Welcome to the Actuant Corporation second quarter fiscal 2008 earnings conference call. Today’s speakers are Robert Arzbaecher, President and CEO and Andy Lampereur, Executive Vice President and CFO. As a reminder this call contains forward-looking statements that are subject to the Safe Harbor language and Actuant’s press release issued today and in Actuant’s filings with the SEC. We are conducting a live meeting to coincide with the audio conference. If you would like to view the presentation online, please refer to your meeting invitation for details. (Operator Instructions) It is now my pleasure to turn the conference to Mr. Arzbaecher, please go ahead sir.

Thank you and good morning. Actuant is half way through our fiscal 2008 and we’re pretty pleased with how things are going. Our operating results have been at the high end of our guidance for both quarters this year. In large part I think this is due to our focus and execution of our business model which you see here on this slide. Our business model starts with core growth which was up 4% for the quarter and 4% for the six months. As Andy will walk through, we are pleased with this core sales growth given the moderating North American economy. As many of you know we have about half of our sales outside of North America and sales growth out there internationally has been holding up better. To this core sales growth we add acquisitions. So far this year we have completed two transactions; TK Simplex and Superior Plant Services. Acquisitions through six months have added about 10% to our consolidated sales growth. You then take these combined growths and we’ll work on our continuous improvement program through our Lead process. Lead stands for Lean Enterprise Across Disciplines. The goal of our Lead program is to improve growth, profitability and working capital. Through six months compared to last year we’ve improved our EBITDA margins by 100 basis points and improved our year over year primary working capital by 140 basis points. All of this leads to increased free cash flow. Through six months we’ve generated $56 million of free cash flow. This is up substantially from the first half of last year and again represents better than 100% conversion of net income. We use this cash flow to pay down debt or to fund future acquisitions. The bottom line is that our EPS is up 25% to $0.95 a share through six months compared to $0.76 a share a year ago. Both of these exclude the European Electrical restructure. I think the first six months of 2008 is a great example of our business model at work. With that I’ll turn it over to Andy to talk about the second quarter.

Good morning everyone. We were happy with the second quarter. It came together at the high end of our internal expectations; 17% top line growth and excluding the European Electrical restructuring costs, 22% EBITDA growth and 23% earnings per share growth. The increased earnings reflects the combination of sales growth and margin expansion with contributions from both our base businesses as well as acquisitions. On a GAAP basis we reported second quarter diluted earnings per share of $0.35 a share. This includes a little over $0.07 a share impact from the European Electrical restructuring provision we booked this quarter of about $5 million. Excluding this item, we earned $0.43 a share. As covered in this morning’s press release we’ve now completed the restructuring program that was launched two years ago in Europe. It included the reduction of about 150 employees, facility enclosures, outsourcing the relocation of production to lower cost regions and the elimination of low or no margin SKUs from our product offering. The restructuring was completed within the original estimates and time line and will generate the anticipated costs savings. Now let’s get back to our second quarter and dive deeper into sales. This chart shows the buildup of our 17% year over year core of growth. Core sales growth was 4% as Bob mentioned and acquisitions added 8% year over year. The weaker dollar also contributed 5% to the top line. The core and acquisition growth components were both in line with our expectations while currency provided a little bit more tailwind than we had anticipated in our original $385 million to $395 million guidance for the quarter. All four of our business segments reported top line growth with three of the four also benefiting from acquisitions as you can see on this slide. In total, acquisitions…

Thank you Andy. As you can probably tell from Andy’s remarks we’re pretty pleased with our second quarter results. If you ask why Actuant is doing well right now, the answer I would give would be one word, diversity; first by our markets, then geography and then customer. Its one of the core attributes of Actuant and it’s been a major driver in our consistent earnings and cash flow performance and growth over the last seven years. Diversity doesn’t mean every market is behaving well. We always have an end market or two that are having some type of downdraft. Today that includes Gardner Bender whose sales of the large home centers is off due to reduced consumer spending and residential housing slowdown. It also includes Acme, our professional electrical business which serves both residential and commercial markets as well as RV and marine where erosion and consumer confidence has affected spending. But diversity also has winners; markets that are doing quite well. As Andy covered Hydratight has grown exceptionally well in the second quarter on the strength of MRO activity in the oil and gas and power generation markets. The growth in this business more than offset the combined declines of North American Electrical, Specialty Electrical, Professional Electrical and the RV product lines. And that ignores other strong markets like Enerpac, European Truck, China and agriculture all of which did well. The reason I emphasize this diversity now is given the uncertainties surrounding economic conditions worldwide, Actuant’s diversity should be a huge comfort for investors. Investors should also find comfort in how we’re managing our cost structure at Actuant. We are managing costs very differently depending on which end market dynamics, based on end market dynamics and growth prospects. If you’re looking at Europe Electrical, RV, Professional Electrical, we’re…

Your first question comes from the line of Deanne Dray - Goldman Sachs

The core revenue growth which really came in above expectations and its hard to kind of reconcile the fact that you’re seeing negative Industrial production numbers in the US and that goes back to your diversity benefit, how does that core number split between North America and international for the quarter?

I’ll let Andy think about how to answer the second part Deanne; we really don’t give a lot of segment data below the total data we gave. When I look at North America, while I think you’re correct you’re starting to see a slowdown I think when you look at numbers like Grainger’s numbers which is a distributor of ours and a pretty good proxy, you really see moderating growth but you still see growth. And that’s what we’ve seen within the Enerpac platform. It is moderating but it’s not…we don’t see a recession in the horizon for that business.

In terms of the split just geographically Deanne, when you look at our different product lines, our Electrical segment on product lines with the exception of European Electrical, its all North American and that clearly was our weakest segment overall in terms of growth. RV was down about 15% for the quarter as well. So because of those factors during the quarter we essentially were flat in core growth in North America. Looking at Enerpac in the US, Hydratight clearly we were up in those markets, but the Electrical markets overall pulled us to kind of a flat range.

That’s exactly what I was looking for. And then what about the impact of pricing today and what’s the outlook for the balance of the year, so if you look at 4% for revenue growth was there a price component that contributed?

I think that there was. I would say it was primarily in the Industrial segment. We’ve anniversaried most of our increases in Electrical. I think you will see some price increases coming in in the back half of the year especially in Electrical with copper increases coming through in some of what we’re starting to see with steel as well. But I think it’s a pretty small number. Within the Industrial segment out of the core growth there…the core growth we had there, I would say maybe 2% of that was price. If you look across the other three segments, it was not much. I didn’t think it was a percent.

It might even be a little less. We don’t have a….the answer is Deanne we really with our financial system here and all the diversity we don’t have a way of tracking unit volumes to really hone in exactly what price is. I think Andy’s number is probably a pretty good estimate and it would be more leaning towards Enerpac side. I think the Hydratight side given we sell a lot of services, its kind of a different beast.

Was that enough to offset the raw material costs of steel and copper?

It was.

Yes.

Good and then just in terms of the businesses, Hydratight was there any seasonal impact this quarter? I know we talked about weather can be a factor either positively or negatively in the quarter, was there any affect there?

None that I think I would point out and while that was a more seasonal business when we acquired just Hydratight and Hedley with the DL Ricci acquisition, with the Injectaseal, and now with the more recent Superior, I think we’re going to see more moderation of that cyclicality because we’re more of a global business than just a north sea dominated business.

Great and then last question, and Bob I absolutely remember the comment you made about potentially adding a torque wrench to the portfolio and then yes, we did see this all develop into the whole Joint Integrity business, within it today what’s the mix between equipment and service and is there a service model that can be developed further?

Well the mix is probably about a third product, a third rental and a third service. I’m looking at Andy and he’s…

Yes, within Joint Integrity, yes.

Yes, that’s I think you question was Joint Integrity. So and that hasn’t changed a great deal. It might SKU a little more towards service when you add the Superior in on a running rate because it’s almost 100% service and rental. And that model has worked well. I think I said in my prepared remarks; there is a major trend towards safely outsourcing Joint Integrity. The OEMs recognize the Joint as a critical element to leaks and other things that happen in a refinery, on a pipeline and subsea and they’re increasingly looking to outsource that to technical service providers who can do that work. That’s worked really well for us. Is there expansion of service into Enerpac for example or Electrical? Not that obvious to us that that would be a big strategy we could do. Obviously our distributor network in Enerpac provides a lot of that service. I think you’d be treading a little bit on your customers’ turf. So I don’t see a monster amount of that within our current platforms.

Great thank you.

Your next question comes from the line of Amit Daryanani - RBC Dain Rauscher

Just had a quick question on the Q3 guidance, it looks we’re looking at about 14% or so revenue growth at the mid point roughly, by my math about 8% is acquisitions, the remainder 6%, could you just help me understand how much is organic versus FX?

We are looking at organic growth for the year still in the 4% zip code, so I’m not sure where the 8% from acquisitions that you came up with is coming in. I’d have to go back in but our assumption is roughly 4% core growth for each of the next two quarters.

Alright and then just into the restructuring, let’s say we did a minor tweaking in the Actuation segment and the Engineering side, do you guys expect any further restructuring aside consolidations going forward given the macro environment?

Yes, there are different things that we’re looking at in the third quarter. We’re moving one of our operations into a…out on the East Coast, into a new site and we’re going to essentially cohabitate two of our businesses together. So there are a number of actions like that that we are looking at whether it’s sharing sales offices between Enerpac and Hydratight or trying to consolidate our footprint a little bit. We’ll continue to try to do that…take the opportunity to do that but with what we’ve…with the guidance we’ve laid out there, those kind of actions are included already in the guidance.

Yes, said another way, we’re always doing that kind of stuff Amid and my view is the next two quarters, three quarters the level of activity is going to be pretty similar to what’s been in the past so I don’t see any margin improvement or degradation associated with those efforts and the only reason we called out the Europe restructuring is that was a much bigger magnitude; working with workers’ councils and things. The payback on that one is a longer, it’s more substantive and it was a longer payback. We’re talking about these small ones. Many of those are between one and two years. Some are even less than a year. We do those all day long with our return on invested capital philosophy and we will continue to do those as Andy said.

I would just add another comment; those types of things I talked about are not items that you should add back saying it was one-time in nature. To Bob’s point, we will continue to do them going forward. The reason I called them out was just to explain why the margins year over year in those specific quarters saw a blip but those kinds of actions are absolutely included in our guidance in the second quarter and we’re contemplating more as we move forward.

And as I said in my prepared remarks we’re…the term we use around here is we feed the eagles a little bit. The businesses that are doing well, we are trying to pour more resources in, be it Hydratight with technicians and we’re adding to the rental assets fleet and in GITS, we’ve got just a ton of engineering activity going on. And we’re trying to pay for that with reductions elsewhere and squeeze down businesses, be very proactive and try to get out in front of the cost structure to reduce those. Whether you’re closing plants, whether you’re getting aggressive about going to China for sourcing, whether you’re working on a temp to fix the relationship that we do with employees, all of these kinds of things are really trying to improve the efficiency of those businesses and then use that money to re-circulate it into the growth businesses.

That was extremely helpful. Moving along to the raw material side of things, I think five, six quarters ago when copper was especially escalating I think you guys were talking about a $3 million headwind from commodity, at least for the last 45 days to two months at least, copper has gone from the low $3s to almost $4, do you expect a similar kind of headwind to come up if copper stays at these elevated levels?

I think that the different Amit is when we talked about that $3 million to $4 million headwind I think that was actually two years ago, the big change is I think we’ve got procedures in place and wording built into contracts or understanding with customers that if the increases come through we are not eating it…we’re not going to be stuck in the middle and we definitely have passed on copper price increases since then. We’ve talked about doing it again in each of our Electrical businesses here for the back half of the year, so I think we’re much better in reacting to that and getting ahead of it as opposed to being six months in arrears like we were in the past.

It sounds like you may have better escalation clauses built in so we can negotiate them.

The other piece is we’ve started hedging a little bit from a copper standpoint over the last 18 months, we probably have 10% to 20% of our spend hedged at a point in time on that so it helps a little bit as well.

And then just finally the Superior acquisition we did, in terms of a margin perspective is that comparable to your Industrial business or how does it compare to that side?

I really don’t want to comment specifically on margins in businesses like that but I can say the acquisition of that thing was at an enterprise valued EBITDA multiple similar to other deals we’ve done. You can probably back into it in on that standpoint.

It’s pretty hard to buy acquisitions that are Industrial EBITDA levels. It’s more in line with our total corporate EBITDA levels is the way I’d answer.

Thanks a lot and congratulations on a good quarter.

Your next question comes from the line of Scott Graham - Bear Stearns

Just wanted to ask you about…a little bit more about Hydratight and a little bit more about Electrical, are you guys starting to benefit from the pull through of the products in the one-third product piece, are you starting to benefit from some of the acquisitions you’ve made as far as being able to pull through some of those products, Enerpac and otherwise through Hydratight?

Yes, let me think through the pull throughs and Mark and Andy chime in if I’ve missed any. The first big pull through that went from Enerpac to Hyrdatight was to get a pump platform that we could use and leverage within the Joint Integrity business. We’ve done that pretty well. On the other side, now this would be coming from Hydratight to Enerpac, both tensioners and torque wrenches are in various levels of ability to bring that. We’ve had a torque wrench probably for a couple of years. We’re introducing a new tensioner for Enerpac which is really made for the Enerpac more maintenance and repair market than the oil and gas but it was a product that we were really leveraged a lot of the knowhow from Hyrdatight to do. In addition to those I think we’ve done an excellent job of leveraging DL Ricci on a machining capability. That’s more of a service than a product sale but we’ve done an excellent job there. Injectaseal is a recent one that we’ve added and again Superior has some things in heat treating and metal disintegration capabilities that we’ll be able to use in those.

Okay it does look like it’s starting to benefit the organic in that business. Is the needle moving enough, what you just talked about to impact the organic?

Yes, I would say the bigger thing to move the organic than that is the global footprint and the increased ability to do one-stop-shop for a big asset owner. That’s what they want. When they send you into a field in Kazakhstan they want you to be able to do as much as you can and not have 16 different vendors all of which they’re on their safety records and they have to worry about training and all of that kind of stuff. So that’s really been the theme that I think has grown the core growth.

Okay, that’s helpful. The other side of the equation here of course is the Electrical which I was wondering if you could characterize for us, I mean obviously in the last six months this market has gotten a lot weaker, I assume both US and Europe, and I was wondering if you can kind of characterize US versus Europe sales.

I think if you remember last year Scott with European Electrical, we expected it to be kind of flat to down during the year and we were surprised and then it was up about 3%. In the first quarter of this year it turned to negative territory; we were down about 7%, 8%. It was still in that same kind of zip code this quarter. So we’ve seen year over year a pretty good size swing but there hasn’t been…I would say a change in Europe between the first quarter and the second quarter in terms of trend. It’s pretty similar.

When you go to the DIY market here the US and I think we talked about it on the last call, there’s been some increases at The Home Depot and some decreases at Lowe’s. A lot of those increases happened in the first half of the year and the decreases will happen in the back half and we did get a little start on that with Lowe’s affecting the second quarter. So that trend probably continues which is why in Andy’s comments he talked about the negative comps in the back half of the year in the DIY market. When you move out of that we’ve certainly seen weakening in Acme, which we talked about in our prepared remarks. That’s affecting commercial transformers and some outdoor lighting and both of those products have both resi and commercial applicability. The marine market which is kind of a combination of both DIY through people like West Marine and also boat builders, I think we’ve seen a slowing in the boat builders side of that business. Consumer confidence; very similar trends that we see in RV. I think the long term trends for the same reasons we like RV are also in existence for marine. But you know with consumer confidence weak you’re feeling the affect of that.

Understood. The auto piece, US and Europe, what does that outlook for the platforms coming on line and what are you thinking in that business?

This year we’ve talked a pretty flattish year in terms of revenue. We definitely had some and have some new platforms and new work that’s coming on. There’s a BMW that’s come on. There’s some Liftgate Actuation we had one hit at the beginning of the year, we’ve got another one coming on at the end of the year so this year is kind of flattish. I think the more interesting news is looking out. We have a pretty healthy I should say backlog which is build schedule for next year in terms of new platforms coming on. I expect this to be a double-digit grower next year in terms of core sales growth in automotive. A number of new platforms hitting and some replacements as well where you just get more of a kick when you launch a revamped platform relative to a more tired platform.

I think Andy is being a little modest, this year we’re having a pretty good year in auto. It’s a little ahead of where we would have expected it to be at this point. We are powering through which is obvious that there’s a consumer confidence we miss but convertibles as a subset of auto and we’ve talked to you guys a lot about that, continues to do pretty well. Mostly out of the US to be candid with you and not as much on the US programs, but that’s where most of our business is, is in Europe. So that…auto has been doing okay.

That’s great, thanks a lot.

Your next question comes from the line of Charles Brady - BMO Capital Markets

The cost savings on the Electrical restructuring given that now we’re done with that and the market’s also kind of softened at the same time, any change to expectations on what you expect to pull out of that restructuring?

I think the restructuring in terms of what we expected to get out of it I think going in; we expect to get that coming out of. We talked in past quarters about some of the inefficiencies that have happened during the restructuring such as under absorption in some of these plants as we’re bring them down, labor slowdowns, those kind of things have impacted…our efficiencies have impacted service levels to some extent as well so that’s kind of muted I think some of the improvements coming out here but it terms up the overall savings from this plan I think we’re…we feel pretty comfortable about that. That being said, it doesn’t help right now that the demand over in Europe is weaker. It’s clearly…I mentioned earlier that we’re down about 7% or 8% year over year and this is a seasonal business. The back half is considerably weaker in terms of revenue than the first half so I guess I’d advise you guys not to build up some sudden big ramp in margins in this business in the back half of the year relative to the first because of that but I guess those would be our comments.

I would just add to Andy’s, I think the actual benefit from the restructuring, most of that was people related and is just a, it’s just math. We took out the right people, their salaries are gone…the right amount of people and the salaries are gone so that’s just math. As Andy said now is our chance to really start getting in and doing the lead stuff. If any of you guys have, and I know you guys have listened to enough companies talk about Europe restructuring, it’s very difficult to run your plants when you’ve got people that are on notification that they’re leaving the organization. It’s just very difficult to go for continuous improvement. That’s now behind us. That started in mid February and we are aggressive….I was in a meeting with Mark and the leadership of this business less than a week ago talking about some of the good things that are starting to go with the lead programs. So Andy’s correct that the profitability of the business declined while we were doing this restructuring, now we’re getting it back and we’re driving that piece of it back. So feel good about the fact that it’s behind us, it’s on…as Andy’s comment said, it’s on track and the costs were on track and the benefits are on track and now we’ve got to get the business just cranking at a higher level of profitability.

Are you comfortable with some of the product mix and the SKUs that you’re selling or is there more reevaluation of that?

There’s more to do but we have done the heavy lifting. Now that doesn’t come overnight. When you’re talking about thousands of SKUs that you get rid of you have to adjust the customers’ buying behavior over time so that doesn’t spell a light switch type issue, but yes we are comfortable with the heavy lifting we’ve done and I’m sure as we run through that first iteration you’ll do just a regular paredo 80-20 rule and you’ll say let’s take another bite at that and work on the lower profit wants. And so that process won’t end anytime soon.

And just on your core sales growth assumption for fiscal ’08, you’ve taken down Electrical but the overall was the same, is it fair to assume that the Industrial side particularly Hydratight is kind of making up for that take down in Electrical or is coming down by itself?

That and truck.

Going into the year if you look back in your notes, we had forecasted somewhere in the 7% to 9% core growth for Industrial. I think what we’re looking at now would be low teens. We’re looking at 11%, 12%, 13% growth in that segment.

Any update or change I guess in the China facility? How’s that coming along?

It’s in great shape. It’s scheduled for a grand opening on August 6th or 8th, something like that. We have some pictures in our lobby that are updated everyday and we’re on to the second floor of the actual construction there. We expect the building itself to be done in the April, May timeframe and then starting to move in product and people behind that.

Thanks a lot.

Your next question comes from the line of Chris Wilser - Robert W. Baird

I was wondering, we’ve talked about raw materials a little bit already but I know you don’t buy much raw steel but do you see component suppliers starting to come back to you on price yet?

Yes Chris, there’s clearly rumblings out there. Some of those suppliers are coming in and saying hey we’ve got increases there. Obviously we’re trying to push it back, trying in some cases trying to bundle more volume to offset those sorts of things. I would not say it’s at a fever pitch right now it’s still…it’s not across the board but clearly we’re hearing some.

I wouldn’t say it’s any different over the last several quarters than what we’re hearing today.

That’s helpful. And in the Engineered Products segment, the restructuring activities you did, could you just sort of give us a rough cost or rough impact from those?

My comment I guess, I don’t want lay a specific number here, but my comment on it…if you just look at what are margins are there and how small that segment is in terms of overall, just throw $0.50 million or $1 million of EBITDA on top of that and see how far the EBITDA margins swing. I mean it’s in that kind of zip code.

Okay and then the restructuring activities you were talking about a move of an East Coast plant et cetera, are those going to be concentrated in one segment or another next quarter?

I would just say it’s not necessarily just next quarter, I mean there’s things that’ll be hitting the next three or four quarters. The one that I said next quarter in particular, I think they’re actually moving some of the stuff this week on it up at Nielsen Sessions so that is in Engineered Products but there will be other actions in some of the other segments as well. It’s not exclusively that one.

Okay and then can you help us differentiate the North American versus international growth rates in truck right now? I though I maybe heard you say that North American growth was positive this quarter?

Yes, we turned positive for the first time in about five quarters. I mean we definitely saw a change from the first quarter to the second quarter on that. I think it’s tough to get a gauge as to what the real run rate is in North America but it was a mid single-digits type grower. Europe has continued to book along in the teens and China’s doing even better than that.

And then you mentioned a lower second half tax rate, could you enlighten us as to what you’re expecting there and whether it continues in fiscal ’09 or is it just a one-time sort of benefit?

Yes we’ve been spending…part of the reason our corporate expense had gone up is we’ve…said be more aggressive in looking at our tax structure overall with all the acquisitions that we’ve added over the last several years. So we’ve got a couple of different programs we’re working on. The back half of the year I think you’ll see a rate that will, in that period, probably 30% or so. Most of that is sustainable going forward, for the year I think we’ll be somewhere in the 30.5 rate this year. Next year that kind of zip code, 30 to 30.5 so it isn’t just a one shot. There is some of it that’s a little bit but I mean you get an idea of 30 to 30.5 is probably what we’re looking at for next year.

Okay thanks and just one more, just going back to Hydratight, really huge pick up in organic growth, did you pick up another customer or how do you explain the quarter to quarter difference in growth rates?

It was forecasted so this is not a surprise to us. It was a little stronger than we expected but it wasn’t a surprise to us. It was a combination of some very large one-time subsea programs and those…some of those connectors can sell for $0.5 million to $1 million and you start putting three or four of them down for a specific customer. It can really be a lumpy type sale. Its not the core of the business, the core of the business tends to be similar to Enerpac. It’s got a core thing and then you have these lumpier infrastructure type items. And those hit this quarter and I think also there was an absence of them last year in the comparable quarter….

And the first quarter was weak this year as well. It was our lowest core growth quarter at about 11% on the business.

But this is a business that the market, it’s grown in the mid teens. I don’t…it’s very difficult to tie down but it’s grown in the mid teens and a lot of people…I know a lot of investors have talked about, gee we’re seeing some signs that new exploration is maybe moderating. This business is really more about install base. It’s really more about refineries and pipelines and fields and platforms that are already in place pumping oil. It’s about more pressure getting the last bit out. Needing the infrastructure to be taken care of so that can happen. I’ve talked at length in the past about how in the 80s and 90s when oil wasn’t selling that well and was sub $20, that things weren’t getting done and now you’ve got lots of maintenance and repair getting done to keep that infrastructure alive.

Very helpful, thank you guys.

Your next question comes from the line of Jeff Hammond - KeyBanc Capital Markets

I guess just in terms of the guidance, it seems like you raised it the mid point by the amount of the B, versus the mid point this quarter and it just seems like given the momentum in the in Industrial business that maybe you could let out a little more in terms of the second half. It sounds like you’re getting the lower tax rate. Is there anything moving the other way on a go forward basis that gives you a little more caution, it just seems like the back half is little bit conservative given the momentum in Industrial.

Well I appreciate the fact you would like me to go out more while the whole world is going the other way but you’re accurate but we are a very short cycle business and I think we talked about some of the Electrical amounts that got weaker this quarter and we’re not ignoring that fact. Both Hydratight and Enerpac have short cycle businesses and I think we’re looking at a year that if we hit the high end of our guidance we’re up 20% and if I think if we’re going to do better than that its going be in actual results not us trying to predict that great curve at the front end. Its typical behavior. I’ve had this pushback before so I’m not picking on you but I think we are paid to set, manage and deliver the results that we give you and that’s what we plan to do and I just don’t feel in this uncertain worldwide economy where things can come at you in a hurry, that letting out a little more to use your term is the right answer.

A couple of other comments on that. If you think back to last year Jeff we had year over year margin erosion the first half of the year and we had year over year margin expansion in the back half of the year so I would characterize our comps this year as easier in the first half and more difficult in the second half so that is part of it. The second piece is the mix as Bob mentioned. We do see Enerpac moderating over time and that’s a high margin business so I think that comes into play in this thing as well and just what we’re trending on other stuff, looking at commodities going forward where our corporate expenses are, that sort of thing. We just think it’s prudent to be conservative right now with the uncertainly in the economy, with some of this other stuff going on. Its certainly not that we’re not, that we lack confidence in the forecast although as we have never even raised guidance in the first place is we just want to be…we think it makes sense to be cautious right now and not get too far ahead of it.

And then on the Industrial margins, certainly at very good levels but just given a lot of the moving pieces with acquisitions, amortization, I know you don’t give detail on incremental margins, but how would you characterize incremental margins in Enerpac Joint Integrity versus the normal incrementals you see?

I would use the term breathtaking but that doesn’t help you necessarily try to quantify it.

They’re substantially larger in the Industrial business than say in the Electrical business.

Just in the reported quarter, given the margins being flat but given how the incrementals are pretty good in these businesses, I just want to understand if the incremental margins in this quarter were what you would consider as normal.

Yes, I would definitely characterize them as normal. I’m just hesitating a little bit when you’re saying the margins were flat. The margins were up year over year in the second quarter in Industrial. EBITDA margins, if what you’re getting at is the operating profit margin…

…well that’s acquisitions.

…and it’s clearly the amortization expense coming through that. It’s that and the second piece is mix between Enerpac and Hydratight, Enerpac has higher margins so you had a little bit of mix working through as well.

…try to challenge the business on margins and what a high class problem to have, to have a business with upper 20s low 30s type EBITDA margins but what I try to drive the organization for is how do we reinvest some of that money and keep the growth going and get the growth going faster and maintain that margin. Now the business, the reality is they’re continuous improvement mentality continues to drive improvement. But the goal is not to take that margin up 200 basis points over the next three years; it’s to keep that sales growth in the double-digits. It was a terrific top line. We’re reinvesting in both Enerpac and Hydratight and that’s the thing that really creates shareholders value. It’s not squeezing the last ounce out of that very successful business on margins.

Okay, that’s good color thanks.

And there are no further questions, please continue.

Well thank you investors. We appreciate your participation on the call today. If you have any follow-up questions for myself, for Karen, for Andy, we’re around the balance of the week. Thank you and good bye.