Mike DeWalt - Director, Investor Relations Doug Oberhelman - Chairman & CEO Ed Rapp - CFO & Group President, Corporate Services Brad Halverson - VP, Finance Services

Eli Lustgarten - Longbow Securities Vance Edelson - Morgan Stanley Steve Volkmann - Jefferies & Company Ted Grace - Susquehanna Financial Group Andy Casey - Wells Fargo Securities Timothy Thein - Citigroup Ann Duignan - JPMorgan Robert Wertheimer - Vertical Research Andrew Kaplowitz - Barclays Capital, Inc.

Good morning ladies and gentlemen, and welcome to the Caterpillar Third Quarter 2012 Earnings Results. 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.

Thank you very much and good morning and welcome to our third quarter earnings call. I am Mike DeWalt, the Director of Investor Relations. And on the call today, I am pleased to have our Chairman and CEO, Doug Oberhelman; Group President and CFO Ed Rapp and Brad Halverson, who will be replacing Ed as Group President and CFO in January as Ed is transitioning over to be the Group President heading our Construction Industry’s business. This call is copyrighted by Caterpillar Inc. and any use, recording or transmission of any portion of the call without the expressed written consent of Caterpillar is strictly prohibited. If you would like a copy of today’s call transcript, we will be posting it in the Investors section of our caterpillar.com website, and it will be in the section labeled Results Webcast. This morning there is no doubt, we’re going to 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. A discussion of some of the factors that either individually or in the aggregate could make actual results differ materially from our projections can be found in our cautionary statements under Item 1-A, Risk Factors, of our Form 10-K filed with the SEC back on February 21 of 2012, and it’s also in the forward-looking statements language contained in today’s release. In addition, we have a reconciliation of non-GAAP measures and that can be found in today’s financial release which has also been posted on our website at cat.com. Okay. I’ll start this morning with a few top points that summarize this morning’s release. First, we reported a good third quarter. In fact it was the highest sales and highest profit of any third quarter in our history. Sales and revenues were a little over $16.4 billion, an increase of about 5% from the third quarter of 2011. Profit in the quarter was $2.54 a share and that ties the second quarter of this year for the all-time record. Profit was helped in the quarter though by a pretax gain of $273 million on the sale of a majority interest in our third-party logistics business and that happened in the third quarter. Now, incremental operating profit pull-through was extremely high in the quarter and that was okay if whether or not you adjust the logistics gain. That said the sales increase in the quarter I think was small enough; the incremental margin in a quarter like this is probably not that useful a metric. However, there has been enough of the sales increase I think year-to-date forward to be a more useful metric and year-to-date it’s been over 30% and that’s an indication of good cost control and execution on part of the company. Now, while we reported a good third quarter, we did lower the full year outlook for 2012 and we provided preliminary sales and revenue guidance for 2013 and I’ll cover both of those in a couple of minutes, but first a little more color on the quarter. And again, let’s start with sales and revenues, up $729 million or about 5% from third quarter of last year. Now, when we look at sales, there are three perspectives that we take. The first perspective is by reason, in other words, was it changed due to volume, price, currency, acquisitions and alike. And from that perspective, sales volume improved $622 million, price realization was favorable $305 million, acquisitions and divestitures and we actually had both, it was a net positive of $36 million and financial products revenues were up $13 million. Currency was negative on sales and it partially offset the increase by about $247 million, and that’s largely because the U.S. dollar versus the Euro and Brazilian Real than in the third quarter a year ago. The improvement in price realization at $305 million is lower than we reported in the second quarter, but it’s held up pretty well this year and it’s been higher than we have expected most of the year. The next where we look at are views, the sales changes by geographic region. And from that perspective, North America was up 9% in the quarter. Sales in Asia-Pacific rose 8% and EAME, which is Europe, Africa, Middle East and Latin American sales, were about flat. The increase in North America was primarily driven by higher sales of construction equipment in the United States, which has been a relative bright spot all year. With expectations around U.S. housing on demand we’re cautiously optimistic about construction sales in the U.S. going forward. I said a minute ago that it was a relative bright spot and that's because although it’s still improving, it’s still well below the prior peak. Within Asia-Pacific, it’s a little bit of a different story. Sales are up in the region overall, despite lower construction equipment sales in China and that’s because mining and power system sales have been up throughout the region. And Latin America was about flat and so was EAME, and while EAME was flat overall, Europe was modestly lower and Africa and Middle East and the CIS moderately higher. The third way that we look at sales is by segment and this quarter most of our sales increase was in the Resource Industries segment, which is mostly mining and that was up 13% from the third quarter last year. Power Systems was up 5% and most of that increase was related to the acquisition of MWM and then Construction Industry sales were about flat in the quarter. Financial products revenues were up by about 3% and our all other segment was actually down 31% and most of that was a result of the sale of our third-party logistics business. All right, let’s shift to third quarter profits, which at $2.54 was a tie for the highest quarter ever. Operating margin was 15.8% of sales and revenues and if you exclude the logistics gain, it was 14.1%. Cost control was good, material costs were actually slightly favorable in the quarter and variable labor productivities held up pretty well this year. When comparing profit to the third quarter of 2011, acquisition impacts had a pretty significant impact on operating margin and that’s mostly two things. The logistics gain was a plus in the third quarter of this year and then last year, we had a lot of the upfront Bucyrus related cost related to that acquisition in the third quarter of last year. So it's less of that from last year and the logistics gain this year. On the negative side, we had higher taxes all year long. Our estimated annual tax rate for this year is 30.5%, that’s higher than the third quarter of last year and it's higher than the full year of 2011. And that’s really because of two things. One is the absence of the R&D tax credit that Congress has not yet renewed and geographic mix change in terms of where our profits are. Okay, that’s a quick review of the third quarter. Let’s move on to the 2012 outlook. In this morning’s release, we did lower the outlook for both sales and profit. We’re expecting 2012 sales and revenues of about $66 billion and profit in a range of $9 to $9.25 a share, that’s down from the previous outlook range on the top line of $68 billion to $70 billion and profit at $9.60 a share at the middle of the sales range. Now, at MINExpo about a month ago, we said we were in the middle of our forecasting process and it was evident that sales estimates were going to come down. Since then, we have completed the forecast and we have another month of actual results under our belt. And the sales outlook is down from July for two primary reasons. First, end user demand, while better than a year ago is not growing as fast as we were expecting it would. From a product standpoint, it’s fairly widespread across construction, mining and Power Systems. And from a geographic standpoint, it’s also spread across the globe. The second reason for our decline today in the sales outlook is dealer inventory. Based on the finished inventory that we have significant improvements we’ve made in delivery times to dealers and some moderating growth in end user demand, our dealers find themselves with too much inventory. In response, they’ve cut order rates to levels that are well below what they’re selling to end customers. As a result, in the fourth quarter we’ll be reducing production levels quite a bit, we’ve already announced a number of temporary plant shutdowns and there’ll be more coming. It means that for the next quarter and into 2013 our production will be below end user demand. By segment about two-thirds of the outlook decline is construction and the other third is split about evenly between mining and Power Systems. Based on our new outlook of $66 billion of sales and revenues this year, the fourth quarter will be just slightly below the third quarter of this year. Now if you look at the decline in our profit outlook range of $9 to $9.25 range, it is primarily result of the lower sales, but partially offset by the gain on our third-party logistics business which happened in the third quarter. Now in addition to 2012 and as we usually do at this time of the year, we have provided the preliminary economic and sales outlook for 2013. You can boil down what we are thinking about 2013 to a short statement and that goes both for economic environment and sales and that statement is that here she goes not much change from 2012. Now as we look forward on the positive side in many countries around the world, monetary and credit policies have eased over the past year and we do expect that to continue into 2013. However, economic growth has been slow to respond and we are not expecting any improvement in world economic growth until may be the second half of 2013. And even then for the full year, we are only expecting economic growth for the world of about 2.7% and that’s just a couple of tens of a point above what we are expecting for this year. In the developed world, we continue to expect growth at levels that are well below potential at about 1.5% in total for the developed world with about 2% growth in the US and the Eurozone close to zero. In the developing world, we are expecting growth of about 5.5% that’s about half a point better than 2012. We think Brazil will continue to improve some and the China’s growth rates will improve to about 8.5%. Again to summarize of our view of the 2013 economic prospects, we’re not expecting much change from this year. We are not timed for a significant pickup in the world economy, but that said, we are also not expecting a recession. We are expecting a continuation of the slow growth path the world seems to be on. And now I will just repeat that for emphasis, we are seeing, expecting or reflecting the world being in recession in our outlook for 2013. And based on our study as she goes slow growth economic outlook, we are expecting 2013 sales and revenues to be roughly the same as 2012 and a band of about plus to minus 5%. We are expecting our resource industry segment which is primarily mining to be down somewhat in 2013. Lower metals and coals prices and the increasing operating cost have hurt the profit margins at many mining companies. That profit pressure combined was economic uncertainty and slow growth has resulted in mining companies delaying some investment. Although, metals prices have recently improved, we expect mining companies will reduce capital spending in 2013 and sales of mining equipment will decline. However, we expect the lower mining sales to be about offset by higher sales of construction equipment. We are expecting some improvement in construction activity in the United States and you are already seeing some of that in housing. Sales of construction equipment in China should also improve somewhat in 2013 after quite significant declines in 2012. Now to be clear, we're not expecting China to make up the ground that was lost in 2012, but we do expect some modest improvement from a very disappointing 2012. We are seeing Brazil continue to improve and expect that construction equipment sales in the developing world in general will be a little better in ’13 than 2012. On the downside in construction, we are not expecting economy recovery in Europe and are planning sales there to be lower. For our third large segment, Power Systems, we're expecting sales to be roughly flat with 2012. In terms of timing, how we're thinking about sales first half versus second half. We’re not expecting a major economic pickup in the year and we're not expecting a big demand pick up next year. But, we and our dealers will be continuing to work off inventory early in the year, which will probably cause early sales in 2013 to be a little bit weaker than the usual seasonality. I am going to finish here this morning with the three main points we're trying to get across today in this call and in this morning in our release. Point number one is, we're doing a very good job of managing costs, margins are good and incremental margins so far in 2012 have been much better than our goal of 25%. Point two, we recognize we have too much inventory and dealers are telling us they have too much inventory. As a result, we’re lowering production. We've already announced widespread temporary layoffs and rolling factory shutdowns or temporary shutdowns and there is more coming. It will take a little while to work down the inventory and that means that our production levels and sales will be lower than dealer sales to end users in the fourth quarter and into 2013. The third and final key point that we’re making today is we’re taking a pragmatic steady-as-you-go view of 2013. We’re not saying or predicting a worldwide recession, but if one happens we know what to do. And as I mentioned a minute ago, we’re already taking actions to lower production to deal with the inventory and we’re ready to do more if we need to. On the flip side of that and this is also an important point, we’re not banking on a big tick-up in the economy and if we get a better economy next year, that’s upside of the outlook. So that’s it. So, we’re ready to take your questions.

Thank you. Ladies and gentlemen, the floor is now open for questions. (Operator Instructions) Our first question today is coming from Eli Lustgarten. Please announce your affiliation then pose your question. Eli Lustgarten - Longbow Securities: Longbow Securities, good morning everyone. Can we get a little more into the production cuts and the timing of it, at MINExpo you told us you were basically taking $2 billion out of the fourth quarter, it looks like you took a little bit third and now gave us a little bit distribution. Can you give us some quantification of how much production are you taking out this year and how much will go into next year, so we can get a sense of the size of magnitude of what’s going on?

Yeah. When we were at MINExpo we weren’t done with the forecast, because at that it was pretty clear that it was going to come down. Order rates for both mining and construction were lower. For mining, it’s been evident that customers wanted to lower CapEx next year and we were seeing that in our orders and it was becoming pretty clear despite decent sales to end users that dealers were reducing orders to cut inventory in the third and fourth quarter. At MINExpo the sum of all of that looked around $2 billion; it ended up being more like $3 billion and that’s the change that we have in the outlook. So directionally, we were pretty; I mean we knew which direction it was going to go. We can see what was happening, we have another month under our belt, it’s going to be this year and there will probably be some reduction in the first quarter as well. Eli Lustgarten - Longbow Securities: So that $3 billion is what you schedule for this year and somewhere on top of that or the $3 billion will spillover?

Well, I wouldn’t view the $3 billion as entirely inventory reduction; I think this $3 billion is a combination of inventory reduction and demand is not as high as we thought. Just in general, if you look at sales to end users still positive versus year ago and along those lines I would mention that the September number was a little weaker than you might have expected and that’s because we have an extra weekend in September. We’ll have more workdays in October, so workdays were about 10% less than September. But the point is, even though sales to end users are up versus a year ago, well in positive territory, our expectation is that it was actually going to be a bit better than it’s turning out in the fourth quarter. So the decline in the outlook is both inventory and increases in demand are a little less than we thought. Eli Lustgarten - Longbow Securities: And a follow-up, can you talk about mining being down next year; can you just give some kind of quantification whether that's double digit or single digit or some magnitude of how we should think about impact on the mining sector?

Yeah, I’ll tell you what, we don't the guidance by segment, but if you were to look broadly at generally what mining companies are saying about CapEx, I think the numbers that I have seen are sort of 5% to 10% and I’ll give you some over the magnitude in the overall terms of what they are thinking.

Thank you. Our next question today is coming from Vance Edelson. Please announce your affiliation and then pose your question. Vance Edelson - Morgan Stanley: Hi, Morgan Stanley, good morning. A follow-up on that last question, with the mining customers delaying some projects and reducing orders, could you give us your feel for just how widespread this has already become; in other words do you have some customers that are taking the early steps perhaps they are acting quite concerned, while others are still taking more of a wait-and-see approach or have the vast majority started to delay already?

Vance, it’s actually been going on some slight in the second quarter; it hasn't really changed too all for much here in the last month or two, it’s a pattern that’s continued. I think basically what happened is mining companies actually have quite a bit in the order book already, we have particularly for the long lead time mining products, like large mining trucks, we have pretty good order cover for next year and I think they are just taking a wait-and-see attitude to see what happens here with China and the U.S. elections and to get some direction on next year before they start ordering again. Vance Edelson - Morgan Stanley: Okay, that's helpful. And then in the past, you have referred to a potential inflection point in China. Any update on when you might see that happening; does the first quarter of 2013 now seem too early given the backend weighted overall expectations that you have for next year?

Well, actually China has continued to be pretty weak. In fact, I would say that’s one of the reasons why our finished inventory hasn’t come down. Maybe a little bit faster. You know, we were thinking we would start seeing at least a little bit of a pick up here in the fourth quarter. Within the economy there, they are going to accelerate some infrastructure spend. Now they have taken monetary policy easing sentiment on the ground from the dealers is a bit better but in terms of translating it into sales, I would say hasn’t happened yet. So the selling season is, sort of mid-February on. So, probably not going to see much till then.

Mike let me add in here. It’s Doug Oberhelman. I want to just add on China little bit. Mike is exactly right. We don’t see anything concrete differently today than we have over the last few months. However, we were just there two weeks ago. All of us with our Board of Directors were October meeting. We met with all of our distributors in China and most of them in Asia and I would say for the first time that I’ve talked to them in a while. As Mike said, the attitude is better and their outlook is better without concrete orders in hand however. We heard, I would say, story after story of positive anecdotes from their customers inside China but none of them yet are on the order books that the presidential transition or the leadership transition happens in the first half of November. Unanimously, they all believe that’s a water shedder that we all know that. They also look for substantial change whatever that means by Chinese New Year which typically is a selling season over there anyway. But, these are anecdotes at this point, but I would note that it’s the first positive anecdotes we’ve had across the board inside China in some time. So, we all are somewhat encouraged without any concrete things to put it in our pocketbook as yet. Vance Edelson - Morgan Stanley: And from the Chinese officials themselves, are you hearing anything either directly or indirectly in terms of what they might focus on to the extent they try to spur growth, do you think infrastructure for example, or anything else that you could benefit from is going to be high on that list?

Well, they’ve had the easing spec at open or almost all year, we’ve seen increased levels of building permitting this year over last year. We’ve also seen in the last six weeks or so a major infrastructure effort announced. I suspect all of that is aimed after presidential or leadership transition and most of that’s aimed towards spring of next year which is kind of a confluence of events that around Chinese New Year but half of this is going to happen and if it doesn’t we’re in for another kind of slow year in 2013. But right now, the hand, the cards in the hand are looking better than they have for a while. But not, I would emphasize, nothing concrete in terms of orders as yet.

As he said, the only thing I would add to that in terms of the government officials is I think it’s quite clear from the discussions as they’re trying to moderate the stimulus maybe more effectively than they did back in the ’08, ’09 timeframe where they felt things really got overheated. And we look at that as a positive, but there will be a point in time when we look back on 2012 and I think, we’ll be pleased with the fact that China slowed and put this thing under more control. I guess it’s going to be better for our business, better for our business model over the long pull.

Our next question today is coming from Steve Volkmann. Please announce your affiliation then pose your question. Steve Volkmann - Jefferies & Company: I am wondering Mike, can you share, you gave us some data regarding your backlog and I am wondering if you could share your book-to-bill in mining specifically?

Well, we don’t, we have never disclosed that, we put out a backlog for the total company. We don’t even; we are not even splitting that by segments. What I would tell you though is the decline in the backlog occurred in all three major segments I mean it wasn’t all mining; it was a combination of mining, construction and Power Systems. And again most would have been construction and Power Systems and its mining companies are taking delivery certainly on products that they have ordered, in fact our sales of mining equipment in the third quarter for Resource Industries were up 13% from a year ago. But they are not ordering much. Again, I think they are taking a wait and see. They have CapEx expectations next year that are a little bit lower than this year. So we are seeing that in the backlog. For construction, it’s a little more about I think the short-term issue. I mean with construction it’s not long lead time product, no dealers try to keep on hand or have orders that are let’s just say in the ballpark of delivery times from us so kind of a few month sales. It’s been orders on construction have been quite low over the past few months, actually improving a little bit as we have gone through. Well below their sales to end users the order rate. So what that means is as those orders over the last quarter kind of move into our production schedules for the fourth quarter and the first quarter. It means that there should be fairly significant reductions in the inventory. And then again I think that's a temporary situation. Dealers can't go on for very long time selling or ordering less than they are selling. We’ll see that for probably a couple of quarters, but then it has to move backup in line with selling rates. Steve Volkmann - Jefferies & Company: Okay, that's helpful. I guess where I was trying to get out tough as to think about the mix shift, as we get into 2013. Are you seeing any cancellations, I know you let that, you allowed that at one point in a previous downturn, is it that aftermarket is kind of holding in okay of that, the [OE] side is weaker or is it more broad?

Yeah, I think the [OE] side is where, I mean order rates are dropped, I mean for parts we are shipping about 24 hours. So our order backlog for parts is usually limited to about a day. So it that doesn't really play much into the order backlog numbers. The decline would definitely be OE and again, we know we have pretty good visibility in the backlog. We not had massive cancellations but, I wouldn’t say, we haven't had any, but the primary reason, the backlog is come down as they have just eased off ordering. I think it’s only to get a better picture for what next year is going to look like.

Our next question today is coming from Ted Grace. Please announce your affiliation then pose your question. Ted Grace - Susquehanna Financial Group: The first thing I was hoping to ask you is on the 2013 revenue guidance. Could you just, may be clarify, is that a top down perspective or is that bottoms up, having gone through their business segments dealer conversations and all the other things that would drive the bottoms up forecast?

It’s a little above. I mean, we do from the top down, we do an economic forecast. We try to translate that into what we think that means, region-by-region sort of product-by-product category around the world. And then we play in to that from a bottoms-up standpoint. The uniqueness that’s going on in individual products, you have new products or you’re having a particular push into a region, do dealers have unique things going on in the territory. So it's a little bit of a combination. It's kind of a top down in economic view coupled with bottoms-up view of the territories and the products and the product dynamics. So it's a little bit of both. Ted Grace - Susquehanna Financial Group: Okay. So just and I realized you haven’t given any kind of formal guidance on or any guidance whatsoever for earnings for next year, but just a little hand holding to think about the key variables; you did walked through sales mix next year and obviously mining you mentioned would be down, which all equals the headwind and you mentioned some of the production issues. But when we think through the key levers of variables, could you just give us maybe some framework of how to think about mix next year and puts and takes?

Yeah, I can do a little bit of that. Under the kind of qualification that we [haven’t] really provided profit guidance and to a large degree, we're still working on the details of next year’s plan. But certainly, one of the things for sure you would have to take into consideration is in the third quarter of this year we had the third-party logistics sale gain. That was $273 million pretax in the third quarter. We're not going to sell that thing twice. So that will definitely come out. Sales mix, as you mentioned, that would lot likely be a little bit negative. We have some decline in mining next year, some increase in construction. We’ll make a little more money in mining and we’ll do construction. So to your point, that would not signal a positive sales mix. We’ve been investing for the future and our CapEx has been a little up, probably a little bit less than $4 billion this year. So that means the depreciation next year will be a little bit higher. Kind of the flipside of that though is we’ve done a pretty good job on managing the factories; we’ve held our fixed cost growth, so I think in terms of managing costs we’ve done a good job, efficiency in the factories, all-in is held up pretty well, we do have some pricing next year, we announced, not huge, but some price increase for next year that would certainly be positive. I think those are probably some of the bigger things to think about. I guess the last point that I would make, is that this year even with what we’re expecting to take out in inventory in the fourth quarter, we’ll still end up this year with an inventory increase and we would certainly be planning on inventory decrease next year. Order magnitude, we’re still working on, and that will likely be a little bit negative for profit as well. Ted Grace - Susquehanna Financial Group: So the last thing I’ll ask Mike is, just the guidance for 2013 revenue. Could you give us a sense of how to think about what the embedded dealer inventory levels would be either year-on-year or versus normal ratios of inventory and sales?

You mean how it would end next or just…….. Ted Grace - Susquehanna Financial Group: Yeah, either where it would end or how we should think about that pattern next year or path?

Yeah, I think it depends a little bit on how next year plays out. Dealer inventory, by and large they’ll have somewhere in the, by historic standards around 3.25 months to 3.50 months of inventory. So it will really depend upon what sales are looking like towards the end of next year in terms of how much they will have. But I think if you look at selling rates today they have more than that, a pretty good size, a chunk of what we took out of not all of it certainly, some of that will come from our inventory, but we would expect to make pretty good reductions in dealer inventory in the fourth quarter, probably again in first quarter, but may be a little bit less than the fourth quarter, not because they don’t have more to do, but because commonly in the first quarter dealers build inventory for the selling season. So I think the specifics of how it’s going to play out by quarter will probably depend on next year and how confident dealers get in the second quarter, but certainly down $ 1 billion or $2 billion from where they are at now.

Thank you. Our next question today is coming from Andy Casey. Please announce your affiliation then pose your question. Andy Casey - Wells Fargo Securities: Wells Fargo Securities. Good morning, everybody. A couple of questions, but first on CAT corporate cash flow, inventory liquidation benefit from the inventory cut that you kind of forecast. How much of that is coming from purchase material and work-in-process or are you considering rolling back some of the PDC inventory?

Well it’s actually a little above, in fact if you look at the purchase content and our work-in-process and raw material inventory, we actually took that down several hundred million dollars in the third quarter. So in fact in the cash flow for the third quarter, payables were a little bit less of a help and partly that's because we’ve cut the front end of that inventory pipeline. I think if you look at what will happen in the fourth quarter, it will probably less work-in-process and production stores in a bit more of the finished goods as we try to take that down. Andy Casey - Wells Fargo Securities: Okay, thanks Mike. And then if I can go back to the topic of the day that mining equipment CapEx cycle, last month you discussed the longer-term extension of the current mining investment cycle. And then today although short-term, you are talking about the 2013 backlog for orders from your customers are pretty full and you acknowledged 2013 CapEx may decline from 2012. I am just trying to understand kind of where we are in the potential cycle and whether if nothing changes in 2013 in the macro environment do all the puts and take suggests that in 2013 you would see accelerating declines through the year or is it just kind of, like you said in the overall revenue mix down first half up, second half?

Before I answer the point on mining, this whole first half second half thing, I would just like to clarify, just a little bit. We are not looking for a Hail Mary second half of the year; that is a big increase after a decrease in the first half; that is not what we were predicting, we are not out there expecting a big economic recovery in the second half; it’s going to somehow save the year from a weak first half. I think what we’re saying is it’s going to be bit of a whole probably is not the right word but a pretty stable year. Our sales will probably be a little bit lower in the first half relative to the normal seasonality just because we're still working on dealer inventory. So I think it's worth noting that we're not backing on a giant second half of the year to somehow bail the year out. I think with regard to mining in general, I would say we couldn't be more positive about the long-term potential for mining. I mean the world’s population is continuing to go up, more and more people are moving into the middle class as standard of livings improve. Those are big commodity drivers. I think long-term we're very comfortable with mining. In the short-term, there are economic swings. The developed world particularly China are big incremental users of [Technical Difficulty] commodities. In 2012, their growth rates tipped down and it's been negative at least for a while to commodity prices. It's given miners an opportunity to take a breather. And that’s okay. That’s a normal economic situation that happens. That doesn’t I don't think change the longer-term view of mining which in our view is actually quite positive. So, I think that next year should be a fairly steady as she goes year overall, but with us probably selling a little less in the first half of the year because we know dealers are cutting inventory. I don't know if that answered it but.

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Our next question today is coming from Timothy Thein. Please announce your affiliation, and then pose your question. Timothy Thein - Citigroup: First question just, Mike to come back on segment mix, specifically on Power Systems, there is obviously a couple of different segments within there where the margins and returns can vary quite a bit, but given your, the outlook in the release on your expectations for brand averaging $110 a barrel next year would seem to be supportive for E&P spending, and obviously petroleum. So can you maybe provide a little bit more color in terms of how you’re currently thinking about mix within that, the Power Systems number for 2013 to the extent you have?

Yeah. If we look at the lower level components, actually we’re not forecasting a very significant change up or down in sort of those different end markets, industrial, marine, oil and gas, the forecast even by account lower level is not dramatically different. So, there is, I would say the mix is probably, maybe just a slight bit negative in that. One of the segments that will probably have some growth after a pretty poor year in 2012 is industrial, that’s been down quite a bit so far this year. I think that’s looking at may be a little bit of improvement next year. But even as I say that the change overall is fairly flat the change even below that level is not very dramatic. Timothy Thein - Citigroup: :

Well, couple of very good question Ross, couple of things one, just in terms of shifting around customers we tend to be certainly the premium product there and although sales are depressed in China not very good, we’ve tended to do a little bit better than the market overall, so in a down market we are doing okay. In terms of the inventory part of your question, I think the way I would describe is we have made steady inventory reductions in China, both us and dealers have finished inventory. But its not been as fast as we would have thought and its not because we are producing anymore than we were expecting, it’s because the sales have just remained pretty low. We have not really seen a pickup there yet. So a part of the inventory reduction that we were expecting as we march through the year, we were thinking, we would get a little bit of help from sales which isn’t happening. So I think if you look at how weak it is there. My guess is the rest, and I don't know their stuff, our competitors don’t report their inventories to me. But if they are anything like us, it’s probably a case where it’s going down but not as fast as we would all like. I think it will, it’s probably going to remain elevated until the selling season starts and that would probably begin mid-February that's the first opportunity I think for a more meaningful reduction.

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Yeah, it’s Oberhelman. I want to pile on again on China and inventory. We have been reluctant to massively lower inventory suddenly and we are doing in a very measured way. Most of our production there today is for export around the world. We need more capacity; we have it today, but frankly I am worried about any kind of recovery in China and not having inventory ready. So we have done this in a very measured fashion, all the way down this year and I would expect that to continue; while we want inventory down, and we’re a bit high, we cannot let us ourselves in to a position where we don’t have inventory to match the market when it that recover and we will be there, I suspect fairly soon and again it comes back to what happens with demand on the ground inside China going into ‘13 and we’ll know this; we’re going to know this likely in the first quarter which way is it going. Timothy Thein - Citigroup: And just a follow-up on your growth projects at MINExpo, you made it clear that you had temporary delayed several of your projects. Is that’s still the case and in your outlook you mentioned, GDP accelerating at 8.5%, if you see signs of that really unfolding in the first half of the year till those projects come back on very quickly?

We have slowed the expansion of our China facilities, as I mentioned at MINExpo. In fact we just laid that we’ve not and deferred that we haven’t cancelled it at all, we’re going to look at again what happens in ’13. But as I said before on many occasions and I’ll say again, having just come back from China; China is under excavated on a per capita basis by any metric to the rest of the world. So we know where that’s going to go overtime and we have to be there with capacity. So right now it’s a juggling act between how much do we lower inventory, how much do we slow capacity expansion knowing full well that and I don't know if it’s six months, one year, two year or five years, we're going to need a lot more than we have today. And your second question, I am sorry was – I forgot? Timothy Thein - Citigroup: I think you got most of it there. Thanks very much.

Thank you. Our next question today is coming from Ann Duignan. Please announce your affiliation then pose your question. Ann Duignan - JPMorgan: JPMorgan. First, just a clarification on the model, how should we think about modeling the logistics business going forward, it wasn’t really clear in the press release or in any of the Q&A’s?

Ann, with the logistics business, okay, we have actually several things going on with acquisitions and divestitures. We’ve bought Siwei in the quarter that’s a Chinese underground coal company; a year ago we bought MWM or not quite a year ago and then we sold a part of the logistics business, so there are pieces coming in and pieces going out. I think for the logistics piece in and of itself, if you look at our all other segments, most of the sales decline there was logistics, it’s a bit little less than $100 million a month in terms of sales, but then again, we have an add-on for Siwei as well. So we have things that are going in both directions, overall certainly from a topline perspective the net of them isn’t going to be a big difference next year. So in other words when we talk about our expectations then next year is kind of plus or minus the same as this year, we didn’t mention acquisitions, because we have some coming in and some going out. Ann Duignan - JPMorgan: Yeah. Just to as we know where Siwei goes, we know where MWM goes, but there is just no reference to, so you said logistics is about $100 million in sales per month?

No, it’s less, it’s a bit less than that; you can look at our release today based on when we sold it, we had absence of about two months of sales; it would have been less than $200 million in the quarter impact. Ann Duignan - JPMorgan: Okay, that’s somewhat helpful. And then my second question is, you had noted that in order to reduce inventories particularly in China that you are going to have to use some marketing programs?

Yeah. Ann Duignan - JPMorgan: Can you talk both about what kind of marketing efforts you are having to make in China to liquidate the inventories and also are we looking now at very broad based marketing dollars being spent to move products all over the world, both out of dealer inventory and out of your inventory?

I think the best guy to answer that question is going to be the new Head of our Construction business sitting to my right here?

Yeah Ann, yeah I would say in China today you have a fairly broad based portion in terms of the merchandizing programs and kind of as we reported last time a good portion of that is coming through the packaging of different offerings all the way from financing to trade and allowances to those types of things. And I think that as Doug said earlier, we are seeing some good results relative to our position in that market because it really plays to the strength of our business model. Yeah, we’ve slowed some of the capital as we talked about in China, but we haven’t slowed the build out of that business model, dealer locations, building out our services be it insurance or financing, building out the product support side of it, the things like logistics capability and re-man, so we continue to build out that business model. So going after that complete merchandizing package really does I would say play to our strengths. I think in terms of how that’s playing out around the world, it’s a bit different in different parts of the world depending on what segment you are operating in. As you have seen year-over-year progress in the States; sales, these are still with a pretty good growth trade. We talked about Europe being weak, but Africa, Middle East and CIS holding, so there is different play out depending on the different geographies around the world. But you have seen third quarter overall price realization was quite positive. Ann Duignan - JPMorgan: Okay. And just while I have you on the line, curious just what the thinking was and in terms of moving the headquarters for the Construction business out of Hong Kong which is obviously closer to China to Singapore, was there any reason for that in particular?

Ann I would say its two-fold. First of all, also included an announcement is the appointment of Qihua Chen as an officer based in Beijing; I’ll tell you, one of our great leaders and I would say a great leader and just happens to be Chinese. And so having an officer on the ground in China is a huge step forward and he will play a great role. The other reason is that if you go back in history, we really moved our Asian operation headquarters to Singapore; it’s where we got a bigger concentration of our people, product managers, to purchasing organizations those kinds of resources. So it puts me right smack in the middle of that. Trust me, I fully understand, it’s a mailbox, because a good portion of the time is being spend on the road, but those of us do thinks really to that decision.

Thank you. Our next today is coming from Robert Wertheimer. Please announce your affiliation then pose your question. Robert Wertheimer - Vertical Research: It’s Vertical Research and good morning everybody. I just had two quick questions on mining. Have you seen any reduction in hours run on mining equipment and do you expect any forecast on the diminution and how you see the growth or contraction parts whether to a de-stocker or cut hours and second, are you allowing cancellations, I mean, you had been at one point I think kind of sold out for ’13. I know you allowed push outs. So I am just curious if you allowed any cancellations or whether just that the clients seemed a little bit surprising given how robust the backlog had been. So I just wanted to see if the stuff have been pushed over to ’14 or cancelled?

Yeah, Rob, just comment on the whole hours work question. I think if we use our aftermarket business as probably a reasonable indicator of that. It would tell us that activity levels and actually if you look at mine production levels as well, they look pretty good. I think the one place where that’s not the case where versus a year ago, it's actually down, is eastern coal in the US. So actually that’s the one spot of weakness certainly in the aftermarket a part of it. In terms of your cancellation question, yeah, there have been some cancellations. It's not been usually significant. For the most part, what customers have done, it is two things. One; you can see this based on the backlog, there is not a lot of new order activity, for new equipment and of course the aftermarket piece is just cycled through. And two, we had some pushed outs; we had some sales, shipments that we would have thought, would have come in the fourth quarter of this year that our pushed in the ’13, some from the ’13 pushed beyond that. So it's a combination of lower orders and some delays, not big cancellations.

Rob, this is Ed. You wondered about the cancellations as you mentioned in the past. We’ve openly communicated to our dealers that the order cancellations in the late ’08 timeframe was an anomaly or an exception. It’s the liquidity crisis, no one was certain, where it was going to end up and so we made some steps there, it’s not part of our ongoing practices with our dealers and we want them to understand the risk that comes with the ordering process to keep good honesty in the order board. And also, as we’ve talked openly, we don’t see a recession coming in 2013, we see things a lot differently than we did in that period. So, like I said, an exception to our standard ordering practice, back in ’08 and ’09 you’re seeing us now move back to more of our standard practice.

Okay. I think we have time for one more question.

Our final question today is coming from Andrew Kaplowitz. Please announce your affiliation then pose your question. Andrew Kaplowitz - Barclays Capital, Inc.: Mike, maybe I could ask you about the western hemisphere in terms of construction, obviously the US market has held up better than some other markets. Have you seen any order slowdown from dealers in that market? And you talked about growth in the market next year, confidence level around that, I noticed your housing start number was pretty good too?

Yeah. A couple of things, sales to users in let’s say North America, the rate of growth has slowed down a little bit, now again September, it’s a little bit unusual we had four weekends last year in September, the way the calendar fell this year we had five, so the flipside of that it will happen in October. So, September, I think because of the calendar was probably a little weaker month. But, if you go back to the fourth quarter of last year, North America was up like, close to 50%, I mean it was up a lot, there was, I think a little bit of probably extra buying in the sales to users because of the depreciation rules at the time, probably a little bit of a pull forward if you will under the fourth quarter I think particularly the dealer a dealer level. So I would fully expect that if you are looking at year-over-year growth rates, I expect those growth rates to come down a little bit in North America; that doesn’t mean that sales to users or kind of sequentially seasonally adjusted getting worst, it just means that the fourth quarter of last year was quite a bit better than the second, third quarter a year ago. We are reasonably constructive on US in terms of construction activity, housing, really does seem to be on demand I mean it’s not blooming but it really seems to have turned to corner and is getting a little better. So that should help if we can get this election and year end tax and spending cliff dealt with I think there is opportunity for comps even to get a little bit better. So I think we are fairly constructive you said the western hemisphere, so I will move to Latin America. In Brazil which is one of our more important countries in Latin America in terms of sales, we’ve had a pretty steady improvement year-over-year in terms of sales to end users. I mean the government there has been constructive I think on monetary and credit policies. We have seen our sales to users or dealers delivers to end users get better. But I think we are, I would say we are reasonably positive on that as we move forward as well. I don’t know Andy that I answered all your questions. Andrew Kaplowitz - Barclays Capital, Inc.: You did Mike just one America you know your sales were still down sequentially, I mean is the Argentina that sort of run its [close] or you just haven’t been delivering a lot there but I think that stopped sort of in February of this year somewhere that should have easily compares there as you go forward?

Yeah, Argentina has been just quite severe declines there. And I think, if you look at our sales in Latin America too, you have a little bit of a different situation. The construction business in Brazil, dealers have actually been cutting inventory there a little bit, actually in the country of Brazil the inventories went down a little bit in the quarter. So our sales there are little bit less then real demand already. And on that as the demand continues to increase there and the dealers get their inventory in line at some point here orders and sales of hours we will start matching and we will get close to that user demand, so that's a temporary thing. Andrew Kaplowitz - Barclays Capital, Inc.: Okay, and then just real quickly. You said as profitability a little lower sequentially looks like less than 5%. Usually they have a strong fourth quarter, so is that kind of what we were anticipating here that one of the reasons why operating cost it was lower?

Yeah, I think our view of this [hour], if you look at what happened in the fourth quarter a year ago, just a shift in their both sales and profitability going from third to fourth, there is an up tick, they just historically have made a higher portion of their profit in sales in the fourth quarter, so we would be looking for that to improve in the fourth quarter as well.

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.