Ladies and gentlemen thank you for standing by. Welcome to the Actuant Corporation's first quarter fiscal 2009 earnings conference call. Today's speakers are Bob 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 in Actuant's press release issued today and in Actuant's filing 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. During the presentation all participants will be in the listen-only mode. Afterwards we will conduct a question-and-answer session. (Operator Instructions). As a reminder this conference call is being recorded, Thursday, December 18, 2008. It is now my pleasure to turn the conference over to Mr. Arzbaecher. Please go ahead sir.

Thank you operator and good morning. Sorry for the little bit of a delay there. That was our telecommunications provider not ourselves. It's been eight years since the creation of Actuant from the spin-off of Applied Power in 2000. And this is one of the first earnings call where regrettably, I can't report increasing sales in earnings per share. But, the many markets that we serve are in a severe contraction mode and that contraction accelerated as the quarter went along. Given our diversity, we usually can offset weakness in a few markets. In the current economic environment, however, we are seeing customer slowdowns in almost all of our end markets, and in all of the geographies we serve. Andy is going to go through the financial results and guidance with you in detail, and then I'll will come back and cover a number of other topics affecting Actuant. Andy?

Good morning everyone. Our first quarter results included a $0.26 a share asset impairment charge, which I will cover in a minute. While last years results included a $0.09 a share European Electrical restructuring charge. As a result EPS for both years for the first quarter contains special items. If we remove these for comparability purposes, our EPS for fiscal '09 first quarter was $0.45 a share or 13% lower than last year's comparable $0.52 a share EPS. Now the details of the impairment charge. We wrote off approximately $26 million of long lived assets from the RV business, as a result of the sustained shrinking of the RV motorhome market, as well as its weak outlook. Motorhome industry shipments have declined dramatically over the last three years and expected to continue in 2009. Declining consumer confidence, the credit crunch and the spate of recent dealer supplier, as well as OEM bankruptcies in the industry have led us to reassess our carrying value of this business. This led to the 26.6 million non-cash asset impairment charge we booked in the quarter. Against this charge, we recorded a non-cash income tax benefit based on a 38% blended state and domestic tax rate. This tax benefit led to a strange looking overall 11% effective tax rate for Actuant. If we exclude the impairment charge, it would have been 29%, which is pretty much in line with our forecast. Now I'll move on to cover our actual operating results, which you see on this slide. It compares our first quarter results for this year to last excluding the special items I just covered. First quarter sales declined 8% year-over year, and I will provide more color on that shortly. EBITDA declined 5% on account of the lower sales volume, but at a lower…

Thank you Andy. Today I want to spend a little time explaining why we believe Actuant is a good stock for you to own in this recessionary environment. The first reason is the diversity of our end markets. As this slide shows, we have tremendous diversity of customers, geography, and end markets. At a time, where everyone has concerns about customer and supplier viability, Actuant's diversity is a huge plus. Consider our top ten customers only represent 18% of sales, and our largest customer is less than 3%. The next attribute is cash flow. There are many reasons why Actuant produces superior cash flow, and each of these contributes to our eight year track record of cash flow and access of earnings, but I wanted to highlight a few here. The first is our DPATS model. DPATS stands for design procures assemble test and service and is how the majority of our businesses are configured. The big component missing here is manufacture or vertical integration. By relying on our supply base to do this for us, we have less fixed cost absorption in terms of machinery, people and buildings than most industrial companies. Another advantage of the DPATS model is our limited CapEx requirements. Less machining means less equipment, buildings, and real estate. In addition, we tend to lease versus own most of our major facilities. So, we don't have cash tied up in our fixed assets. And lastly, but certainly not least is our focus on ROIC. Simply stated, all major business and economic decisions at Actuant are driven by what it means to a return on invested capital calculation. Having this mind set is especially important today. In fact, if there is a single message we want to leave you with today, it's that Actuant is focused on…

Thank you. (Operator Instructions). And our first question comes from the line of Steven Fisher from UBS. Please proceed with your question.

Hi, good morning.

Good Morning Steve.

Just a few clarifications. Andy, did you say that your expense is going to be about $5 million to $5.5 million per quarter for the rest of the year?

That's correct, yes.

So that would be a ramp back up, and what would be driving that? It sounds like you took some permanent costs out?

Yes, the first quarter included lower bonus expense year-over-year. We were expecting that to continue for the year. The second item in there is our Long-Term Incentive Plan, the LTIP Plan that we have out there. We had to essentially write-down the value of that or write-down the reserve that we had accrued of that to-date and that was a one-time credit that came through in the first quarter. That will not repeat as we go forward. So that's the primary driver as you look forward.

If you recollect that LTIP Plan, that's the plan that has some compensation if the stock gets to $50 a share, so there is a mark-to-market or fair value that goes on in that calculation which caused that.

Right.

Okay, great. And then did I hear you say that you had some pricing benefit in industrial?

Domestically, definitely yes.

Okay. Have you seen that holding as kind of the business that has decelerated throughout the quarter?

Yes we have. It was primarily in North America. The biggest portion was in North America. We put in a price increase last June-July, and we actually put another one in November. It has stuck, I mean, we are definitely realizing benefit from it.

Okay, and then just to confirm that you are not currently taking any restructuring action in the industrial segment?

I wouldn't say that. There are a number of opportunities within industrial as we have bought things to consolidate facilities for example in the Houston area with the SPS acquisition. We picked up a few facilities and we are consolidating around that. The same is true in Europe at a couple of small locations. So I think our comment there though is that, as that business has been growing, we've really been deploying capital towards that growth at the expense of other places, and in general that's the statement. But there is some cost down actions going on within industrial.

Okay. And then just lastly, you talked about acquisitions. Are you seeing the multiples come down enough to off set your higher borrowing costs?

Yeah, I mean the answer is yes we are. But one of the things you run into Steve is the fact that an owner of a business 90-days ago thought an 8 to 10 multiple was a reasonable valuation for his business, and he's having to wake up to the reality that that's a difficult set of economics 90 days later. So it's not like we've got a ton of things that are right at the finish line ready to sprint out at old valuations based on our new borrowing costs. The two work in tandem.

The other comment I will make there Steven just to put it in perspective; today our increased borrowing costs are on a 3% to 4% basis all-in. So, obviously, they are quite a bit lower than what you'd think.

Okay. Great. Thanks a lot.

Thanks Steve.

And our next question comes from the line of Wendy Caplan from Wachovia Securities. Please proceed with your question.

Good morning.

Good morning Wendy.

Well, I guess not surprisingly industrial remained the star, but surprisingly it was up 12% core. Given your expectations of slowing related to the OEM business versus maintenance and your comments that you think you can maintain a mid single-digit core growth level or range for the balance of the year. And the lack of visibility; how confident are you in that? And you did mention you are taking some costs out selectively. How bad at this point if you think about your kind of worst-case scenario, how bad could that be sub segment?

It's a good question, Wendy, and I have more confidence in Enerpac than I do in Hydratight, because we haven't owned that through a whole down cycle. I don't know exactly how that asset will do straight through a cycle. I think a couple things that we feel very strong on. Number one, when Enerpac slows, and we saw slowing. We have seen moderation for a couple years now, but it comes from so many different distribution points that it doesn't sneak up on you like we saw in vehicles or as Andy says, you can go from minus 7 to minus 33 in a month. You just don't see that from the global 1200 distributors that support that, and all the markets that those guys are supporting. So, one thing that gets me confident on Enerpac is just that multiple visibility from spots. Yes, we will have weakness in certain markets, but across the whole platform, I just don't believe it's going to sneak up on us in any way. Even though we brought down, and we've brought down our guidance to try to take that into account. Okay. When you move to Hydratight, I think we had a lot of shareholders concerned over the last six months about oil going from over a $100 to $40. This is going to be a disaster for Hydratight. I really think they don't appreciate how much of a maintenance and repair business this is, and how much, if you are going to produce anything you need that. Clearly, some of the frontend deep water exploration, Cortland type things; we will feel some of that. And I think that's factored into our guidance. But so much of Hydratight is power generation facility. Well, we are still running all the power plants in the US. They are still going to need that maintenance. So, again, I'm less confident because I haven't owned it the full cycle but I have confidence that our guidance has taken that into account in a moderating way.

So, I guess Bob to get to the bottom line here in terms of your outlook for the balance of '09, do you feel confident that you have scrubbed the numbers to a degree that unless we see another 35% decline in vehicle sales or some other event like that that your numbers are appropriately conservative?

We believe that Wendy. You've been covering us for a long time, and I think Andy's comments said it. We are giving you guys the facts that we have. And we are not forecasting the business any different than we ever have. Every quarter we get a bottoms up rollup from all the business segments. We have monthly meetings with all the businesses and segment leaders. The process we followed that's allowed us to deliver, prior to this quarter 24-straight quarters of meeting or beating guidance, the same process is in place. It is just incredibly dynamic. So I am comfortable that there is nothing different based on the information we know. Andy is absolutely right; it is a crazy time to try to predict the future, but based on what we know, we haven't changed our methodology. It should be the same conservative Actuant forecasting philosophy that has been successful in the past.

Okay. Thanks very much.

Our next question comes from the line of Jeff Hammond from KeyBanc Capital Markets. Please proceed with your question.

Hi. Good morning guys.

Good morning Jeff.

Maybe just to flush out the industrial, your 4% to 8% growth, how should we think about that Hydratight versus Enerpac?

The majority of the growth is Hydratight. On our Enerpac assumption and maybe we should have commented on this earlier, our Enerpac assumption is flat to down in the back half of the year. And that would mean that Hydratight is growing at a decent rate in the back half of the year, not as strong as the 18% we just disclosed for the first quarter.

Okay. And is that flat to down? I mean, you mentioned slowing in Enerpac late in the quarter. I mean is that kind of the new trend line you are seeing now or is it still a little healthier than that?

The most recent data we have is November. The weakness we saw in November was primarily Europe. I wouldn't say there was a noticeable change within Enerpac for the quarter. Again, the 12% we reported overall for the industrial segment was dead on the internal forecast.

Enerpac hit its four corners; its internal forecast. And we are creating some cushion or hedge against their forecast going forward which brings that flat number that Andy talked about.

Yes.

Okay, great. And then can you give us a better sense of this $10 million to $15 million restructuring? How does that flush out by quarter? Does that kind of exacerbate the downside in the second quarter or does that flush out through the year may be just a little more?

Yes, it is definitely not a big bath, the way you could book restructuring reserves in the old days. I mean this will be coming in over the balance of the year. I would say, it's going to be more in the third and fourth quarter than what you would see in the second, but there will be some in the second. The more facility oriented projects will be back half of the year, and that's where the bigger dollars are.

Okay, great. And then just finally, Bob, you mentioned the Hydratight business and the maintenance aspect, and then I think you touched on Cortland. Just as you get to know Cortland a little bit better, and as we've seen this big drop off in oil and gas prices, I mean, what's your sense of the cyclicality of that business around these dramatic moves in this pricing environment?

Well, Cortland's got a pretty diverse profile in its own right. It's more diverse than Hydratight. So it does some mooring type stuff for ships that really isn't energy related. It does some stuff for the Space Shuttle and kind of a lot of goofy applications that are outside of oil and gas, so, it also has more frontend exploration. Some of the tow cables, what's called a skinny tow cable used for seismic which is exploration related, and those are the ones we're paying a little more attention to from a slowdown point of view. The rest of Cortland, you know, you have a fairly good replacement revenue stream that comes from replacing an umbilical that either got damaged or needs to get changed as a rig moves, so it's probably going to be a little more volatile than Hydratight, but I don't think materially so, and as Andy and we talked about in our prepared comments, it met its expectations for the two and a half months we owned it.

Take this one anecdote, we just had an operations meeting and talked through the results. They have not seen a falloff yet in the exploration, the E&P side of the business with the skinny tow cables. In the seismic side of it, we definitely expect it to happen in the balance of the year, but there are still new business that's coming through, still quoting that is going on in that area. So, it is not shutdown the way some of the articles you are reading in the Wall Street Journal.

I think just to summarize the industrial comment, and it affects both Enerpac and Hydratight. The businesses in the first quarter did not see this slowdown. We did not see any change in ordering patterns, okay? Yeah, they hit their forecast as Andy said. We are deliberately at the corporate level hedging that back saying it's got to moderate, okay? So, you know, we think there is a level of conservatism in there already. It is not like, this is an ordinary pattern that it's already below this, and we have a stretch to get to. We are trying to be conservative about the future in these businesses, saying, even though we haven't seen it, it's probably going to happen. So, I think it's important people understand that that is the dynamic of the forecasting that happened.

Great, just Cortland, can you remind me how much is replacement in nature?

I don't even have that number, probably 15 to 20.

There is a replacement cycle on a lot of the stuff. But it's probably a three-year cycle. Half of it is oil and gas and…

Why don't we try to do a little homework and come back to you on that?

Okay.

I don't think we have an intelligent answer today.

Okay. Thanks guys.

And our next question comes from the line of Scott Graham from Ladenburg. Please proceed with your question.

Hey, good morning you guys. And once again thanks for being so straight forward with things, things are what they are, right? Couple of questions that I had were, first on the restructuring the $10 to $15 million is would you be able to tell us what number was in the first quarter results and maybe what you are assuming for second quarter? Is that something we can ask you?

First quarter was a $1 million or $2, second quarter will probably be in the $2 to $3 million range. The back half will step up from there.

On your assumption for Enerpac flat-to-down in the second half of the year, is that US and European sort of general industry driven or is this something else that you are seeing there above and beyond what I think we all know is slower infrastructure spending on. Is it something more specific to you?

No. Really, again we have not seen this thing slowdown. With the slowdown in all of the other…

We have seen it slowdown. We have not seen it slowdown outside of our forecast.

Outside of our forecast, correct. It moderated that this correct quarter-to-quarter, but we have not seen like a triggering event within Enerpac itself that suddenly sales are coming down quickly. We are anticipating that because of the rapid slowdown and other end markets out there, it's bound to impact Enerpac. That's why we have put out what we believe to be conservative guidance, flattish within the middle of our range.

Right. So, to the extent that your budgets, which end market or is it just you are just taking a best guess across end markets is would be the contributing end market or end markets to the potential of a down second half in Enerpac?

It would be the industrial production type sales that go through Enerpac. So, I think Grainger, you guys I think knows about a $6 million customer within Enerpac. You can read Grainger's announcements. They're talking about slowing activity in that MRO type environment, so that would be a chunk of it Scott. They, clearly ship building is a chunk where Enerpac does a lot of work. There has been a lot of delays and deferrals there. So that would pick up. As Andy talked about, Europe distribution seemed slower or a little more dramatic than we expected in the quarter, so that would be a chunk. So, it'd be all of that kind of stuff.

Got you. My last question relates to some of the liquidity. I thought it was interesting that you put that as one of your main bullet points as far as accomplishments this quarter. I guess my question is, can you explain a little bit more what you mean by this accordion feature? If you got $240 million right now of cash available to invest in say acquisitions off of your new facility, how is this accordion feature work exactly?

Sure Scott. Well the accordion feature essentially is an ability to expand the size of the facility without having to go out and formerly amend the facility and pay additional fees to do it. Now, you have to secure, you have to go out and find the new credit to tack on the essentially existing participants and the bank would have to increase their commitment to the facility or go out and find some other banks that would add to it. But that's essentially what a accordion is. So, it's not sitting on the shelf ready to go committed. But, you can move a lot faster and cheaper than not having it.

I'll put it in this lingo Scott. You can't force the bank to drawdown on that money. But, it's accelerated, because it's under the same credit terms as others. So, there is no paperwork, no lawyers or anything that has to be done to go get the piece of paper. When we did the most recent credit facility, one of the things you always try to do is leave some borrowing capacity within the existing banks to try to have that availability in the accordion feature. We had three lead banks on this deal and we think there is additional accordion capability within those three. And that's what you always try to do. You try to get it over subscribed, where you have got capacity, people wanted more of the paper than they got, and so now they're willing to look at the accordion. The only time you would use it would be a big acquisition. As Andy went through the cash flow with 140 to 150 plus the over 200 we have today, the only time we'd be tapping that accordion would be on a bigger deal.

Understood. So, then the 3.5 max leverage that would of course be annualized EBITDA plus the acquisition holiday and to the extent that you can explain, I mean is there a period of time that you're allowed to be essentially at 4 or what's the sort of, I guess accordion feature in that 3.5 as well?

Yes. The acquisition holiday is a new feature that we added to the facility we had in accordion in the past. Essentially what it allows you to do is, if you were to do a larger transaction and again there is nothing we're planning on doing right now, if you would do a larger deal the banks would allow you to actually go above three and a half times leverage I believe to a maximum of four times for two quarters that facilities. If you got additional details on it Scott, I can take it off line.

I'm good. Thanks.

Our next question comes from the line of [Chris DeYoung from Schroeder]. Please proceed with your question.

Hi. Good morning, guys. Just to piggyback on the leverage question where the leverage issue we were just talking about. I was distracted for a moment and I think you told me that the bank agreement requires leverage to be at or not above 3.5 times, is that correct?

Yes. Maximum leverage covenant is 3.5, yes.

Okay. With the potential for it to go up for two quarters under certain circumstances with an acquisition, but as you think about doing additional acquisitions, I mean you mentioned that you'd look opportunistically for additional tuck-ins. How sensitive are you to your BB credit rating? I mean, does longer-term opportunity and equity value take first place with that BB with your potentially letting it slip to B?

Well you have hit a sore point, because we continue to gain credit given to us by banks at much better rates than BB would lend. So you're getting into a very sensitive area for me, which is the rating agencies don't get it right. Okay. The answer to your question now is, the acquisitions we're talking about with the $140 million of free cash flow, our leverage is dropping from 2.4 to back down to 2 or below just throughout the year. So, it's nothing we're doing would change the leverage profile of the company above what we're doing, unless we really did something big. If we did something big, we've been fairly consistent. We want to stay in the two to three times fairway, don't want to go outside of that. So, I don't see anything that would change, nothing has changed our profile. If anything, I think the credit crisis has kept me at the lower end of the two to three times debt to EBITDA [theory] versus the higher end. So, I don't see anything there that would put that BB at risk.

Right. And I'll add it, we definitely don't anticipate doing anything that would move us down.

Okay, thanks.

And, our next question comes from the line of Chris Weltzer from Robert W. Baird. Please proceed with your question.

Good morning guys.

Good morning Chris.

Just wanted to follow up on Steve's question actually. Even though we have seen copper prices fall off significantly, I imagine, and correct me if I am wrong that you've had to give back some price back on the DIY Electrical area. Can you just talk about what sort of a headwind you're looking at from price there?

Yes. We definitely have given up price to our customers that are buying copper. I'd say most of it is not DIY in the US, a little more in Europe. Copper is more in the Marine space, as well as our transformer. The magnitude of what we are talking, I believe we're buying in the neighborhood of 500,000 pounds of copper a month. So, we're probably talking 12 million a year. You know $8 to $10 million from where we were two years ago. I'm sorry, where we were two quarters ago to where we're at right now. It's that kind of change…

Pretty immaterial.

Yes. In the scheme of things that's and a lot of that's already been passed through, because we have automatic price escalators and de-escalators built into some our larger both supply as well as our customer contracts.

Okay.

It's the same way on the way down as it is on the way up Chris. We were aggressive in passing it through on the way up, and we're going be as aggressive as we can, making sure that if we're giving it away on the way down, we are getting it from the vendor on the other side. So, we are just moving our point of pressure from the customer to the vendor. We are the guy in the middle and our goal is just to keep the stuff balanced.

Understood. You must get some sort of sell through numbers for your DIY Electrical business. Can you give us a sense of how much of the weak demand you're seeing now is or might be inventory de-stocking versus actual underlying demand?

Most of our DIY is delivered to the store not to central warehouses, and is sitting on the peg. So, you do not have major inventory in the system within the Electrical DIY markets. So, I would say what you are seeing in terms of our orders is what is passing through, what the store and the aisle see. There is some anecdotal evidence that our product is doing a little better than some of the other electrical products in the aisle, its anecdotal would be the best I'd say.

A lot I would say is the sell through and POS is probably down high single-digits on that stuff. The one caveat I will say is, we are expecting based on what we have been told here the second quarter both Home Depot and Lowe's are cutting way back on their purchases just to bring down inventory

For their year end?

In the year end, you know a real heavyweight here, so that also goes into our guidance for the second quarter, but, I would say to-date here, we haven't seen any kind of real difference. And what we are seeing through is a sell through relative to what you have been reading at Home Depot and Lowe's.

Okay. Thank you.

Again, I think, if you are a big power tool, if you are more of an aisle type product, these are much more high profile issues for you than it is for something that tends to be a consumable-type product like a cable tie. So, I'll just put you at alert on that.

Got you. And we haven't talked about Gits for a while, and I know the outlook for overall heavy duty truck market has gone a lot worse. Can you give us an update on your progress with your new business wins and winning new applications?

Yeah, I mean, if you follow the Gits business, you'll understand that its emission law related. We don't see any change in our government changing its emissions policy with that 2010 changes standard. In fact, I would argue with a change at administration that there is almost no chance you're going to see any change in the emission standards that are coming in 2010. So regardless of what's getting sold in 2008 and 2009, these guys have to meet this standard in 2010. So that bodes well for the Gits business. If we had something to announce this quarter we would have but there is no change in our optimism and the backlog of projects that we're working on, the amount of engine testing and mule vehicle testing that is going on. We continue to be excited about that opportunity.

All right, thank you guys.

And our next question comes from the line of [Phyllis Kamera from Pax World Funds]. Please proceed with your question.

Hi, thanks so much. I just was curious; you said you were a little surprised at how the energy sector continued to be good during the quarter. Do you think that had anything to do, I know a lot of what you do you said is maintenance and repair, how much of that had to do with the hurricanes possibly during the summer in the gulf, and then maybe there was some maintenance in comparison, and I was wondering if you started to see a drop off in that too much so far this quarter?

The business unit didn't identify any of it to be hurricane related. If anything we had a little bit of a slowdown in the summer, and maybe a project or two that we're going to get done in the summer get done now, but not a material enough thing that anybody brought into our attention.

Our volume in the gulf on a relative basis is smaller. Our sweet spot is up in the North Sea in the real deepwater type applications.

Okay, great. And then can you talk about the margin differentials between the Cortland business and the other industrial business. Is it 5%, 10% core amount?

We disclose this when we announced that deal. From an EBITDA standpoint it's probably 700 basis points differential between the base industrial business and where Cortland is, on a normal basis it was more than that in the first quarter because we are manufacturing purchase accounting that we took on, purchasing accounting charges coming through in the first quarter that widened that out a little bit. So, it's meaningful.

Yes, okay. And I'm sure now is probably not the time that you are going to be able to do anything about that, but were you able to possible see how you can make some changes and increase that going forward for the year or you think it is going to stay at that differential?

No, it's right in the middle of the 90-day integration process that includes a heavy dose of what we call LEAD, Lean Enterprise Across Discipline, and we believe Cortland's margins have a decent amount of growth probably better than the other two that are in that segment because they have been part of the family longer and the low hanging fruit has been picked. So, I think margins will go up there. But, you have to recognize when we pay on a multiple of EBITDA, its not like you paid for something that had the same, you are not going to find acquisitions that have the kind of EBITDA that Enerpac and Hydratight have. You are going to have some narrow fairway of businesses. So, we were thrilled with Cortland's profitability going in and we think we have great opportunity to take it up.

Okay. Thank you.

And our next question comes from the line of Jimmy Kim from RBC Capital Markets. Please proceed with your question.

Good Morning. My question is following up on the Cortland question from earlier, how is that business weathered the current downturn versus the rest of your industrial segment? I guess specifically, are sales up year-over-year down year-over-year or flat?

There is two different pieces of Cortland. There was the Sanlo business and more of the energy related umbilical and cable and tow rope business which was primarily serving oil and gas. That part of the business is doing very well. Its growth was certainly not that far different than what we saw in the rest of the industrial business on a year-over-year basis. The Sanlo business is more industrial [feeling], it is hitting a lot of end markets outside of oil and gas. We did see moderation there in its growth rate where it had been in the prior couple of quarters. So, as expected.

So it came in below the 12% organic for the overall industrial segment?

No.

It's not in that.

The Sanlo business is not in the industrial segment. The piece that is in the industrial segment which is about 70% or 80% of Cortland grew fine. It was up double-digits. The Sanlo piece is in the Actuation Systems Segment.

Okay.

That was the piece that moderated.

I don't want there to be any confusion. It met its forecast. So it did what we expected it to do, and it was double-digit growth. Although that is not in our calculation because we haven't owned it a year, so it doesn't enter the core calculation for a while. If you pro-forma for a period that we didn't own it, it was in the double-digits. It's very similar to our other energy and industrial assets.

Got it. Okay, thank you.

And our next question comes from the line of Charles Brady from BMO Capital Markets.

Hi, thanks. Good morning Guys or afternoon, sorry.

Good morning, Charles.

As you look to the Enerpac, you know, the distributor base out there do you have a sense of the inventory levels within that distribution base?

Charlie, we don't have visibility on a real time basis because our typical distributor out there might do $0.5 million in sales with us a year and they might carry $30,000 of back inventory or maybe a little bit more. They are not stocking most of what they sell. It is, you know ordering it, and it comes through that way. So we don't have real good visibility. We don't sense that there is big change. We had a distributor meeting in the last three or four months. We are not seeing feedback from them any kind of material change there.

Okay. And what are your thoughts as far as repurchasing shares as maybe opposed to acquisitions using the cash for that?

Certainly, it has never been something we have really considered seriously. Certainly at the price that is today, you looks at it and say, it looks interesting but our focus is, just conserving the cash looking for better growth opportunities, whether they are organic or tuck-ins that's kind of our strategy going forward.

Okay. And then the last one is in your core sales growth, just so I'm clear on that. That the core sales obviously would not include Cortland that would be part of acquisition growth, correct?

That's correct.

Correct.

Okay, thanks.

Mr. Arzbaecher, there are no further questions at this time. I will turn the call back to you. Please continue with your presentation or closing remarks.

All right. Well thank you operator. There is no more presentation, but I do have a couple of closing remarks. To summarize, we're navigating some tough economic environment right now. But, as Andy went through, our debt and liquidity, cash flow are very strong, more than ample to pursue the growth opportunities we are doing with little redemption's over the next couple years. We are aggressively pursuing cost reductions every where and we are focused on the $140 to $150 million of free cash flow for 2009 with also a focus on trying to continue to grow for the long-term, the investing in our initiatives that make Actuant stronger. I think, I talked about Gits on this call is a great example. Hydratight, Enerpac, China all are great examples of how we're also investing for the future. Thank you for your continued interest in Actuant. Please have a happy and safe holiday season and we'll talk to you again in March. Good bye.

Ladies and gentlemen that does conclude the conference call for today. We thank you for your participation and I ask that you please disconnect your line.