Question-and-Answer Session
Okay. [Operator Instructions]. The first question comes from the line of Deane Dray with Goldman Sachs. Your line is open.
Deane Dray - Goldman Sachs
Thank you. Good day gentlemen.
John L. Stauch - Executive Vice President and Chief Financial Officer
Hi Deane.
Deane Dray - Goldman Sachs
Just quick... this is for Randy or for John, just to clarify the whole steel dynamic within Technical Products. You suggested that the steel prices benefit might not come through for the next couple of quarters. Is that because you have locked in supplier agreements or are you less open to spot pricing?
Randall J. Hogan - Chairman and Chief Executive Officer
No, we've been... we haven't really locked in. We've been expecting a decline. It just takes a while to work through the... working through the books... with FIFO.
John L. Stauch - Executive Vice President and Chief Financial Officer
We use the capitalized variant system Deane as our accounting methodology. So some of the --
Randall J. Hogan - Chairman and Chief Executive Officer
About a quarter lag.
John L. Stauch - Executive Vice President and Chief Financial Officer
So we sometimes have a month or too lag on the favorable pricing working its way through the system.
Deane Dray - Goldman Sachs
But maybe I just misheard Randy, you said... I thought you said a couple of quarters, what... you mean a couple of months or quarters?
Randall J. Hogan - Chairman and Chief Executive Officer
I think I said a couple of periods. I probably should have said a couple of months.
Deane Dray - Goldman Sachs
Okay, good. That's helpful. What about the... how sticky will the prices be that the price increases you were able to get over the past year, what have you seen in the past about being able to hold price?
Randall J. Hogan - Chairman and Chief Executive Officer
Well one of the things we do is our prices go into our base. We don't do surcharges and the like. So it goes into our base pricing, and 80% of what we sell, we sell through distribution. And prices tend to be pretty sticky for distribution. I think it's evidenced in the fact that we were able to get as much price as we did if you compare that to other business that weren't quite as capable of getting as much price to offset commodities. I don't think that was... that was so much execution differences, that is industry structure differences.
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