Good afternoon. My name is Taylor, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Q4 '07 earnings call for IDEX Corporation. [Operator Instructions]. I would now like to turn the call over to Mr. Heath Mitts, Vice President of Finance. Please go ahead.

Thank you, Taylor. Good afternoon and thank you for joining us for a discussion of the IDEX Fourth Quarter and Full-Year 2007 Financial Results. Earlier today, we issued a press release outlining our company's financial and operating performance for the three and 12-month periods ending December 31st, 2007. The press release along with the presentation slides to be used during today's webcast can be accessed on our company website at www.idexcorp.com. Joining me today from IDEX management are Larry Kingsley, Chairman and CEO and Dom Romeo, Vice President and Chief Financial Officer. The format for our call today is as follows. First, Larry will update you on our performance for the year across our company and four business segments. Dom will then take you through our financial results for the quarter and Larry will wrap up with our outlook for 2008. Following our prepared remarks, we will then open the call for your questions. If you should need to exit the call for any reason, you may access a complete replay beginning approximately two hours after the call concludes by dialing the toll-free number 800-642-1687 and entering conference ID 29334256 or simply log on to our company home page for the webcast replay. As we begin, a brief reminder, this call may contain certain forward-looking statements that are subject to the Safe Harbor language in today's press release and in IDEX's filings with the Securities and Exchange Commission. With that, I'll now turn the call over to our CEO, Larry Kingsley. Larry?

Thanks, Heath. For the full-year 2007, we achieved strong sales and income growth and we generated excellent cash flow. For a quick summary of our operating performance for the year, orders were up 16%, sales were up 18%, operating income increased 17%, and EPS was up 15% to $1.90. We are pleased with our overall results for the year. Our business is strong and it's performing well. As you know, we continue to grow our applied product portfolio and improve our global reach. In '07, we added sales offices and resources in the Middle East, Russia, China, and in Eastern and Western Europe. We like the niche markets that we've chosen and we will continue to build them out both organically and exquisitely. We added internal operations capability during the year as well, including new centralized supply chain management resources to assist the business units and a new Asia design center for low-cost OEM product design. Our business units performed well and our new acquisitions are contributing to our growth and profitability per our expectations. We achieved our annual objectives with operational and commercial excellence for the year and our balance sheet is in great shape. So, all in, 2007 was a solid year. On slide seven, our balance sheet is as strong as ever with plenty of capacity to invest for future growth. Full-year free cash generation of nearly $181 million was up 25% year-on-year. As you look at the chart, you see '07 compares with just $120 million just two years ago. Our business model will continue to generate strong free cash, which we will effectively deploy in the way of new internal product development and acquisitions, and we are committed to growth as our primary capital deployment strategy. If you look at slide eight, we used this…

Thanks, Larry, and good afternoon, everyone. I'm now on slide 15, orders and sales. Fourth quarter orders of $350 million increased 11% from last year and 2% organically. Increases of 6% at FMT and 8% within Dispensing were offset by lower growth within fire suppression and Health and Science. Sales increased 15% in total, organic growth was 6%. And by segment, organic growth was as follows. FMT posted a 9% increase in the fourth quarter. Health and Science was down 1%. Dispensing was up 10% and lastly, fire safety and diversified products was up 5% in Q4. Turning next to operating margin on page 16, reporting... reported operating margin at 17.8% was down 170 basis points from last year. Adjusted operating margin was nearly 20%. In the quarter, we had impacts related to, first, bad debt expense from a recent bankruptcy of a fire suppression customer, secondly, our previously announced severance expense and also foreign currency translation and acquisition. And I'll walk you through these components by segment in a few slides, but let me be very clear, our fundamentals on price and operations remain extremely strong, and we still see an ability to expand margins as we move into 2008. Turning to income on page 17. Income from continuing operations was up 7% and EPS of $0.47 is 4% higher than last year. Income from continuing operations was unfavorably impacted by over $0.03 per share by severance and bad debt expense. Adjusted for these items, diluted earnings per share from continuing operations were $0.50, and that's an 11% increase versus the fourth quarter of last year. The fourth quarter tax rate increased 160 basis points versus the prior year due to timing of research and development tax credits and other tax matters. Moving to page 18, Fluid & Metering…

Thanks, Dom. So we are assuming less economic lift in '08 but regardless of the market conditions, we see a pretty straightforward opportunity to grow. We can tactically execute what we're already in process with. Slide 22 is a simple organic bridge as we see it. Price will contribute 150 basis points to 200 basis points of growth for the company. The Dispensing program activity, as I mentioned, should contribute at least 100 basis points on a company wide basis of contributed growth. New product revenue out of all of the segments combined, that's the incremental revenue, that's aggregated out of all of our specific initiatives will contribute at least 200 basis points. International growth and continued channel expansion will contribute between 100 basis points and 200 basis points. So the math that we're doing inclusive of the specific segment slowing is that we will achieve mid single-digit organic growth, if we just stick to the IDEX netting as you know it. And to give you a sense for why we think we can deliver the 200 basis points of incremental new product revenue growth, we have over 100 product and market initiatives set at the business unit level that are in process. This is the IDEX single and double [inaudible] individually they contribute from 100 K, annually to $2 million of annual revenue as they ramp up. I'll run through several of the examples of those new product initiatives. Our hydraulic diaphragm pumps that we’ve just introduced in China are winning applications in power generation of water treatment. The new Faure Herman ultrasonic meters are being sold alongside our liquid controls products now. Our universal mag drive pump -- family offer the market a new sealless pump to be used in a broad range of applications, but particularly in…

[Operator Instructions]. Your first question comes from Jim Lucas of Janney Montgomery Scott.

Hi, Jim.

Jim, please go ahead. Jim, please proceed with your question.

Can you hear me, okay?

We could hear you, Jim.

Yes. This is actually Joe Herrick with Gutterman Research [ph]. A couple of things. It can be a very challenging year for a company and maybe factoring in surplus, what are you guys doing in terms of the operational improvement initiative throughout your plan regarding like various lean and six sigma to improve throughput, throughout your plans and what benefits do you expect to achieve with those?

Okay. Let me restate the question, because I'm not sure everybody can hear it is. In our manufacturing environment, and this overall top line environment as we're expecting what are the various lean and six-sigma initiative that apply? As your firm knows, and Jim who has followed us closely, that we have very consistently applied our operational excellence and more recently our commercial excellence. Overall, process improvement tool set very successful. We achieved in '07 our targeted incremental cost savings. So, we got to our both material, as well as labor productivity expectations. As we rolled up our plans for '08, we came to a number that exceeded '07 by a nice margin, which I’m not going to disclose right now. The most recent update is actually we think that we are even better off than that. And the way we track it Joe is that we look at actual costs, hard costs saved by the business and we have a very granular metrics approach that we can look into each of the business units, each of the product segments, understand by commodity. Right now in the case of labor to the... labor value contributed to any one of our work areas, we call them value strains, and I can tell you that we are rolling up an incremental number that's the best ever for certain and we're going to see nice contribution out of both our existing core businesses, as well as the newer acquisitions. On top of that, in the prepared remarks, as I mentioned through the course of '07, we significantly beefed up our supply chain management resources on the ground in China. And we think that we've already hit the ground running on some nice commodity-based, cross-business unit savings opportunities for us, that will begin to pay off early in the year and through the course of the year in '08. So, I can tell you that I think our businesses are just absolutely razor focused on both material and labor productivity. We've got higher hard numbers dialed into our plants. We’ve got good optics around the metrics, and I think with the new resources that we have added through the course, clearly the last couple of years, particularly in the supply chain side, I think we got nice opportunity to actually exceed our own internal expectations.

Talking about metrics, what metrics are you guys using to measure yourself against, are we looking at RONA or OEE, what's the [inaudible] IDEX to make sure that you are as you say number one in the industry?

We certainly look at our return on assets, but when we are talking about our own material of labor productivity, we are fundamentally focused on the variable cost components. So we look at it in a very granular fashion again down in… within the value stream as to what we see in the way of labor applied to the product, material cost embedded with the product, what we can do in terms of design, material content to improve that and also in terms of process to make it. So, yeah, on a very top level, we look at lot of return metrics, but really when we are talking about productivity and the various lean and six sigma initiatives, we are looking at things they are right now within the product cost, the material build, build goods.

As we continue into a very challenging year of 2008, what systems or solutions are you going to put in place to accelerate [inaudible] initiative?

Yeah, I'm gong to make this the last question because I think we ought to continue to move on. But, in terms of our ability to execute and accelerate, as I've mentioned, I think the primary contributor for us is going to be all that supply chain expertise and capability that we have added particularly in the low cost regions and that's a corporate managed resource set that we now use to support the business units on a local basis and so we have made it a lot easier for the business units to take advantage of low cost sourcing and to pull their various spend across business units of our common commodity types. I think that will probably be the primary element that allows us to fuel accelerated improvement as we go forward not just '08, but beyond, and thanks for your questions.

Thank you.

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

Hi, guys.

Hi, Mike

Maybe first just focusing on the quarter, if you look at what an organic growth actually fell short from the last time we talked, it looks like it was HST and concentrated presumably in the pneumatics area. Did you see a degradation in the existing contracts as you went through the quarter that was, I guess representative for the industrial slowdown or were there additional contracts terminated or lost in Q4? Just some color would be helpful.

This short answer, Mike, is yes, in some of those non-core HST industrial segments were basically supplying compressed air in the less differentiated fashion. We did see a little bit less in the way of sales and that's part of what’s included within our assumptions for Q1 as well. So that's a little bit more the kind of a non-core headwind. From a Q4 organic contribution based on the two OEMs that you know we’ve talked about quite a bit, those numbers came in pretty close to what we had anticipated.

So, do you view the gas business as your most cyclical in the portfolio today and represented of I guess your basic industrial exposure?

I would say that it is certainly cyclically exposed. I wouldn't say it is representative of our industrial exposure though. No, we don't have much in the way of revenue in the other FMT businesses or HST businesses that's in the same end segments the gas it. And so, I don't think that it’s representative of our industrial exposure beyond what's already embedded in those numbers, if that's what you are referring to. And I think it is kind of the sum of the parts also is so.

Okay. And then looking into '08, looking at HST and these two OEM contracts, I guess, I was surprised to see that you expect another three points or actually four points of pressure from those terminated contracts. Can you clarify is it that you actually lost or terminated additional business with those two OEMs or you’ve just now replaced them because this goes all the way back to Q1 of last year when we started talking about this and I just want to be clear what's new or different?

Sure, Mike. We want to go set out to basically slowly exit some of these non-differentiated elements of HST and basically re-invested some of the areas that we like more and that's... it's obviously both internally and acquisitively. What we anticipated through the point of our Q3 call, so when we talked in the fourth quarter was that there would be a couple of new... actually a few new OEM contracts that would begin ramping up early in the year this year whose volume would be offsetting the sun setting of those two large OEM agreements that we talked about. Those two programs are alive and well. The ones that are ramping up, when we think there is a third that looks pretty probable at this point. We have already committed the capital dollars to the two of the three late in the year last year and it’s really a matter of the timing of those as they ramp up, which now looks like it will be late in '08 versus what we have thought was early Q2 of '08. So as that's essentially yet the issue is not exiting additional OEM relationships now nor is it a tremendous different viewpoint as to what the sun setting of those OEM relationships was expected to be versus now what we anticipated. It’s more of the uptick on the few and then also the core business as it replaces it.

So, would you consider then and if I heard you correctly, you expect HST to grow mid single digits this year organically despite soft 1Q expectation?

Mike, we are viewing, as you know, we have expectation for HST of high single-digit organic growth. The way the year is mapped out without getting into a lot of detail by segment is relatively flat first half, followed by good growth in the back half where we have good program minus seg [ph] visibility. And the 400 basis points of headwind that we've referred to was 400 basis points versus our HST higher organic... higher single-digit organic expectations.

Got it. Okay, and then just to clarify though you sort of reached this ramp or achieved this ramp in the second half. This is the business you have booked today or is there a possibility again like going back to Q3 that these programs get delayed further or a detailed launch?

I think we have got a pretty conservative view of the timing of those, those aren't orders that are booked, but we are certainly very tied with our customers in terms of the ramp expectations there and again as I've said we have already to the point of committing the capital dollars to the program the resources and they are well along and it is a matter of their launch rates, and so I think that we feel pretty good about the timing.

Okay, one detail and I will get back in line. Dom, the ADS amortization expense, it is included in the Q1 and annual guidance?

That's right, Mike, it is. And that was again, 6 million, it's an estimate. We are still working through the final balance sheet in terms of intangibles and amortization, but that is in our 2008 estimates.

Got it. Thank you.

Thanks, Mike.

Your next question comes from Scott Graham of Bear Stearns.

Couple of questions for you, when you look at the FMT margin, you ex-out the acquisition effects, it looks pretty like the margins were still down, just a touch on what was pretty good revenue growth. And in the press release, you were... you cited in addition to acquisitions also FX. Could you, maybe connected that's for me here Dom on why the margin on an apples-to-apples, I think was down and maybe why FX was contributor to that?

Sure, Scott, if you go to page 18, if you have the slides, there is an op income bridge. FX, if you look at the revenue, FX increased revenue by about $2.7 million, which didn't provide any significant operating income. Unlike and actually acquisitions, as well flow through just around 10% from an op income perspective. Now, I remember that includes amortization of intangibles. So, if you take out both the FX and acquisitions, you'll end up with an adjusted operating margin of 21.8% versus last year's 21.4% and that's roughly 27%, 28% almost 30% organic flow-through as we've... as we've talked about flow-through. But without getting to mechanical on FX, if you recall we acquired Quadro, we used foreign funds for that acquisition. So, we actually have a gain, if you look at other income and expense of about $1 million working through the gain on the P&L. And that was offset though as we have... this is one of our only locations where we have US-based sales and foreign currency related costs. So, we had a operating income drag related to both FX and acquisition of top. So, that's why you don't see what you might expect to be a modest income impact related to op income was actually a bit worse, that actually flow-through on acquisitions too. So, we keep a pretty solid tracking of organic and the outage through the operating initiatives. So, our view will be at these two adjustments count as we're still getting appropriate level of flow through on the organic side of FMT. And remember again the acquisitions included this quarter are Faure Herman and Quadro.

Okay. Next question relates to the full year 2008 guidance. It looks to me as if you know after what looks like a... let us say below average first quarter. That things improved pretty measurably from there or is that essentially what you're modeling like -- essentially sort of a slightly up first quarter and then increasingly up quarters or does it start to go. I don't want you to get too specific here of course, but I mean, are you looking at really much improved results beginning in the second quarter or are we kind of have to wait for that until the third quarter?

No, I think Scott what we view you basically is that Q1 is on a total growth basis, not bad. Obliviously the organic assumption of around 3% is certainly below IDEX average. But, we think that the remainder of the year holds for pretty nice growth and certainly pretty nice EPS generation. So, we're not expecting this to be a hockey stick in a true sense of, a hockey stick at year at all.

Okay. Two other questions, did you say that organic in Dispensing in the first quarter is going to be down in total or down in couple of the portions of it?

Just to make sure, Dispensing is your question?

Dispensing, yes.

And what we are saying is for the first quarter is relatively flat, and as you know Dispensing is coupled against a tough relatively tough comp for the quarter. And, so they look like, they're going to have a great year overall.

Right. So, when you're referring to Dispensing, a portion of it again, you're just talking about like the US retail, European small retail business.

That's right. Thanks for the clarification.

Okay. Sure. Lastly, could you talk a little about the acquisition pipeline? In some of the conference calls that have occurred so far continue to speak to higher EBITDAs obviously because of the... as the cycle lengthens, as well as the departure of some, let's say, smaller private equity players are more caution than the larger ones essentially creating an incrementally better acquisition environment, can you comment on that on what it might mean for you in '08?

I think that's a pretty fair summary. I think incrementally better in terms of the quality of the properties that are out there. Multiples are still higher than they have been on a historical basis. I mean we are still pretty disciplined, but we continue to chug along and as you know we make very logical acquisitions that fit what we are trying to target and we will continue to do so. So, I don't expect multiples to drop tremendously quickly and we’ll be disciplined about what we pay. But the quality of properties and the number of funds that makes sense for IDEX is still reasonable.

Do you think you can have an '08 like you had in '07, Larry?

I think that we can have a great '08 and I think our guidance pretty well spills out what we anticipate at this point. So--

No, I mean acquisition wise?

Oh, I think that in terms of total revenue that's certainly possible. Yeah, it always depends on how quickly, particularly on a proprietary basis, you can get these things to the finish line.

Okay. Thanks.

Thank you, Scott.

Your next question comes from Robert LaGaipa of Oppenheimer.

Hi.

Hi, Bob.

Just want to start off with a couple of clarifications. I guess, just related to the costs in Dispensing and Fire and Safety, can you just break out how much was severance versus was how much was the field service cost in Dispensing and likewise the severance versus the bad debt expense in Fire and Safety?

Sure, Bob. If you go through Health and Science on slide 19, that 400 K on the bridge is all severance. And then if you look at Dispensing in the next slide, $1.2 million severance/other, 70%, 80% of this is severance, the rest is field service. So you saw the end of field service as you recall mid-October, we were pretty much through the cycle there. I won't give you the split on Fire and Safety because we are still on our claim process for the bankruptcy, but the lion's share of that amount you see on page 21, the 2.4 is mostly bad debt versus severance, but there is a piece of severance as well. But I hope you understand we are not going those details, because we are still filing our claims.

No, absolutely. I guess with regard to that I mean, when you look at especially given the fact that the market suppose to be down as much as it is in the first quarter as well as coming off of the weakness we see in the fourth quarter, are there any other customers that you view as high-risk customers where we could have another bad debt expense moving forward?

Bob, obviously you never want to see a bankruptcy, but we have been through a pretty thorough credit limit check and also kind of looking at our exposure by key customer and there is nowhere near this type of an exposure in the current balance. So, I'll never say never, but right now we've been strong on our credit limits and the like and in the midst of what's going on with the industry. So, I would say the answer is no. I don't expect to see any significant write-offs in '08.

And one other question for you, Dom, just seeing with regard to the interest expense what are we expecting there for the full year?

We do not... we didn't provide specific guidance on that. We leave it there, and we will update you as we get into Q1, but obviously you guys can do your own modeling you can see that fed cut, most of our current debt is floating with current rates. And I'll let you do your own model there for now.

Perfect. And the last couple of questions, one is for Larry. I mean when you look at this environment and you look at some of the... how proactive you've been already in terms of addressing the cost structure in light of some of the choppiness you're seeing out there or maybe potential weakness continuing here. Where do we stand here on the cost side of things? I mean should we expect additional severance or should we expect any additional level of restructuring on a go-forward basis?

When we rolled up our plans for '08, we went through a very rigorous exercise this year much more so than we have over the last couple of years to build contingency plans and to each one of the business units bottom build assumptions. And so I think we've got a very good understanding that elaborates our business unit leaders, know what their cost structures need to be, and I think we are in good shape. You could possibly see some additional severance come through as necessary, but I don't think you should expect a large number. And frankly anything of that sort obviously would be something that will put us in pretty good shape almost on an immediate basis in terms of local cost structure. So I think we are actually in terms of contingency plan and in pretty nice shape as we look forward into the year.

Terrific and last question, if I could. I just want to circle back and drill down a little bit deeper into the HST in terms of these contracts. When you look at these two or three programs that are potentially ramping up, or you expecting to really get the benefit more so in the second half of the year, can you maybe just tell us, obviously not which OEMs they are, but maybe just give us a sense of what industries they are in, that will help us understand how they might be going?

Okay, well for a number of reasons, I won’t go into too much specificity. But basically one of them I mentioned which will be multiple parties associated with the new EPA regulations that are being applied to various different diesel engine technologies, a lot of those fixed place large engine technologies where pumping of various things are required for the overall emissions reduction, and there is a couple of different processes that apply. So we think that one bodes for pretty nice multi-year continued growth because it's going to be rate driven and frankly we've got a superior solution. The other one that we talked a bit about is a few different food-grade applications and this is a family of pump products that's new but it is a derivative of some things that we have had for a couple of years that will be applied and a number of applications both food and sanitary, sanitary meaning could be for pharma or biotech that we think will ramp pretty nicely with some OEM volume, unfortunately I can't get into heck of a lot of detail there, Bob.

Okay, terrific. Thanks very much.

You're welcome.

Your next question comes from Walter Liptak of Barrington.

Thanks, guys, and good afternoon.

Hi, Walt.

Dom, first question is for you. On order growth, in the press release it said 5%, I think in your commentary you said 2% organic growth, which one is it?

It's 2% organic on orders and that split FMT was up 6% for the quarter. You may be referring the full-year, for the quarter that was 2%, FMT was up 6%, Dispensing up 8%, HST was down 5% and Fire and Safety segment was basically flat, slashed down to 1%.

Okay, great. And I wondered if I could ask if we can get the organic revenue growth outlook that you're using for each of the segments in 2008?

Walt, we are not being keen, but we are not going to provide that specifically. We gave you a kind of general view of the state, but it is the 4% to 6% range for the whole company as you might guess at this point, yes, there is puts and takes by segment. We are going to stick with this full year at this point.

Okay, good. And in the healthcare, the HST, in the past, originally you had talked about double digit growth and I realize the quarter is growing double digit at this point, but as we get into 2009, and I know that's a long way to off, wouldn’t we getting away from this overall HST growth in the low single digits and get into some things that’s more like the 15% that we--?

Yes, absolutely Walt. The way we are modeling it, yes, it would be certainly prior to that, but, by '09 we emerge from the drag as we’re calling about to 15%.

Okay.

What was your organic number that you quoted?

Oh, I am sorry for which one?

HST.

Oh, for HST, yes the organic looks like it's in the low single digits for the last couple of quarters.

Yeah, now just to be clear, the '09 looking forward expectation for HST would be high single digit organic growth and that would be basically moving beyond or what we calling out of the OEM drag that we ramp out of to the course of '08.

Oh, I am sorry. Okay, so for in '09 you wouldn't be getting up to an organic growth rate of 15% would be more like high single digit.

We've, we are not assuming 15% organic growth in '09 for HST at this point anyway.

Okay. And then the last question, if I can switch over to the Dispensing business and you may have gone into this in the last quarter, but the smaller retailers you mentioned are still slow, but stabilizing. What is, can you provide a little bit more color because of the economy, the housing market etc?

Basically, I think the, what continues to drive the Dispensing sales is replenishment of equipment and that, that model again if you look at a top down and bottom build-up by the larger retails is truly solid. In our case, the age of the equipment, the basic purchase decision for the large retailers in a capital investment decision. And that capital investment decision as we talked before amortizes out as a bucket of paint as a really, really low expense item and it drives a very nice profitable product segment sales for them. So, it's a real easy return on investment decision for the larger retailer. Combined my guess and the smaller retailer, particularly the mom and pop segment within Dispensing as if the way they view it is cash as cash and they may not be making that spend on a larger piece of equipment and are more of a highly automated dispenser when they are concerned about how they manage on a short-term basis. And luckily as you know what we've seen both in Europe and in America is the growth in the segment has been driven by the paint shops, the company owned paint stores, the large retailers which are the harvest to our chains in the co-ups [ph] and larger retailers which are the mass and DYI format of retailers, and again what we have in the way of bottom build plan that we work very closely with their model for '08 suggests that now things hold as they are that we will have a nice organic opportunity irrespective of the housing market.

Okay, perfect. All right, thanks guys.

Thank you.

Your next question comes from Matt Summerville of KeyBanc.

On first just on the Fire and Safety side, just within fire suppression, I guess how are you thinking about the second half of 2008 and then on the rescue tools side, how much of that business is non-US now?

First on the fire suppression side, for the back half of '08 for us, obviously if that comp serves for a quite bit easier. So, we are assuming that it’s at least flat, it’s not better than that. We're still maintaining a conservative outlook and that’s what we’ve factored into our overall top line assumptions for the year. But, frankly now it's we think based on the comp issue for the first half plus what we see in way of truck based program activity, much more of a first than second half effect. On the rescue tools business, it is a very much in internationally distributed business. So historically it's always had in the neighborhood of about 65% to 70% of sales outside of the US and whether the fastest growth has been, frankly in some other country markets that we've never participated in. If you look back over the last 12 months, we’ve gotten orders out of all the smaller country markets in Eastern Europe and some of the emerging African country markets and Middle East markets and some of the South East Asia country markets, so let's going to rethink continue to propel the overall sales growth for rescue tools, but in the segment, it'll largely be the international growth.

Okay. And then in terms of the tax rate for either the first quarter or the full year, I think you are a little under 34 for the year '06, a little under or maybe right at about 34 in '07. Why the uptick in the tax rate?

Matt, to be blunt, we can't really call that close I think that we've always told folks somewhere in the 33 to 35 range, there’s a lot of moving parts in '08. State taxes actually, as our U.S. not to make a public service comment, but as our U.S. income becomes more of a bigger piece of the puzzle that may be up a bit. But it's 34 to 35 and as it’s now settled, we'll update you on that every quarter but it could be 34 right now, we're guiding on 35.

Okay. And then just again within HST you kind of talked about the fact of things that been pushed out, but can you kind of get into more around what the root cause on that push-out is, is this something that normally occurs in that business?

No, I wouldn't say it normally occurs, let's, basically new program activity from time-to-time with customers move slower than you're ready for the customer to move. We don't think that there is anything that's changing their -- the group decision to invest as matter of fact quite the opposite, we think it’s actually upside as we move forward with the couple of programs that we talked about, it's really just the time for execution.

Okay. That's all I have, thanks.

Thank you, Matt.

Your next question comes from Ned Borland of Next Generation. Ned Borland – Next Generation Good morning, guys. Couple of questions here on fire, I guess we've to look at the three buckets that you talked about, fire suppression, rescue tools and then Band-It. Can you talk a little bit about the margins for each of those buckets which is the highest margin and which is the lowest?

We got a lot of detail, I'll tell you that Band-It has got fantastic margins, rescue tools has got fantastic margins, and fire has got modest fantastic margins. So the mix should work to our benefit. Ned Borland – Next Generation Okay. And then the bankrupt customer, I mean what percentage of your segment revenue, I guess, what they have represented?

I don't know what's going in to that detail right now, I think we got frankly, not… disclose our annual revenue to that customer. But from a top line standpoint, their bankruptcy is not materially impacting what we view is our expectation for the first part of this year, we already kind of had the impact is pretty slow. Ned Borland – Next Generation Okay. All right, great, that's all I had.

Our next question comes from Charles Brady of BMO Capital Markets.

Hi, thanks. I don't know if you mentioned it, talking about the percentage of sales that came out of new products?

Sure, Charlie, it was just over 22%. We've seen a very nice increase year-on-year now for three years running. If you look at particularly the... kind of the end of the year to measure that, on a year-over-year basis, so we are up a couple hundred basis points in terms of new product sales, that's sales generated within the last three years over the total sales denominator.

And then on slide 22, you talked about your growth plan in '08 and specifically under globalization and channel expansion, could you just expand on that and give a little color as to what that's really driving towards and what channels, maybe a little more detail?

Sure. As I think I mentioned in my prepared remarks, we have expanded our international channels nicely over the last... really the last couple of years. We've got nice sales resource content on the ground now in Asia, and it's performing extremely well, particularly for Fluid Metering where we are generating huge organic growth there, in Eastern Europe, the Middle East, Russia and even some incremental resources in Western Europe, we expect that will grow very nicely in all those markets and then we are looking at some other selective country markets, where we’ve made some initial investments in places like India, which are fairly new country markets for us, so we expect that some of the resources investment that we've already made will already begin and this frankly already is paying dividends. But if we continue to see the opportunity frankly for geographic base channel expansion at the largest portion of that, I wouldn’t say there is much in the way of new alternative channels to market that is going to aggregate into a lot for ‘08, but there is some opportunities to continue to improve our access selectively otherwise as well so, improved access to other markets we serve.

And so then the channel expansion really that is... did you say is geographic tied into the geographic expansion not sort of branching out into a newly identified, area or application for existing products or new R&D?

That's correct, that the vast majority of what I was speaking to is global entitlement.

Thanks very much.

Welcome.

Your next question comes from Amit Daryanani of RBC Capital Markets.

Well, I just had a few really quick ones, in terms of the program push-out from the HST segment, is any that of FDA related on the sanitary or pharma aside, that may be beyond your or your customer controls?

No, we do run into that, in some cases from time to time with our HST customers, but in this case it’s nothing to do with FDA or anyone concerned.

All right and than, just moving into the bad debt expense, are there any other payments you expecting from this customer, but you may have to account for going forward or is this the best.... is the entire magnet, I should say?

Yeah, again without getting into details, I would just tell you that we would not expect to have any future exposure based on the charge that we've taken in the fourth quarter full heartedly with there for now.

All right, and just finally on the Dispensing side something we expect in pretty good high single digit growth, based on what your customer forecast look like to you right now, I’m just wondering how financially committed are the OEMs to the forecast to give you... give you a six month rolling forecast or something, but I’m guessing the amount of financially committed to maybe two or three weeks are so?

You know it depends. We tend to hear science for commitment long before the orders that's what your referring to that, if you look at the last four or five years, I can tell you our accuracy in forecasting on a multiple like two or three quarter out basis has been extremely strong, very, very accurate. The order itself typically doesn't come in until a few weeks, somewhere in the five to six weeks prior to when we realize the first sales out of that blanket, however, we have line of sight that typically is two or three months in advance of that and it’s with that level of certainty that we are making some of the comments that we are today.

All right, that's helpful and just finally, new products, we expect 200 to 300 basis point of growth out of it in 2008. How much of that contribute in incrementally in '07 for us, I know it was 22% of total sales but on a year-over-year growth in '07 how much was that?

Out of that growth, there would be a relatively small portion of '07 sales that are ramping through '08. Most of the way that accounting was stated was incremental sales of programs based on products that are for the most part finished, but that didn't generate huge '07 sales.

All right. Thanks a lot guys.

You are welcome.

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

Larry and Dom, just circling back to slide 22. It’s going to sound like an odd question, but if you add out the categories of growth you come up on the low end at 5.5 points of growth up to 8 points of growth on the high end, organic growth is estimated for the year at four to six. I mentioned there is some hedge factor in there, but even if you take the 4 to 6, it looks like your GDP assumption for North America at least is zero, is that your implicit assumption in here?

Essentially, what we are saying Mike is that we are not going to see a lot of economic help, as we mentioned in our remarks. Now GDB... GDP excuse me or market growth of zero is probably obviously too conservative. What we said here is, if you run through these one by one, a price increase, the 150 to 200 basis points pretty well locked in, so that's not a question, and frankly we think that will flow through pretty nicely based on what is our material cost standpoint. The 100 basis points on a company wide basis is contributed by dispensing, but that per the last question said is that is we think very certain. There is always a potential for some of those do not materialize. So now there is maybe a bit of a hedge there based on program activity and not knowing to you absolutely healthy order locked in Q2 and we do feel very good about it though. On the new product, incremental portion, I think that's the best way to think about it is at least 200 basis points, so kind of state where the 200 versus 300 basis point incremental number there. And then on the channel expansion, we basically said it could be as much as 200. Our plans roll up to that, we took it down a little bit here in terms of range. So I think the summary is... yes Mike there is a little bit of hedge built in here just based on all the conjuncture around what is going on in the economy in the market, but when we look at our tactical plans, frankly we feel pretty comfortable about that mid-single digit organic number for the year at this point. So, it’s not perfect and it's a bit circular in terms of logic, but frankly it supports we think a nice organic expectation.

Great. Well and a... I'm obviously trying to emphasis the conservatism of the forecast. The other way to look at slide 22 is the one category that’s missing is he volume and in order for you to reduce this range down to this 4% to 6% organic growth forecast, you have to assume negative volume. If that does the mathematics of it, what in '07 would be unsustainable heading into '08 in terms of volume growth? Is there any particular program that you can call out that is fading? Is there any particular market dynamic that fades, and along that question, I presume a few OEM contracts, they're virtually at zero today. So, that wouldn't be a negative increment in '08.

Mike as we talked through there is... the only real negative market element would be fire suppression, and we talked through that 10 to 15 for the first half. So, down 10 to 15 first half. And then flat to roughly first, second half. The OEM component that we talked about within HST if you look at it on an all-up basis really doesn't swing the numbers negatively, tremendously but does have a very slight negative impact year-on-year. And then it is the... I guess the unknown and I don't frankly think at this point that we ought to assume that that's much more than what we stated, because when we look at FMT in particular, the markets are really holding quite strong and we think we'll continue to generate nice growth through the course of the entire year and beyond. So, if these...those are top line expectations are slightly on a conservative side that could be from organic standpoint.

And then just in terms of the momentum, we're five weeks into the quarter now. As you look back from the start of October through January. Can you give us a sense of your feeling for general industrial trends as you progressed over the last four months?

No surprises at all. We feel basically like so far and it's obviously early, but things are materializing, as we would have anticipated them to.

And your anticipation was what?

For the Fluid Metering businesses, those segments that we called out energy, water, pharma all the petrochem that they are going to perform nicely in aggregate, they'll generate probably mid-to-high single-digit growth. The offsets in FMT will be relatively few, but it will be more things like the on board vehicle applications and some of those things, which might be a little bit slower, they'll be still be growing, but slower growth. But then, the Fire and Rescue segment, that's the three components that I spoke to. So, rescue tool is up, Band-It up, offset by fire down. Dispensing as you know kind of binary in nature in terms of growth, but we expect that we'll see nice growth through the course of '08, and the opportunity frankly for really nice growth. And then HST, we've... I think we have talked to that basically it comes down to the OEM drag on the core business growth. And so, if you look at the end markets that apply to all of those, essentially pretty consistent with what we had assumed, we started building our plans back in late September.

Okay. I appreciate it.

Thank you, Mike.

Your next question comes from Robert LaGaipa of Oppenheimer.

Hi, I just had two quick follow-up questions. I guess one just clarification, the acquisition growth that you're anticipating for 2008, that acquisition's is already in hand, correct?

That's correct Bob. Those acquisitions have already closed.

Okay. And is there an official target for 2008 in terms of revenue?

No.

Okay. And then lastly, the price increase, the 150 to 200 basis points. What was that in '07, and where is that weighted towards in 2008. Is it the new products predominantly, is it in any particular segment may be if you could just give us some color there?

Sure. '08 assumptions are pretty consistent with '07 and in fact they’re pretty consistent with what we've executed every year. The price increases aren’t certainly not every segment every customer, we have some customer segments that are much more competitive than others. But when you look at them on a bi-segment basis, we do believe that we get price and we get material parts and flow-through when you look at price plus material cost. So we don't see any adverse impact as a function of price and again most of the businesses have locked in there. They are priced in their discount plans already and they have already been executed, so it’s a matter of just realizing the sales accordingly.

Terrific. Thanks a lot.

You bet.

Your next question comes from William Cram of Reed, Connor, and Bergwell [ph].

Hi Larry, hi Don, how are you doing?

Good. How are you?

Good. Two questions. First, might be more of a comment than a question kind of [inaudible]. I noticed, maybe like couple of years ago you really didn't provide any type of guidance. I think last year, you started doing yearly and now all of sudden you are doing the quarterly guidance game. I am just kind of wondering what the rationale is there because in the past you've kind of talked about your business being a short cycle business, there's going to be a lot of noise from quarter-to-quarter. Why put that emphasis on kind of that short-term quarterly noise and kind of taking away from, I guess the long-term view of the business.

Well hopefully we are not taking away from the strategic plan that we are executing and that we haven't… we have proven now that we are interested primarily in growth both organic and inquisitive growth and driving good flow-through right to the operating line as a function of that growth. And that's… if you look at our track record what we've executed. So nothing changes there of course. There is lots of friends out there that both tell us we ought to be providing guidance and those that say that we shouldn't. We made the decision given the fairly volatile nature of what is going on up there in the various segments that apply that we speak in a little more specificity to what is going to impact us and we walk away through both the year and the quarter. I’d say operationally, we have got better visibility into our businesses and our ability to forecast has improved a bit, certainly not perfect by any means. But all out, we decided that more information earlier on was a better thing. Certainly not meant to detract from the focus that we got in terms of building long-term and sustainable value as a business and now continue to execute the outstanding track record we've got.

Alright, just, I don't know, it seems like the quarterly guidance tends to be a loser's game. But next question, looking at, you said what you…you’re going to generate ample free cash flow next year and it's, most of that is going to be targeted towards growth which will be buying growth via acquisitions. Wanted to get kind of your thought process as you look at this, if you look at the acquisitions you guys have made over the last say couple of years, there's been a quite a few that have been in that two to three times revenue multiple. In this environment, I understand how the strategic have an advantage and this is probably going to be the best year to make strategic acquisitions out there. But you also have your stock rate now trading at about 1.5 times revenue, probably as cheap it’s been about six years. So how do you look at that versus buying growth at 2 to 3 times, versus buying your own stock at 1.5 times and how do you… that pre-cash, how do you maximize the return on invested capital?

Yes, you know it is good point. Obviously, fundamentally I think the stock is a great buy. At the same time we think that we've proven by a way of every single acquisition we've made that we've made great returns on those investments and they have allowed us to improve our position in the target markets that we’re continuing to build out. So those acquisitions fundamentally enable organic growth, which has got outstanding returns associated with it. So if you look at the acquisitions that we've made, frankly on a history to date from the zero [ph] IDEX or just ones that we've made over the last couple of years they are performing very well and they have allowed us to get at an organic return on investment model that is phenomenal. So the primary capital deployment strategy is to continue to use it for acquisition, for growth. And to allow us to continue to build our foothold, so that we can build that organic subsequent growth on top of where we position ourselves.

Okay, Thank you.

All right. I think that' it . We want to thank you all very much for joining. We've obviously provided a lot of detail in our prepared remarks and some very good qualifying questions as well. We definitely anticipate a solid '08 and we look forward to talking to you again a quarter from now. Thank you.

Thank you. This concludes today's Q4 '07 earnings call for IDEX Corporation. You may now disconnect.