(Operator Instructions) Welcome to EnPro third quarter earnings conference call. Today’s conference is being recorded. At this time the conference is being recorded. At this time I would like to turn the conference over to Mr. Don Washington. Mr. Washington, please go ahead.

Thank you Leslie and good morning everyone. Again we welcome you to EnPro Industries Quarterly Earning Conference Call. Stephen Macadam, our President and CEO, and Bill Dries, our Senior Vice President and CFO will review the events of the 3rd quarter on the call, our financial results and our outlook. In addition Rick Magee, our general counsel, is present and prepared to participate in the Q & A. Before Steve and Bill make their prepared remarks and we open the lines for questions I’d like to remind you that you may hear statements during the course of this call that express a belief, expectation or intention as well as those that are not historical fact. These statements are forward looking and involve a number of risks and un uncertainties that may cause actual events and results to differ materially from such forward looking statements. These risks and uncertainties are referenced in the safe harbor statement and are included in our press release and are described in more detail along with other risk and uncertainties in our filing with the FCC including the 4M10k December 31 2007 and the 4TQ for the 2nd quarter of 2008. We do not undertake to update any forward looking statements made on this conference call to reflect any change in management expectations or any change in assumptions or circumstances on which such statements are made. I’d like to remind you that the call is also being webcast on EnProIndustries.com and a replay will be available on the website shortly following the call. If your questions aren’t answered or you have any follow up questions, please contact me after the call at 704 2731 1527 and with that I’ll turn the call over to Steve. Thank you Don, and good morning everyone. Thanks for joining us…

Thanks Steve. To reiterate what Steve said, both sales and income improved over the 3rd quarter of 2007. Sales in the amount of $279 million and were up 10% from last year. Acquisitions and organic growth account for 7 points. April Foreign exchange contributed the other 3 points. We recorded this double digit income in sales even though sales in our engine product and services segment were 27% below last year. Sales in our other two segments were up 15 totals twelve points of that increase coming from acquisitions and organic growth. three points coming from foreign exchange. Reporting in our release earnings before interest, taxes, appreciation hominization, asbestos related expense, other selected items, were $44.7 million, or 16% of sales. That’s a modest increase over last year, but as a percent of sales are in decline from 16.7% as I talk about our operating performance. Gross margins were 35.5% in the 3rd quarter, virtually identical to the 3rd quarter of 2007. However, they declined from the 1st and 2nd quarters of this year as we saw normal regional decreases in activity and changing conditions in some markets. SG&A spending increased by $7.5 million to $65.3 million. Most of the increase in spending associated with acquisition, the effect of a stronger Euro. As a percent of sales, SG&A was up a half a percentage point to 23.4% Asbestos related expenses were $13 million in the 3rd quarter, or about $1.5 million higher than last year. In part, the difference reflects the collection last year of a small amount of insurance from carriers that we classified as solid. Operating income in the third quarter amounted $20 million, slightly higher than the $19.4 million we reported in 2007. This represented 7.2% of sales in 2008, down ½ a point from 7.7% reported…

Acquisitions and organic growth contributed twelve of those sixteen points in equal proportion. The remaining four points came from foreign exchange rates. Both the Sealing Products and Engineered Products segments reported strong, double-digit percentage gains in sales over the first nine months, while the Engine Products and Service segment was essentially flat. Net income of $47.4 million resulted in earnings of $2.22 a share which was 30% higher than our 2007 gap earnings. Before asbestos related expenses and other select items, we earned $3.47 per share or 23% more than in 2007. Let’s look at our third quarter segment results beginning with the Sealing Products segment. Sales in that segment were up 13% and profits improved as well. The increase came primarily from organic improvements in our Sealing Products market and acquisitions. Profits in this segment were up compared to 2007, but margins declined primarily because of lower profits at Stimco’s Legacy business and at Plasmer Technologies. Margins for the segment were 19.8% for the quarter or 180 base points below last year. Golack continued to benefit from several markets including nuclear power and land-based turbine power generation, aerospace, and oil and gas. On the other hand, some of the hydrocarbon processing markets were affected by the hurricanes on the US gulf coast. Heavy-duty truck markets remain weak, but that business continues to benefit from the Kaiser acquisition. We acquired Kaiser in the first quarter of this year and it has made nice contributions to both sales and margins for the six months we’ve owned it. Looking at the Engineered Products segment, sales were 17% higher than a year ago with most of the increase coming from acquisitions and organic growth. While our sales increased, segment EBITDA was about flat with last year and margins were down by 280 basis…

Thanks, Bill. Before we open the lines for your questions, I’ll wrap up with a few comments and our outlook. EnPro has experienced six years of solid, stable growth as an independent company. Over that period a substantial amount of effort has gone into improving our operations, strengthening our product lines, building a strong team of employees, and capturing opportunities for growth. The benefits of those efforts are evident in the improvement in sales and profits that we reported in 2008. But as everyone knows the economic direction of many world-wide markets has changed, and we are entering a period that is likely to differ significantly from the recent past. Because of our successes over the past six years, however, we believe we are entering this period as a strong company. Our strategic direction is sound, and we’re committed to the pursuit of excellence in all facets of our business. Our total customer valued lead manufacturing program continues to be effective in improving our operational efficiency, which will benefit us even more in weaker markets. To move the benefits of TCB beyond the manufacturing floor, we are expanding the program to include a commercial excellence initiative by employing the techniques of TCB and dedicating additional resources to commercial excellence. We expect to improve the way we source materials, the way we go to market, and the way we interface with our customers. We are focused on growth. We have a healthy balance sheet and liquidity sufficient to pursue opportunities for acquisitions that support our corporate strategies for products and markets. We will also continue to support new product development and market expansion which offer us additional avenues for growth. Finally, we will continue to prudently manage our cash flows, optimizing the deployment of cash in ways that will create lasting long-term improvements in value. Looking at the remainder of 2008, sales in the Sealing Products and Engineered Products segments will continue to benefit from acquisitions made over the past 12 months. Both of those segments, however, are entering softer market conditions both in the US and in Europe. This is likely to limit opportunities for organic growth. In the Engine Products and Services segment, a number of engines are scheduled for shipment before the end of the year, which should lead to strong sales in the fourth quarter for that segment. Based on our performance through the first nine months and our outlook for the fourth quarter, we expect our record of our consistent year over year improvement will continue for the full year of 2008. Thanks for your attention these past few minutes. Let’s now open the lines for your questions.

Thank you. For those of you with a touch tone phone, please press star one on your touch tone phone. If you are using a speakerphone you may need to pick up your hand set before pressing star one. If at any time your question has been answered, to remove yourself from the question line-up please press star two. Once again, for those of you who would like to ask a question, please press star one on your touch tone phone. Let’s allow one moment for our first question. Our first question comes from Joel Mondelo of Fidelity and Company. Please proceed with your question. Joel Mondelo - Fidelity & Company: Good morning. First you mentioned that you are expecting a solid fourth quarter for your engine products. I was wondering if you could give an outlook for 2009. How do you see those orders coming in and what are you expecting in 2009 in that segment?

Joel, the backlogs are good for F&E and, as we’ve said in the past the engines have an extremely long lead time. We have many for the Navy, and the after-market parts and services business has been strong. We expect that to continue. We’re pretty bullish on how the engine F&E business will look next year as well. Joel Mondelo - Fidelity & Company: Okay, great. Also, could you just give more color in terms of what you’re seeing in terms of after-market sales versus your own EM sales? What are you seeing now in the fourth quarter?

Again, it really depends on the segment and the business you’re talking about. It also depends on geography. Many of our after-market segments are very solid -- nuclear energy, oil and gas, and the engine business that we described. There are many segments, quite frankly, that are not affected by the current economic environment and we believe that they’re not likely to be. There is also a group of our businesses that have been in tough times for quite awhile. We’ve spoken in panic calls about the Stimco business selling in the commercial truck environment, which in the US has been in the bottom of the cycle now for 18 months. It’s not great, but it’s certainly not getting any worse. Joel Mondelo - Fidelity & Company: Is it fair to say that the Sealing Segment could perform better in 2009 than the Engineered Products just because of the higher after-market sales exposure?

Relative to the previous year I think that’s correct. Joel Mondelo - Fidelity & Company: Okay. Then just to look at the share count outlook - it seems that you’re buying back stock, but it seems that the share count’s not increasing as much as I thought it would. Do you have an outlook for the year?

Well, Joel, we retired 1.7 immediately and we bought over 200,000 in the month of October, so we’re down close to 2 million. Our share count is down to about 20 million, down a couple of million from where we’ve been. Joel Mondelo - Fidelity & Company: Okay, finally before I jump back in the queue could you talk about currency? It seems like you benefited in the third quarter. What are you seeing now and what do we expect for the fourth quarter in terms of that?

Well, I think you can probably run the math as easy as we can. Plug in the Euro to the dollar number - whatever you think. Obviously we’ve seen just a bit of a rebound in the dollar in the last couple of days. I’m really not going to predict whether we think the dollar’s going to strengthen or weaken in the fourth quarter. I really don’t know. Joel Mondelo - Fidelity & Company: Okay, thanks.

Good morning. Looking at the cost in Sealing and Engineered Products, you talked last quarter about the fact that costs were a little bit ahead of price, but you had price increases put in place to cover that. Could you give some color on if this is consistent with the way you would have thought? Did costs run up more than you would have expected? Can you let us know broadly what kind of price increases you did put in?

It varied a lot across the segments, and what you see in the third quarter is that many of those increases were put in place during the third quarter, particularly in August. You’ve always got the difficulty of driving them through and coverage that you give. I think we said this in the call last time that in general we didn’t expect that the third quarter per se would reflect complete recovery of those material costs, but we felt that the price increases that were put in place once we got to a run rate following those that we would have recovered all those material cost increases. We still believe that. We phased many of them in the third quarter - many of them were in August - so we were already half-way into the quarter.

When do you think you’ll hit that run rate?

I think we’re there now.

Okay. When you were talking about the lower volume, can you quantify what you’re seeing and what you’re expecting for the fourth quarter in terms of your various businesses?

That’s really tough to do because of the diversity of end markets that we sell into, and even in the segments where we have significantly different businesses. But the best way I could describe it is to break the business up into the categories that I was describing to Joel, which are ones that we think are pretty solid end-use markets. Our belief is that oil and gas exploration, in particular, will still be pretty strong as long as oil stays above $45 or $50 a barrel, which it obviously still is today. Nuclear energy, other power generation stuff, and the engine business because of the markets they serve all comprise a solid chunk of our business in the order of magnitude of 25% which we think is a pretty solid situation, both at the OEM and after-market lull. On the other end of the scale are the businesses that have already been hit pretty hard. These are already reflected in our numbers. I’m talking about GGB’s automotive business, both in the US and in Europe and the commercial trucking business that we described. These businesses have been pretty dramatically affected, and that’s probably another fourth of our business, plus or minus, and then the other half is mixed. It’s in businesses in which we’ve seen some weakening, and it varies. I’d say it’s also split 50-50 between OEM and after-market, and we certainly are seeing more weakness on the OEM side. The problem, as you know from listening to a lot of calls and following the news, is that there’s a cloud of uncertainty in the industrial world. Everybody’s taking a pause to see how the thing’s going to shake out. It’s a very difficult time to actually look forward about what’s going on. When you talk to customers in the channel, they don’t know either. We feel pretty good about where we are simply because we do have the mix of after-market which, even in a declining environment, won’t go down that much in our view. We’re hoping that this will provide some nice opportunities for acquisitions as we go forward.

Fair enough. As you think about these lower volumes, how can we be thinking about margins? In this historical period, as we look back to think about the impact - I know you have been consistently making improvements in efficiency. How should we think about the impact that’s going to have on profitability?

Well, obviously as the markets slow down and the unit volumes fall off in certain of our businesses, there are fixed cost dates at a number of those units so we’ll lose something on the absorption side. I think that by and large we’ve seen moderation in material price increases fairly recently. On the selling-price items, some of our businesses with declining markets, there will be some competitive pricing pressures We are poised, each of our units have worked and are ready to take actions if we see continued weakness in our outlook, in our markets, to maintain a whole margin as high as we can, but again it depends on the length of time market and the depth of the markets and how slow they get. It’s hard to predict.

You pre-empted my next question which was going to be: Actions that are taken have you started implementing any of those efforts to offset weaker volume? Are you anticipating when we haven’t quite seen them as much yet? Where do you stand on the course of action?

You pre-empted my next question which was going to be: Actions that are taken have you started implementing any of those efforts to offset weaker volume? Are you anticipating when we haven’t quite seen them as much yet? Where do you stand on the course of action?

We’ve definitely taking action, and again, it varies a lot across the businesses because they are seeing a lot of demand patterns but we’re very focused on trying to drive material costs down now, taking advantage of the turn in many of our commodity parts like steel and bronze and copper and whatnot. We are going after that very aggressively, and we’re also working really hard to manage our costs and flex labor and those kinds of things.

Nothing on the fix costs side now?

Nothing on the fix costs side now?

No. We don’t. Our facilities are still pretty full. We don’t have the opportunity for any major facility rationalization so I don’t think you can expect any major adjustments in fixed costs.

Thanks a lot.

Thanks a lot.

(Operator Instructions) Our next question comes from Todd Vencil of Davenport. Please proceed with your question.

I thought I’d give someone else a chance to ask a question but I guess I’m in at the moment anyway.

I thought I’d give someone else a chance to ask a question but I guess I’m in at the moment anyway.

Welcome back. Thanks very much.

A couple of housekeeping things and maybe a couple of global questions. You gave us a comment, Bill, on the tax rate for 2008. What are you thinking for 2009 would be the right level?

A couple of housekeeping things and maybe a couple of global questions. You gave us a comment, Bill, on the tax rate for 2008. What are you thinking for 2009 would be the right level?

We will likely be down from what we’ve historically in the past we have consistently said we ought to be in the 37, 37.5% range. A number of foreign countries have recently enacted the changes and reduced the specifatory tax rates. Germany, the UK, Italy, have all implemented the tax rate reductions. Hopefully, whatever administration gets put in place in Washington is be cognizant of those things, but we’re also doing some things on the strategic side, some planning that should help us as well so I’m thinking that we ought to be coming in at 35.5% to 36% range next year.

Thanks, and then you you mentioned in the backlogs that FME were good. How do they compare year after year?

Thanks, and then you you mentioned in the backlogs that FME were good. How do they compare year after year?

They’re actually up pretty strongly. In fact, I was looking at that the other day, these are the highest backlogs at FME that I recall, saying since we started off. Our total backlog - we’re up to 300 million- at the end of September and FME accounts for well more than half of that. So their backlogs are in very good shape. They had a very good quarter and key three in terms of orders.

Any order of magnitude increase Just round numbers? For FME?

Any order of magnitude increase Just round numbers? For FME?

No. A lot.

Fair enough. And then a global question, wrapping up together. Use the cash flow and strategic initiatives and ideas. If I take two or three things that you said, and put them together, it feels as though your primary use of cash is going to be, if you can find the opportunity, is going to be acquisitions as opposed to share purchases. And this feels to me to be an uptick in the pace of activity. Are those two observations fair? What am I missing?

Fair enough. And then a global question, wrapping up together. Use the cash flow and strategic initiatives and ideas. If I take two or three things that you said, and put them together, it feels as though your primary use of cash is going to be, if you can find the opportunity, is going to be acquisitions as opposed to share purchases. And this feels to me to be an uptick in the pace of activity. Are those two observations fair? What am I missing?

I think that’s very fair Todd. That is a priority for us at this point. We’re going to close several deals, small, but of similar size to what we’ve done in last couple of years, we’re going to close several of those before the end of the year and then we’ve got some that probably wont’ close until early next year. We feel very good about it, they are good strategic goals, regards to what we’re doing, exactly the type of acquisition that we really like to do, that add a lot to our existing business, that are creative, have really good strong fits and help us in the product line or market or geography, those kinds of things. We’re pretty excited about that. Now as we look out to the future, on the horizon, and as you know most of the stuff that we look at is kind of non-public, smaller bolt-on kind of deal, with any pressure on the environment we’re hopeful that that’s going to present a broader set of opportunities for us and we’d like to be in a position to take advantage of that.

Have you started to see that opportunity broaden out?

Have you started to see that opportunity broaden out?

I would say, maybe a little. Yes. But we certainly haven’t seen nearly as much as we anticipate as the economies of the world slow down a bit over the next six months.

In terms of thinking about your capacity, can I give you a little color on.. what do you think your capacity for dealers would be and what that’s going to imply about your comfortable with on the balance sheet?

In terms of thinking about your capacity, can I give you a little color on.. what do you think your capacity for dealers would be and what that’s going to imply about your comfortable with on the balance sheet?

We’d still like to be in a position where we don’t have to tap our revolver to do acquisitions. Our strategy is to use our own cash to do that. Now we will if we need to, on an interim basis, but we’d like to be able to generate enough cash to just do that on our own.

What do you think that implies about your own capacity over the next twelve months? Hypothetically?

What do you think that implies about your own capacity over the next twelve months? Hypothetically?

I’d rather not give you a number because I don’t want to get us committed, and quite frankly, part of that is whether the deals that we have keyed up in Q4 all stay in Q4 or whether one or two of them slide into Q1 of next year, there is a tiny issue there. I think that might be more appropriate for the next call or for perhaps the one after that, perhaps after we get some of these under our belt and we can publicly report what they mean.

I’ll be sure to ask on the next call.

I’ll be sure to ask on the next call.

I’m sure you will.

Two more things, then I’ll let you go. Housekeeping. Bill, the signet DNA levels that you have go in the press release, are those going to be stable for the purposes of modeling?

Two more things, then I’ll let you go. Housekeeping. Bill, the signet DNA levels that you have go in the press release, are those going to be stable for the purposes of modeling?

Yeah, I think so. They are in that ten, eleven, quarter-of-a-million dollar range, that’s kind of in the low mid-forties range, that should be where we are.

And my final question to you. I’ll give you a chance to look in your crystal ball a little bit. You mentioned that you think you are going to have repeat your pattern of consistent year after year of improvement in EPX earning results, do you feel like making that projection for 2009?

And my final question to you. I’ll give you a chance to look in your crystal ball a little bit. You mentioned that you think you are going to have repeat your pattern of consistent year after year of improvement in EPX earning results, do you feel like making that projection for 2009?

Not really.

Okay. Thanks a lot.

Okay. Thanks a lot.

Yep.

Thank you. At this time, there are no further questions.

Well, thanks everyone for joining us. And listen, we will talk to you again next quarter. That completes our call. Thank you.

Thank you. This completes our call. Thank you all for participating. You may now disconnect.