Good morning, ladies and gentlemen, and welcome to the Caterpillar Earnings Call. At this time, all lines have been placed on a listen-only mode, and we will open the floor for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host Mr. Mike DeWalt. Sir, the floor is yours.

Thanks, Kate, and good morning, everyone, and welcome to our second quarter earnings call. I’m Mike DeWalt, Caterpillar’s Corporate Controller. On the call today I’m pleased to have with me our Chairman and CEO, Dough Oberhelman; and Group President and CFO, Brad Halverson. This call is copyrighted by Caterpillar Inc., and any use, recording, or transmission of any portion of this call without our written consent is strictly prohibited. If you would like a copy of today’s call transcript, we’ll be posting it in the Investor Section of our Caterpillar.com website, and it’ll be in the section labeled Results Webcast. Now, this morning, undoubtedly we'll be discussing forward-looking information that involves risks, uncertainties and assumptions that could cause our actual results to differ materially from the forward-looking information. Our discussion of some of the factors that either individually or in the aggregate, could make actual results differ materially from our projections, that can be found in our cautionary statements under Item 1-A, Risk Factors, of our Form 10-K filed with the SEC in February of this year, and also in the forward-looking statements language in today's release. Now, in addition, a reconciliation of non-GAAP measures can be found in our financial release, and again that’s been posted on our website at Caterpillar.com. Now, before we start the Q&A today, I’m going to be covering three main topics. The first will be a summary of our second quarter results and revised outlook. And then I’m going to take a few minutes and talk a little bit about our business segments and then I’m going to finish up with cash flow and the stock repurchase that we talked about this morning. So I’ll start with second quarter, which I’m going to discuss in two ways. First, I’m going to cover at a…

Thank you. (Operator Instructions) Our first question today is coming from Robert Wertheimer. Please announce your affiliation, then pose your question. Robert Wertheimer – Vertical Research Partners: Hey, it’s Vertical Research Partners, thank you. Good morning, everybody.

Good morning, Rob. Robert Wertheimer – Vertical Research Partners: Let’s see – let me just start with our systems, since you did highlight that division, I mean, you had one of the strongest margins you’ve ever had. And wanted to just check in on whether you are seeking or actually just whether that was a mix related, I know power gen – backup power gen has been awful whether it’s structure improve in the margin or division and then whether you are seeing any change in electric power?

Yeah. If you look actually Rob, the dealer statistics that we put out yesterday morning, you can see that’s a little bit better than it was a year ago. I think a lot of that has to do with – it was a kind of even turned down a year ago. So I think a little bit on powers – on electric power in particular, the comps will probably just continue to get little easier. I think for power systems overall, they had a pretty down good quarter. Sales volumes down a little bit, but some of the pieces were up. I think more of their profit improvement had to do with a little price realization and they’ve done a pretty good job on cutting costs. As opposed to power system, as opposed to construction and resource industries, they didn’t have near the decline in inventory that those other two segments did, so the absorption impact was relative to the company in total lots more for them. Robert Wertheimer – Vertical Research Partners: I’m not sure, if this is one you are willing to or able to answer, but is it possible to look through the turmoil that’s gone on in resources over the past six months, and think about what’s your margin would be in a more stable environment at these volume levels?

Well, you are right, I’m not going to throw out a number. But I think in my opinion, we had a one positive item the Siwei settlement would be in their numbers, if you would have to take out, that would actually make a little bit lower. But we are in the middle of pretty heavy inventory decreases and that in total, the amounts that they are really underselling real demand and the absorption impact probably more than offset that. In sense, we are moving from, let’s just say, higher volumes over the last year to lower volumes this year. Cutting cost is not a process, and that’s going to continue into the second quarter. So if for example, volume, end-user demand kind of hung in at this level. Our sales would probably go up a little bit, because we would stop cutting inventory. We wouldn’t have the Siwei adjustments in there, but costs would likely be lower as we’ve – as where part rates grew kind of the cost cutting activities that we’ve been doing. So I guess my part is that would probably be a little higher than it is now, but I don’t know that I would want to throw out a number. Robert Wertheimer – Vertical Research Partners: I guess that was my two. Thank you, Mike.

Thank you. Our next question today is coming from Ann Duignan. Please announce your affiliation and then pose your question. Ann Duignan – JPMorgan: Hi, good morning, JPMorgan.

Good morning, Ann. Ann Duignan – JPMorgan: Good morning. I’ll start out with the decremental margin question. Doug, you’ve been pretty vocal about driving for 25% pull-through. Can you talk about the decrementals this quarter whether they were disappointing or not to you and are we going to get back to 25% by year-end?

Hi, Ann, this is Brad Halverson, and it’s a good question. If you look at the second quarter, I think there is a couple of things if you look to the right up to consider in terms of results. On it’s close to 70% of our drop in sales, are mining which is negative for mix. But even putting that to a side, if you just look at the period cost absorbed kind of impact, you get to a decremental margin slightly under 30% and we’ve talked about 25% to 30% kind of a decremental margin in terms of our target. So for the quarter, you will get slightly under 30%. If you look full-year at our outlook, even with all the headwinds you’ll get to a decremental pull-through of 24%. And this was something that we spend a lot of time on, internally. We have targets that we’ve committed to. And if you look across our segments Resource, Construction, Power, Financial Products each of them, as we talked about before, have made a commitment as to what they’ll make at certain volume levels, which ties to our external commitment and they are executing on that. So when we get through the end of the year, we’ll be at 650 right around 24% which is, with the mining headwind I think a good number. Ann Duignan – JPMorgan: Fair point. Thanks for the clarification. It’s normally in the press release, but it wasn’t conspicuous either today. My follow-up would be on pricing and you also mentioned in the press release some negative pricing, I think it was in resources in Australia. Can you talk about pricing overall and where you are seeing the most price, obviously probably in mining, but why would we be giving up pricing at this point in the cycle?

Yeah, again this is Mike. Just a couple of comments, I think when we talk price realization here it’s versus the second quarter a year ago and again, I don’t want to harp too much on this, but we had an absolutely fabulous quarter a year ago. Price realization in the second quarter last year, kind of everything came up heads and we had just about $500 million reported for last year, which was pretty close to a third of the whole year. So, I think to start the discussion off, it was – in total and in particular for price, a pretty tough comparison. we did have slightly negative price realization well less than 1% for Resource Industries and for Construction Industries. For Construction Industries, it was mostly in Latin America, and we have a few big deals going on down there that had a little tighter pricing. And I think for mining in general, it’s a tough market out there right now, I mean volume is down quite a bit, and it I think by and large, we’re pretty close to holding our own again with a slight reduction in the quarter compared with a really big quarter a year ago. I don’t’ think there’s any big fundamental shifts. You didn’t ask this question, but I’m going to answer it anyway. As a part of this updated outlook, before we were kind of talking about 1% of this year, we’re not far off that, and I think we’re looking at just a little under 1% for the full-year for the total company this year. So it was a little tighter I think in the second quarter, but pricing didn’t overall go down. it was helped a little bit by better number at Power Systems. Ann Duignan – JPMorgan: Okay, wonderful. (Inaudible) so I will turn it over. Thanks, guys.

Thanks.

Okay.

Thank you. Our next question today is coming from Ross Gilardi. Please announce your affiliation, then pose your question. Ross P. Gilardi – Bank of America Merrill Lynch: Hi, Bank of America, thank you. Mike, in talking about mining, there is an awful lot of focus dealer destocking and the business as the big source of paying, but this is a major order business. So I mean, isn’t the real fundamental issue that the miners are just canceling orders and as long as that remains the case, you are not going to see much of a pickup in production and margins unless until you see a pickup in orders?

Yeah, Ross, that’s actually a great point. And one of the things I think that has been impacting orders, remember we don’t take orders directly from the mining companies, we take orders from the dealers, the dealers take orders from mining companies. So if you look at the destocking inventory, I think that’s certainly having some impact on the dealer order rates to us. So we definitely would like to see order rates pick up, but I think certainly until we get through the inventory reduction, there will probably a drag at least on orders placed on us. But to your point, I’ll just kind of go back to it. I talked about the surveys that suggest mining CapEx down another 20, for that to be the case, I mean, orders have to pickup. I mean, if dealers don’t order anything or, I’m sorry, customers don’t order from dealers and dealers from us don’t order anything or don’t order more, then 20% is just not, I don’t think it’s in the cards. That would look like an optimistic number. So I think for mining CapEx next year to be down 20%, they have to order more, dealers would have to order more from us than they are today. Maybe I am not trying to make that overly complex, but to say that even at 20% decline in mining CapEx considering the dealers ought to be out of inventory here pretty soon, would have to mean more orders placed on us, and that’s a better way to say it. Ross P. Gilardi – Bank of America Merrill Lynch: Okay. Thanks, Mike, and then you mentioned in the discussion of resources in the press release that that acquisitions and divestitures negatively impacted operating profit by $33 million in resources and I believe that’s with $135 million gain from Siwei in there. So is that $33 million a year-on-year swing in earnings or should we assume that BUCY is loss making at this point?

No, no, no.

I think what you need to do is go back in our second quarter release from a year ago, one of our Q&As in the back of that release had quite a bit of detail on Bucyrus and included in there we had pre-tax gains on the sale of the Bucyrus distribution, we had some big ones. So basically the gains from last year on the sale of Bucyrus distribution to some of the big dealers more than offset the $135 million this year. Ross P. Gilardi – Bank of America Merrill Lynch: I got you. Just related to that though, have you had an impairment test for Bucyrus yet and if not, is there a next test coming up to do that annually?

Yeah, we do that annually. I want to be careful on how I answer this. If you do an impairment test, it looks forward to what you think you’re going to generate in that business over a longer period in time and we certainly wouldn’t be using a cyclical low straight line going forward. In our mining business, I think there is reasonable headroom, I certainly don’t want to predict what a test would be, but I think the chances of an impairment there are probably not, it certainly not like, but… Ross P. Gilardi – Bank of America Merrill Lynch: Okay. Thanks very much.

Thank you. Our next question today is coming from Ashish Gupta. Please announce your affiliation, then pose your question. Ashish R. Gupta – Credit Agricole Securities, Inc.: Hi, good morning, it’s CLSA. I believe in the past that Doug mentioned that China is not overexcavated. Now I’m wondering kind of what the pickup in sales we’ve seen recently. I’m wondering how to think about the machine population over time, now they are moving to more to maintenance from infrastructure. I’m just wondering how you guys view the long-term machine population in China, relative to some of the more developed economies?

Yeah. I mean this is the case where there is a short-term story, there is a long-term story. I think clearly, if you look at long-term, I mean I know the market doesn’t like to look out this far, but if you look out at a point where China is developed, say today to the level of Japan or South Korea or Europe maybe, the excavator population, the construction equipment population in terms of equipment relative to the economy currently is a lot lower than those developed countries. So as the standard living wise is there at the level of development, builds out over time, the population of equipment in China will certainly need to grow. I guess the big question you have is, will that take three years, five years, 10 years, 20 years, 50 years. And I think that depends a lot on the scale of China’s growth. From our perspective, I think it’s going to grow. I mean our view is it, it’s probably I guess the second biggest economy in the world today and it is growing at a faster pace than the rest of the world and it’s important, it’s going to grow and this level of development is going to grow. And I think as a result of that construction equipment industry, there it’s going to need to grow. But it is true when we see that in our part sales in China. As the population is increased and the equipment gets used, it has driven part sales up in China over the past few years and as that population continues to develop that’s a trend that will probably continue.

And that's exactly what we’re trying to do. We’ve also been working hard on market share in China and that is up and we’re quite happy with that. And as that year-over-year sales are up that is for all of our business in China are fairly substantially. So, we’re going to see China go in fits and starts. Obviously and I have said this before to many that, I hope we don’t see another double-digit burn. The after effects of that and the residue is painful for everyone, 5% to 7% 8% growth rate is just fine. We’ve sized our business for that. We’ll do very well with that particularly trying to get to a leadership position in market share, and that’s really the way we see China overall. Mining certainly, is an opportunity there. we’re working on that, and much of that is underground as you know. we now have an underground offering to work with. So a long-term, China and mining are appealing to our short-term. we go through cycles and we’re certainly in that downturn at the moment. Ashish R. Gupta – Credit Agricole Securities, Inc.: Thanks for that, Doug. Just one quick follow-up, when you guys look at your global fleet of machines with GPS data, can you help provide us with some sort of indication of what you’re seeing globally by region?

Ashish, I’d like to give you the answer to that, but of all the myriad of data that I made sure I was up to speak on, before I came in here today, I didn’t look at that. So I don’t…

We can’t do it regionally anyway, but overall machine operation is service meter units on the fuel population that we have monitored today are relatively steady and have that. And I think as we look back a few months. So overall, that’s a worldwide number including the U.S., China and everywhere else in the world. So it’s hard to say that regionally. Ashish R. Gupta – Credit Agricole Securities, Inc.: Great, thanks very much.

Thank you. Our next question today is coming from Andrew Kaplowitz. Please announce your affiliation, then pose your question. Andrew Kaplowitz – Barclays Capital, Inc.: It’s Barclays. Good morning guys.

Hey, Andrew.

Hey, Andrew. Andrew Kaplowitz – Barclays Capital, Inc.: Hey, so if you look at your press release, one of the things that you said is, you believe it’s unlikely that dealers will continue to reduce machinery, machine inventory in 2014. So maybe, Mike if you can talk about your conviction level on that statement, this is first down cycle of that you’ve had with your PDCs, with your product distribution centers. so I guess what I’m wondering is, is there anyway to look at the overall inventory in the channel between the PDCs and the dealers to get a read on whether you think inventory is low enough that you can sort of make that statement, because it’s hard for us, because the PDCs are relatively new development.

Yeah, yeah. That’s actually a very good question, Andy. If you just look at dealer inventories, they’re really today, really on the lower side of the historic range, actually, really on the lower side. If you include PDC inventories right now, the sum of the two is probably right kind of maybe, more in the middle of our reasonable range. and we’re looking for continued dealer inventory reduction through the rest of this year. I mean we’re looking at somewhere between $1.5 and $2 billion coming out in the second half. So further from here, I mean mining inventory probably be at about half the level, but it’s started the year and construction down some. Now your question about conviction level, as in all things, it depends upon what the economy does that our sales forecast for next year ends up being and we don’t have that. But if you look at just where months of supply are or the severity of what’s happening, and particularly in construction it’s trajectory of the way the sales chart looks. I think there is a pretty reasonable conviction that dealer inventory is certainly not going to have the kind of declines that it had this year. and probably, I guess at this point, I think it would be, we will have a pretty reasonable conviction that it’s not going to go down certainly at least much next year. But again, I’m going to qualify that, because it depends a lot upon what happens to sale, as into some degree, when it happens next year.

Now, just a couple of other comments; dealers are using PDC quite a bit more this year. The usage rate, the percent of dealer machines that are coming out of PDC is actually quite a bit higher in the second quarter than it was last year. So it looks like dealers are using PDC inventory and that’s a good thing. However, delivery times for product to dealers compared with a year ago are much less and I don’t think that’s probably a surprise, so that’s happened. So I think there is a pretty reasonable conviction on dealer inventory that’s going to slow or stop. Andrew Kaplowitz – Barclays Capital, Inc.: Mike, it’s fair to say then that at the end of this year, when the dealer inventory comes out as you expect that the addition of PDC plus the dealer inventories would then be at the low-end of your historical range versus dealer inventories in the past?

Well, that will dependent upon what our forecast for the first quarter sales is, because when we look at it, months of supply is kind of related to the forward-looking sales estimate for the quarter. So since we don’t have that out there right now, it’s a little bit tough for me to just say that. But I think our expectation is it would certainly be in the range, yeah. Andrew Kaplowitz – Barclays Capital, Inc.: Okay. And then if I could ask a follow-up on Resource Industries’ margins. I mean, I know people are already hitting you on that. I guess, the issue that we have is the decremental margin in that particular business looks exceedingly low, and you’ve talked about really accelerating cost takeout in 2Q. Is it possible to quantify how much cost takeout you really started in 2Q in terms of expense, so maybe we can sort of pass-through why the decrementals were so low. I know you are going to tell me that mix is negative also.

Well, mix is certainly negative for the total company, because more of the decline was mining. But we introduced this concept of profit curves inside the company, demands of the business, and each of our three segments have a positive curve. In other words, if sales goes up, there is an expectation of a certain amount of profit, when sales goes down, there is an expectation that only that much will come out. And so there is basically, think of it as an incremental and decremental margin rate for each segment. And the take-out rate for mining is a little higher than the 25% that we look at for the total company, and that’s probably not as fast. So we are trying to take actions on costs that will allow us to get as close as possible for that, sort of curve decremental margin rate. So they’ve been, I’m not going to quantify for you, but they’ve been doing – rolling lay-offs, rolling temporary lay-offs for salaried management, employees. We’ve taken R&D down a little bit. And the things that we’re going to do in the second half of the year, we certainly haven’t announced to our own employees yet. And so the specifics on that are probably going to start coming out, I would guess over the course of the next month or so. So it’s probably better to talk about the specific items after that, but definitely we’re planning to take some more action here in the second half of the year. Now, one thing that and this is through the first half of the year and this will ease in the second half of the year, it’s particularly earning decremental and that just period cost absorption. I mean, we added a lot of inventory in the first half of last year and in the second half. I’m not talking dealer inventory, I’m talking our inventory. And this year’s first half, we’ve taken inventory out. We took about $0.5 billion out in the first quarter. We took $1.7 billion up this quarter, and that does primarily impacted construction and resource industries. And the more vertically integrated you are, the larger the impact is on your business and that's been a particular negative for Resource Industries in terms of incremental. There was a positive last year and negative this year. It's not really an operational item. When you think about it, it's not operating efficiency. So as the inventory declines start to slowdown, that should be a little better in the second half. Andrew Kaplowitz – Barclays Capital, Inc.: And for that segment the decrementals to inventory reduction would actually be higher than 13% to 15% as you said for the whole company?

Yeah. We’ve not given out a number overall, but if you think about it the absorption thing is basically down to fixed costs that essentially get absorbed in and released from inventory, when you build and sell inventory. If your entire business was just buying and selling material, you wouldn't have a lot of value added to absorb. Then the businesses where you are a lot more vertically integrated, you would have more and I think Resource Industries is probably a little more vertically integrated than Construction, for example. Andrew Kaplowitz – Barclays Capital, Inc.: Thank you.

Thank you. Our next question today is coming from Jamie Cook. Please announce your affiliation, then pose your question. Jamie L. Cook – Credit Suisse Securities LLC: Hi, good morning, Credit Suisse. I guess just two quick follow-up questions. Under your new forecast, I think, your forecast implied that mining OE would be taken down about $7 billion, what are your assumptions under your new forecast, because I’m just trying to back into what mining OE will be as a percentage of total sales as we exit 2013, because I actually think that would be most helpful as we all have different macro assumptions or assumptions on mining. But if we can get a sense of what mining OE would be, I think that would be much easier for us. and as I calculate it could be as low as 10% or as high as 15% and I’m just wondering how off I am? And then I guess my second question, Mike, last quarter, I think you said, your core mining business would be down 50 [but you see] 15 and then aftermarket flat, just can you talk to what your new assumptions are? Thanks.

Yeah, again, if you look at the last outlook and this outlook, the main driver of the decline is dealer inventory. So I mean that’s the biggest driver and that is machines. So it’s a combination of Resource Industries and Construction. What we’re looking at in the back half of the year is probably more slanted to Resource Industries. So I think proportionately of the decline in the outlook, more of it would have been Resource Industries certainly than Construction. And actually, Power Systems is sort of flat to slightly up in the outlook. Jamie L. Cook – Credit Suisse Securities LLC: Okay, but you didn’t answer the question on…

No, we don’t disclose new equipment separately from aftermarket in our results. So I can’t really give you mining equipment number separate in Resource Industries. We still don’t disclose it that way. I am not trying to (inaudible). What I am trying to tell you is it, whatever your current estimate is probably the majority of the decline in the outlook, and when I say majority, I mean, more than half in this context, would be Resource Industries for equipment. They have more of the defined and dealer inventory in the second half. Jamie L. Cook – Credit Suisse Securities LLC: And then any change in your assumption, so do you see this turning what you saw at aftermarket, can you just talk to those relative to last forecast?

Yeah, I think directionally, both of those numbers are kind of the same, but remember when we were talking about the 50%, that's not end-user demand that's what we’re selling to dealer's. Jamie L. Cook – Credit Suisse Securities LLC: Yes.

And that has been impacted, of course, by the dealer inventories, so that means that our sales of the traditional product is down. The Bucyrus product is down a little bit, but I think that’s sort of proportion that you used with Bucyrus sales holding up much better than the traditional CAT product, is absolutely true, and a lot of that is because the dealer inventory impact is much more pronounced for trucks and dozers and wheel loaders, then it certainly is the Bucyrus product. Jamie L. Cook – Credit Suisse Securities LLC: And then the mining aftermarket?

Yeah, it’s holding up pretty steady. We had a really strong first half last year. Coal mining was still doing okay and then it’s kind of started to tail off a bit in the second half of last year, but our expectations for aftermarket this year haven't really changed. Jamie L. Cook – Credit Suisse Securities LLC: Okay, thanks. I’ll get back in queue.

(Inaudible) that you would be concerned about.

Thank you. Our next question today is coming from David Raso. Please announce your affiliation, then pose your question. David M. Raso – International Strategy & Investment Group LLC: ISI, I’m just trying to gain some comfort with the second half implied margins. if you pull out the settlement gain in 2Q, the margins for the year so far about 8% and 9%. the second half of the year is implying more at 11.5% to 12% operating margins. So when I think about how to bridge that gap, basically to find about 300 bps of margin improvement. you are looking for sales growth of about 7% sequentially first half to second half. and I can get a decent amount of margin improvement with a pretty healthy incremental margin on that sequential build increase, but can you help us a bit with the mix to better understand the incremental margins, the overhead absorption benefit. Where do you see the 7% sequential increase, which businesses maybe geography, just help us a bit, we’re trying to get a feel for how much could the incremental margins be, the overhead absorption benefit, what could it be on that sequential improvement?

Yeah. I think when you say incremental margins; you are talking about kind of from the first half to second half. David M. Raso – International Strategy & Investment Group LLC: Yeah, I’m talking sequentially.

Yeah, yeah. I think there are three big things that are driving that. one is just the absence of negative inventory absorptions. and if you start with the premise that the second half of our year, if you look at the implied guidance at the midpoint on sales and revenues, it has sales in the second half of the year averaging about what they did in the second quarter, but up a bit from the first half average. so volume will be some hope, and we would certainly expect our reasonable incremental margins on volume. I mean I’m not talking massive, but our kind of target range is around 25%, and so incremental margin on volumes, second half versus first half a little better. I think the second thing is absorption that was a pretty big deal in the first half, and in particular, in the second quarter, we have $1.2 billion inventory declines. so that had a pretty sizable effect. And I think the third thing is, to get to a point where inventory is not going to go down further, our production needs to go up. And that’s certainly the case, particularly for construction. And so that are to be positive for this efficiency in general. And then we have cost reduction activity, we’ve said we’re going to do it. We haven’t really – particularly because we haven’t announced it internally, any specifics, but we’re going to take additional actions in the second half of the year to lower cost, so volume from efficiency as production goes up, absence of the large negative cost absorption impacts and some additional cost reduction. David M. Raso – International Strategy & Investment Group LLC: But where is it coming, you mentioned construction, but if you had to handicap, the 7% increase in revenues sequentially first half, second half, is the increase mostly in Construction, is it Power or even suggesting Resource Industries sequentially better. I’m just trying to get a feel to better gauge those incremental profitability?

Yeah. I think you would, normally, if you think about our fourth quarter, our Power Systems business usually has a stronger second half than they do first half. so I don’t know anything this year that would cause that to be different and where we're ramping up production is mostly in Construction. David M. Raso – International Strategy & Investment Group LLC: Okay. And lastly not to even suggesting and tell me 2014 sales guidance, but just going from what you've articulated in this press release and this discussion. You feel inventory won't be lowered further next year as a base case, right? So that's $3.5 billion of Cat sales growth next year, if retail is flat, I mean that's a caveat there. But when I think about your commentary and your thoughts around Construction and Power, can we walk away from this call saying base case, Cat is thinking revenue growth at a bare minimum is up next year?

I would love to answer that question directly. But and I said about five times in my script, we're not doing an outlook. I think the message that we're trying to get people to think about is just the scale of the impact that dealer inventory reduction has had in this year. And the likelihood that, there is a lot of water to go under the bridge, and so I'm hesitating a little bit on making too much in the way of predictions about next year. Well, I think given the scale of what's happened this year, it's certainly not likely that that's going to happen again in terms of dealer inventory reduction. So…

David, Doug here. I’ve kind of been waiting to make this point and this inventory swing up and down has been painful on us and our dealers. That is the fundamental reason we established our enterprise system, structure organization and emphasis a few months ago, working on lead times, lead manufacturing, and really getting after a condensed supply chain. And that's my number one initiative between now and the end of '15, and I think I said in the last call, we expect to see some of that in 2015. There is lots of mine, lots of fruit to be picked on this one. And if there is ever a reason or a good way to get after it, it’s this inventory swing that we’ve seen up and down. I just want to make sure you all understand how important that is if we get that organized. We have come a long way, but we still have the ways to go with that, and we’ll start to see that manifest itself late next year and certainly into 2015 a little bit. David M. Raso – International Strategy & Investment Group LLC: Okay. Thank you very much.

With that, I’m afraid we’re at the end of our hour here today. Thank you very much for joining in and we’ll talk to you this time again next quarter.

Thank you. Ladies and gentlemen, this does conclude today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.