5 percent down from 32 percent last year

Gross profit margin percentage for the year was 52.9 percent compared to 53.2percent last year. The effects of higher material and other costs on the grossmargin rate were mostly offset by the impact of favorable currency translationrates, pricing and manufacturing efficiencies. Operating expenses for the quarter were $10 million (19 percent) higher than thecomparable period last year. They included $6 million associated with therollout of entry-level paint sprayers to additional paint and home centerstores; $4 million of impairment charges because difficult economic conditionsaffected the value of certain intangible assets; $3 million related to workforcereductions; and $3 million from acquired GlasCraft and Airlessco operations. In addition to expensesrelated to fourth quarter actions, continued strategic investments in productand market development contributed to the increase in operating expenses for theyear, including expenses related to the introduction of new product lines, newproduct development teams and additional sales and marketing personnel indeveloping countries.

Year-to-date interest expense was $4 million higher than last year due toborrowings used for the purchase and retirement of Company shares and forbusiness acquisitions. The passage of legislation renewing R&D tax credits resulted in an effective taxrate for the fourth quarter of 20.5 percent, down from 32 percent last year. Theyear-to-date effective tax rate of 32.3 percent was slightly lower than lastyear due to the settlement of the examination of the Companys income taxreturns in the first quarter of 2008. In 2008, the Companys balance sheet was affected by a change in the fundedstatus of the Companys qualified defined benefit pension plan.

The fundedstatus changed from a $30 million asset to a $70 million liability as the valueof plan assets declined with the downturn in financial markets. Segment ResultsCertain measurements of segment operations are summarized below:Fourth Quarter YearIndustrial Contractor Lubrication Industrial Contractor Lubrication Net sales (in millions) $97.9 $50.8 $18.0 $462.9$266.8$87.6 Net sales percentage change from last year(17) (23) (16) 4(13) (3) Operating earnings as a percentage of net sales200821 (5)130 18 14200735 22 734 27 10 Industrial segment sales for the quarter were 17 percent lower than last year,with double-digit percentage decreases in all regions For the year, there wasmodest growth in all regions. Operating earnings in this segment were affectedby impairment charges, selling and product development initiatives and costs andexpenses resulting from acquisition and integration related activities. Contractor segment sales for the quarter were down 23 percent compared to thefourth quarter last year, also experiencing double-digit percentage decreases inall regions. For the year, an 8 percent increase in Europe (3 percent atconsistent translation rates) was not enough to offset the 22 percent decreasein the Americas. The decrease in sales without a corresponding decrease inexpenses had a large impact on the operating earnings of this segment. Solid growth in Europe and Asia Pacific was notenough to offset the 7 percent decrease in the Americas.