

They aren't planned right now. It's a... I would say that as we've gone through and we have been getting out of certain businesses, we have slowed down certain sales in that area. As we've gone there, we don't like that business, we don't like that type of technology or customer. But Jay and his team, the Motorola team are doing a good job relative to getting a very large global business with businesses in Mexico and Malaysia and in Germany and the U.S., getting that all sorted out and integrated. So, I would say that they are doing real well given the complexness and I think we will see that business get in line as we move into 2009. And as we talked about when first at the acquisition, it takes 18 to 24 month. I still believe it's going to take 18 to 24 months. This is more complex than the Artesyn acquisition that we did a couple of years back. And we have to be very careful here too. This is a higher level technology. Relative to new products, I'd say they are doing a very good job getting the new products on board at this point in time.

On climate, the business on the volume side was better than I thought, but margins on the light side, I mean, you said you have the hot weather, things looking better. I mean maybe you could flush out the thought for the fourth quarter... I heard the business about China and the prospective scroll but just in the next few quarters how does climate look... was on the volume side and on the profitability side.

On the margin side in this quarter we got hurt because of currency; we have lot of currency benefits in climate in this quarter last year; it's a little bit unusual. They have a very large Thai operation, one more profitable facilities in Thailand and the Thai bhat was moving around last year versus the dollar and we got benefits from that and we obviously went the other way this year. The other things is yes we are getting price increases because I said we are not covering and we are not getting margin. We raised the prices to cover material and the material number is quite significant as you know in the compressor. So we all actually have a negative margin impact from that standpoint. As I look at the margin going forward the next couple of quarters I would expect the climate margin to really to improve. I think we've gone through ignoring the restructuring which we are going to be doing some restructuring in the European business here in Queensland [ph]. I would say the volume starts coming back up which I think it will start coming back up and as European business gets better and as the Asia business continues to turn line, I'd expect our margin to go a little bit better as we move into 2009. Given the E [ph] right now, I'd... I'm expecting a pretty good fourth quarter. We have made this call earlier and I backed it off and now it's back on but clearly there's very little inventory out there Bob at this point of time.

Yes that brings me to my last question. You mentioned with some emphasis the issue by getting our pricing green... sort of where are you. Some companies talk about putting prices into his zoo and big increments, others are gradual. I mean... then there's the soap business about purchasing in advance of price increases. I mean how are you going about it and where are you at getting the 2 percentage point of price you need to cover the mature cost increase you referenced?

I would say that right now we're at... Walter just said 75% there... 75, 85, 80% there.

80% there now.

Yes, we've actually started... I mean back in May we flagged this as you know. And we already had our plans in place. We are going May-June-July and August. So we have some... the price increases already been set in those areas there. We will be going back out here late calendar quarter, early calendar quarter next year to get the final parts of this. We... from our standpoint it can only hedge for little while here and we obviously helped discover this little bit last year but right now given the dramatic change in steel and all of the other commodities and it's not been easy to hedge this so we right now looking to get this pricing into place. And we... but we do work it over time. Sometimes it takes six to nine month for the customer and we sure share that pain for a while. But we are in good shape right now. We are okay for '08 and I would say 75, 80% are covered now going into 2009. It will be covered by the time we get started in 2009 by the end of this calendar year.

A final question for Walt. On the corporate expense you called out the 11 million on the material hedge but this... whether it was 13 million of other accruals including it was environmental and other maybe you just flush what that is and what should we expect in the fourth quarter and for corporate costs... corporate expense rather?

Well we're not giving any specific look at as you can imagine Bob for the fourth quarter. But I think Lynne in her answer identified when she was going through the slide that as you look at corporate and other $11 million was for commodity hedging... I'm just ion slide 7, and 12 million for environmental chores and other items that netted down to... the other would probably be net of couple of million dollars. So the big issue was clearly what I've highlighted. You have pluses and minuses as you look at mark-to-market on incentive share plans and everything else; there are just minor issues that tend to offset. The two way issues that we identified that explain it was the commodity hedging and the environmental costs.

I don't think the environment will repeat again because we --

No it doesn't. It's not anticipated to repeat at all, it's just as we reviewed it as we review it periodically as Lynne said. We saw some things as we look at accessing what environmental cost had done over a longer period of time. Several years we wanted to make sure as we saw that we booked the estimated amount to get it correct at the end of the quarter.

I got it, thanks.

The mark-to-market is the same thing all you had... some bankers have same issue these days. But your numbers are a lot bigger than ours.

Yes I noticed that.

A lot bigger than ours.

The rules have changed Bob since what I first dealt with you 30 years ago.

Yes I have...

There's mark-to-market --

So either the numbers have changed too --

Yes.

A little bit.

Yes.

A little bit bigger.

Okay.

Thank you. Our next question is from Nigel Coe with Deutsche Bank.

Thanks, good afternoon Dave.

Good afternoon Nigel.

So obviously the double digit growth in your US CapEx businesses was quite remarkable. You talked about the weak dollars as a big factor there. It is the same in Europe, the flip side in Europe to the reasons that it's backed in US and Europe as the cent to the euros has done to impact those businesses?

I would say that our European businesses can be lumpy. First of all the European business can be lumpy because of the process business which has the tendency to be strong or weak depending on what's going our that quarter. We are clearly seeing the impact of the euro, the strength of the euro, euro on some of our industrial automation businesses and the climate technology businesses. But is that... as that stabilizes and as we get all the European companies get their cost in order and we look at what is the dollar strength in little bit. I mean I think that's going to stabilize. I think it will be okay there. Eventually what going to be happen we'll settle back down, we'll start getting the... we'll stop getting the benefit of the weaker dollar in the US, see it shipped back out into the... into our other facilities. So I see it's a 6 or 9 month type of structure and I think the European competitors will do... will get back in the game here pretty quickly.

Okay. And then industrial automation, do you sense of getting share in those businesses because the $0.08 [ph] kind of growth is clearly high. We are seeing elsewhere. If we take away the alternative of some that mix, I mean how does the rest of the business look?

I think as we look at we have gained a little bit... it's... I mean as you know it's extremely hard to gain... to measure market share in 12-month or 6-month time period. I'd say our trail [ph] in the last 18 months have been pretty good and I'd say as I look at our industrial automation business we have done well here for last two or three years and I would say based in that strength of that business for last two or three years is I would say has been a positive impact for our global market position, yes. Hard to quantify but definitely positive. If you see it an underlying pace of the business.

Okay. And then if we take away the alternative of some of the mix how does the rest of the... how does the organic growth look ex power gen?

It's a little bit lower, but it's still... still better than I would say the underlying economics I would say Robert.

Okay. And then I mean just finally on the climate... obviously we have just discussed already but take away the weather and the inventory situation, do you sense that US resi has turned the corner or close to turn the corner?

No because I said in May you will not see... you will not see any bottom in U.S. residential until late 2009 on a calendar year basis. If that was a betting man, I would say it's maybe end of 2009 on calendar basis.

Okay. That's depressing. Thanks a lot.

That's not depressing, it's an opportunity.

Thanks.

Thank you. Our next question is from Christopher Glynn with Oppenheimer. Christopher Glynn - Oppenheimer & Co.: Thanks. Good afternoon.

Hi. How are you doing Chris? Christopher Glynn - Oppenheimer & Co.: Doing well, thanks. What if good tangible complexion around the longer term outlooks in cycle trends the network power in process automation. Just think about industrial automation there. Is there any way to gauge the same sort of outlook in applied staff business or is the cycle just kind of too amorphous relative to the --

No, we do long term trends. We definitely do long term trend in industrial automation. The... we do it with and without the alternative business because the alternative business is very what I would say cyclical... I think very aggressive up and aggressive down. I would say the long-term credit's still okay, but it's definitely... as I say it's going to go to the bottom end of the long-term growth... underlying growth rate, excluding alternators for next year. What it means it's going to be down in that 3% range. Alternators will help us next year. But it's... clearly, we've had four... may be in five good years now in the Industrial Automation businesses and so it's in that later part of that cycle right now, as I see it. And if the U.S. core six [ph] investment environment for both non-res and res continues to weaken as I think it's going to do, you will see that impacted on the non-alternator business for 2009. It's... the cycle is pretty normal there right now in the fourth and fifth year of cycle. But it still should be positive for us. Christopher Glynn - Oppenheimer & Co.: Okay. And that 3% or so that would include price?

Yes. Christopher Glynn - Oppenheimer & Co.: Okay. And then how should we kind of think conceptually about the role of operating leverage of that business?

That business... you mean... Christopher Glynn - Oppenheimer & Co.: The margin seem to be a little stuck.

It's stuck because of the significant material hit there right now from the standpoint of what's going on. It is... we are... from the standpoint of... whether you think about the material, the steel, the copper being used as... like alternators, huge. And as we have got the price in to cover the material inflation, it's very... you can't leverage it right now. So all our cost reductions, all our new product efforts are going here to offset the margin impact of the material inflation. And that's the biggest issue we have right now. They clearly keep working this, but with this type of inflationary environment, it's very difficult to expand that margin to the margin... the cost structures are being used to offset the material impact. Walter, anything else you want to say on that or is that okay?

No... it's in the first half.

Yes. Christopher Glynn - Oppenheimer & Co.: Okay. And then any thoughts on the tale of the acquisition dilution at NP from the sort of 150 basis point level?

As I said, I think this is going to take us 18 months to digest that. So we will be going into [ph] 2009 is when we see the benefit of that. I see no reason to say that other than no. Christopher Glynn - Oppenheimer & Co.: Okay. And then lastly, just more broadly on the divesture outlook and in particular some scale to the impairments of European appliance business. Would any of that have been recorded if you're keeping it?

Probably not. I think we've looked to that at year-end. We look at all our assets at year-end. And if we were to had an impairment situation there at year-end, a lot of you will not agree with that -- Christopher Glynn - Oppenheimer & Co.: Yes.

Based on how weak that business is and what's going on with the price/cost situation there. You obviously look at it a little bit finer when you go out in the marketplace and have too sell an asset like that. But I'll say, yes, we still would had some... we'd have still had some negative impairment there. Christopher Glynn - Oppenheimer & Co.: Okay. Thanks very much.

You're welcome.

Thank you. Our next question is from Steve Tusa with JPMorgan.

Hi, good afternoon.

Good afternoon, Steve.

I just a question on Network Power. I think you walked through the product lines, can you just talk a little bit more about the data center specifically and what you are seeing out there, may be in the U.S.?

Our data center businesses still remain strong. Ex the financial market place, which has been very weak for some time now, as you all know, our other data centers in U.S. and around the world have held up quite nicely. As the corporation in the world has continued to work on the reliable and the redundancy, and the growth... a lot of the U.S. corporations have had significant growth last couple of years. And typically the data centers usually come behind that growth. We always do it later to make sure we have it, growth in hand. So that marketplace is still doing pretty well for us.

Got you. And then just from the acquisition environment here, could you just comment on what you are seeing out there, pricing, properties as we move into '09?

I think as I said on EPG in Florida, I think the pricing environment for the large global industrial companies like ourselves and the other ones in our space, the environment will get much better as we go into the calendar year 2009. I think that expectations will continue to unwind. It's still pretty high. But you always have to pay a very good price for quality assets and that's what we look at it. We're buying good assets here. So I think the environment, as told the Board today, will get better for us. Bigger opportunities as we move into 2009, but we're not in a big hurry. We're going to make... we know where we want to get and we'll wait for it.

And then one more quick question just on capital spending, you're putting some more capacity in Asia for Climate. Is it too early to get a read on how you're feeling about your capital spending for 2009 when you look out with the volumes softening just a little bit, yet plenty of capacity, how do we think about that?

We will think about it the similar level as capital expenditure as a percent of sales as in 2008, which we have said that right around a 3% number.

So closer to sales?

Yes

Okay.

-- cycle down, it will still around that 3 to 3.1 range.

Okay, thanks

Welcome.

Thank you. [Operator Instructions]. Our next question is from Steve Searl [ph] with Conning Asset Management.

Yes.

Hello, Steve.

You have a little over 400 million of debt maturities in the next couple of months. Any plans to come to market with that or you just take it out with your cash balances?

We have plenty of cash. We will look for opportunities typically at the end of this calendar year. If the interest rate environment improves for us, we will go out and do some long-term borrowing. We have a very good ladder right now. But our cap situation is in pretty good shape. So I think we are okay.

Thank you.

You are welcome.

Thank you. And at this time I would like to turn the call back to management for any additional remarks.

Again, I want to thank everybody for joining us today. I want to thank the global operating management, the corporate management of Emerson. They did a great job this quarter and in the first nine months of this year. I feel very good as I told the Board that we are going to have a very good close this year, as we finish out 2008. And I feel good about the position we are in right now. The order pace is holding up. And clearly as I... as we talked about in February, the changing economic winds are such that we have to stay very close to this and we will adjust, our cost will adjust what we do business. And I feel good about where we sit right now on a very conservative basis. With that, I wish you all well and thank you very much. Bye.

Thank you sir. Ladies and gentlemen, this concludes the Emerson Third Quarter 2008 Results Conference Call. If you'd like to listen to a replay of today's conference, please dial 1-800-405-2236 or internationally at 303-590-3000 with access number 11116837 followed by the pound sign. Once again, if you'd like to listen to the replay of today's conference, please dial 1-800-405-2236 or 303-590-3000 with access number 11116837 followed by the pound sign. We'd like to thank you so much for your participation and wish you a pleasant day. You may now disconnect.