Good day, ladies and gentlemen, and welcome to the fourth quarter 2010 Cummins Incorporated earnings conference call. My name is Ann and I will be your coordinator for today’s call. As a reminder, this conference is being recorded for replay purposes. (Operator Instructions) We will be facilitating a question and answer session following the presentation. I would now like to turn the presentation over to Mr. Dean Cantrell, Director of Investor Relations. Please proceed, sir.

Thank you, Ann. Welcome, everyone, to our teleconference today to discuss Cummins results for the fourth quarter of 2010. Participating with me today are Chairman and Chief Executive Officer, Tim Solso; our President and Chief Operating Officer, Tom Linebarger; and our Chief Financial Officer, Pat Ward. We will all be available for your questions at the end of the teleconference. This teleconference will include certain forward-looking information. Any forward-looking statement involves risk and uncertainty. The company’s future results may be affected by changes in general economic conditions, and by the actions of customers and competitors. Actual outcomes may differ materially from what is expressed in any forward-looking statement. A more complete disclosure about our forward-looking statements begins on Page 3 of our 2009 Form 10-K and it applies to this teleconference. During the course of this call, we will be discussing certain non-GAAP financial measures and we refer you to our Web site for the reconciliation of those measures to GAAP financial measures. Our press release, a copy of the financial statements and a copy of today’s webcast presentation, are available on our Web site at www.cummins.com under the heading of Investors and Media. With those formalities out of the way, I would like to call your attention to our 2011 Analyst Day in New York on Tuesday, September 13. Please mark the date on your calendars as we will reveal our new five-year outlook for the company. Turning back to the fourth quarter results, we will begin our remarks with our President and Chief Operating Officer, Tom Linebarger.

Thank you, Dean. Good morning. I will start today by sharing some thoughts on our performance in the fourth quarter and for the full year. Pat will then provide greater detail on the quarter and we’ll discuss our 2011 financial guidance, while Tim will talk about our longer-term priorities. As you can see from the results, we had an outstanding fourth quarter capping a very strong year for Cummins. Our revenues in the fourth quarter surpassed $4 billion for the first time and were 22% higher than the same period of 2009. Fourth quarter EBIT of $541 million or 13.1% of sales also was a quarterly record and was 41% higher than a year ago. Our Engine, Components and Distribution segments reported record sales and EBIT in the fourth quarter. All three segments also earned record EBIT for the year. Our Power Generation business, which entered the downturn later than our other businesses, also saw dramatic sales and EBIT gains in the fourth quarter and full year compared to the same periods in 2009. Cummins full year sales of $13.2 billion were 22% higher than in 2009 and our second best sales year ever. Our profit results were even stronger. Earnings before interest and taxes of $1.7 billion or 12.5% of sales were more than double what we earned in 2009 and represent our highest annual EBIT ever. We continued to return value to our shareholders in 2010 as well. In addition, to a 140% appreciation in our stock price we increased our dividend by 50% in the third quarter and repurchased $241 million in stock over the course of the year. Our financial results in 2010 were much stronger than we had expected when the year began and can be attributed primarily to two factors which we have discussed…

Thank you, Tom, and good morning, everyone. The results we are reporting today show solid progress within every business segment and positive momentum across nearly every region. Full year revenues for the company were $13.2 billion, an increase of 22% over the prior year. Earnings before interest and taxes were a record $1.7 billion or 12.5% of sales. This compares to $774 million before restructuring charges or 7.2% of sales in the previous year. Earnings per share finished at $5.28. Now let me speak specifically on the fourth quarter and provide some more details on our performance. Revenue of $4.1 billion was 22% higher than both the previous quarter and the fourth quarter of 2009. Gross margins remain strong at almost 24% of sales. While spending on selling, admin and research and development came down as a percent of sales, it did increase in dollar terms due to increased investment in research and development on growth initiatives and as a result of higher compensation accruals. Joint venture income of $90 million was 34% higher than a year ago reflecting the strength of the emerging markets. EBIT was a record $541 million or 13.1% of sales, up from 11.4% last year and up from 12.3% from the third quarter, excluding the one-time benefit from a favorable legal ruling in Brazil on the tax treatment of imports that we discussed last quarter. Earnings per share for the quarter were $1.84 and included a tax benefit of $0.09 related to the recently enacted legislation impacting the research tax credit. Moving on to the operating segments, let me highlight the performance during 2010 and in the fourth quarter and then conclude with our revenue and profitability expectations for this year. In the Engine segment, full year sales were $7.9 billion, up 23% from last…

Thanks, Pat, and good morning. As you’ve heard from Tom and Pat discuss, the company performed well during the fourth quarter and for the entire year. To put our performance into perspective, consider the fact that our record EBIT in 2010 exceeded what we earned in our second best year of 2008 by $400 million on $1.1 billion less in sales. As a result of the actions we took during the recession, we are operating more efficiently than at any time in our history. Our performance over the past two years has set the stage for what we think is going to be an extended period of significant growth in profits. Our business is generating record profits. We also have more than $2 billion in cash and available credit and historically low debt levels. As a result, we are well positioned to make the investments necessary to capitalize on the several long-term trends that are working in our favor. As a reminder, those trends are; we expect continued significant investment in global infrastructure over the next 20 years, which will benefit most of the markets in which we compete, especially the emerging markets. The cost of energy will continue to increase as will the disparity between supply and demand for electricity in developing economies. This will benefit our Power Generation, Engine and Components businesses. The emission standards in markets around the world will become more stringent and challenging to meet over the next several years. Tighter emission standards play to our strengths as a technology leader and provide a barrier of entry for new competitors. These emission regulations will also be instrumental in the growth of our Components businesses, which provide many of the technologies that allow engines to meet the new standards. And finally, the world economy will continue…

Thank you, Tim. Out of consideration to others on the call I would ask that you limit yourself to one question and a related follow-up. If you have additional questions you’re free to rejoin the queue. Ann, we’re now ready for our first question.

Okay. Thank you. (Operator Instructions) And our first question comes from the line of Jamie Cook with Credit Suisse. Please proceed. Jamie Cook – Credit Suisse: Hi. Good morning.

Good morning, Jamie. Jamie Cook – Credit Suisse: You probably won’t be surprised by my first question. I’m trying to understand your margin guidance in Engines given the top line growth. I think it implies an 11% incremental margin, so I’m just trying to figure out if you could outline what the offsets are. I’m assuming a lot of its material costs. And what your assumptions are for pricing or putting through surcharges. And then my follow up question is on your Power Gen guidance for top line. You’re assuming 15% growth which implies revenues of $3.3 billion which is below your Q4 run rate. So that seems conservative in particular as we hear about some strength in the developed world, in particular North America. So if you could just answer those two questions.

Okay, Jamie. I’ll take a stab at the first part and then between Tom and myself, we’ll answer the second one. Yes, you’re correct. Incremental EBIT margins, for the Engine segment, we expect to be around 11% in 2011. So the components that make that up, we get about 1.5 points of benefit from the additional volume. Warranty will be up though as we introduce these new products. We have said before that we always carry higher warranty accruals in the first couple of years of launch. So warranty will increase by 1% of sales for the Engine segment. Pricing we expect to be positive, between 1% and 1.5% of sales for the segment. But we see that being offset by higher material costs of four tenths of a point. We will make increased investments in research and development and in growth initiatives, and that will cost about 1% of a headwind against the numbers, most of that being research and development. Joint venture income is relatively flat in dollar terms next year. As a percent of sales it goes down, so that drives it down by about three or four tenths of a point. So there are the four or five main drivers behind the Engine business incremental margin guidance for 2011. On Power Gen, the fourth quarter, if you look at the fourth quarter when we had $900 million sales. Keep in mind that was a 14 week quarter for the company. I think your point is still valid that there probably is still some upside if the markets do materialize as well as what we expect. But at the moment we feel the guidance of 13% growth is probably appropriate.

Jamie, the only thing I’d add to the Power Gen guidance – we definitely recovered slower there and I think we still have a relatively conservative view about a North American recovery. There’s definitely recovery in there but it’s not – we’re not bouncing back to the levels we were and the non-res construction spending assumptions are not very aggressive. So I think – we’re watching that pretty close though. I got a little bit of pressure on Tony about that. I do feel like we have some upside and I do feel like if the non-res construction spending comes back as some people are forecasting, it’s kind of a mixed bag out there about what people are saying, but if it comes back like that, we will see stronger growth in Power Gen for sure. Jamie Cook – Credit Suisse: But while it’s not in your guidance, are you seeing any anecdotal evidence because some of the industrial companies are starting to cite that. We’re seeing some constructive ABI numbers. So I understand what you wouldn’t...

The answer’s yes. Jamie, we are. Jamie Cook – Credit Suisse: Can you give me an example?

Yes. Jamie, we are. The same kind of anecdotal evidence that you are seeing. And in fact, Tony is feeling good about his order book in North America. It’s getting better. I wouldn’t say it’s – he feels all the way there, but, yes, we’re feeling better about it. And so we’ll let the first quarter run and then we’ll see where we come out. And if we are seeing better answers on North America, you’ll see us push guidance up on Power Gen for sure. And we’re watching it really closely. Jamie Cook – Credit Suisse: All right. Thanks. I’ll get back in queue.

Okay.

And our next question comes from the line of Jerry Revich with Goldman Sachs. Please proceed. Jerry Revich – Goldman Sachs: Good morning.

Hi, Jerry. Jerry Revich – Goldman Sachs: Pat, for the Component segments, can you talk about your sales outlook by business? I guess considering the sharp ramp in Emission Solutions and Fuel Systems production, why wouldn’t the Components business deliver stronger sales growth than you’re looking for in Engines this year?

Yeah. Most of the growth in the Components segment we’ll see come through Emission Solutions and the Turbocharger business in 2011. The Fuel Systems business does recover as the North American top markets come back into play. The Filtration business does not recover to the same extent given that it is primarily an after-market business. So you’ve got two of the businesses really coming back strong. One growing with the top market and the other really is up 5% or 10% for the year. So that’s the mix by business, Jerry. Jerry Revich – Goldman Sachs: And, Pat, can you say more about your incremental margin comments around the raw material piece? What are your assumptions for raw material in place? Let’s say we get this deal. And the metal costs are surprising for the upside here, can you just step us through the pricing announcements you’ve made in the marketplace? I think you’ve got a bunch out on the Power Gen side. Can you just give us an update for the other businesses as well? Thanks.

Well, on the material costs, we do expect a headwind of somewhere between three tenths of a percent and four tenths of a percent net. The metal market part of that is going to go up by more than 1%. And just now we’re fairly confident we can offset around three quarters of that. We will continue to work at it. But that’s one of these issues we’re going to have to pay attention to through the year as there seems to be continued upward pressure on metal markets. On pricing for the company, we’re looking at pricing being up about 1% in 2011 versus 2010. That’s really coming through the Power Gen segment, it’s coming through parts of the Component segment, we’re seeing it in the Engine business, high horsepower engines in those markets being impacted favorably and the after-market business is also up by a couple of percent. I actually don’t have the specific numbers so maybe that’s something you could follow up with me after the call. Jerry Revich – Goldman Sachs: Thanks, Pat. And lastly, can you give us an update on Foton Cummins and Xian Cummins production rates in the quarter and whether you expect the operating losses in those businesses to narrow in ‘11. Thanks.

On Foton, we ended up building 16,000 engines last year, so that was up from 1,000 in 2009 and the fourth quarter production, shipments were around 8,000 units, so we did see a climb through the year. Our projection for 2011 is 50,000 engines in this year, so significant growth over the 2010 level. And then for the XCEC joint venture, we ended up building about 4,000 engines last year and we see that growing to 16,000 engines in 2011.

I think one point I noted in my opening but we do expect, despite a relatively flat truck market, for our business to grow in China and specifically, we expect our truck business in China to grow. Those are really the two reasons that we expect our BFCEC expansion into light-duty trucks to start in earnest and then XCEC which is heavy-duty engines where the market is moving much towards, up in power range, up into heavy-duty. We’re getting some traction on our XCEC joint venture with Foton so with our partner from BFCEC those are definitely, starting significant expansions in 2011 and that’s helping is grow in a relatively flat market. Jerry Revich – Goldman Sachs: Thank you.

Our next question comes from the line of Robert Wertheimer with Morgan Stanley. Please proceed. Robert Wertheimer – Morgan Stanley: Yes, hi. Good morning, everybody. Quick question on Industrial Engines, oil and gas was coming up strong. Can you talk a little bit about where that is within the oil and gas patch, whether it’s share or – I guess we’ve seen some companies reporting very strong oil and gas and some still not bouncing back. I know you had the potential to gain some share, so could you talk about the strength in the industrial in oil and gas please?

Where we play most successfully in the oil and gas market is obviously in the well servicing, the frac rigs in the oil shale deposits that you see throughout the United States. That’s where we’ve seen a lot of success in those markets. You may remember back in the third quarter, we announced that we were getting into the Transmission business for the oil and gas and that will be product that will be coming online here towards the end of the year in 2011. And so we’re really seeing a lot of good share gains in that market. We don’t play in a big way at this point in a lot of the offshore drilling. We’ve got some efforts underway through the Distribution segment to establish centers of excellence in the Singapore area to really go after that offshore drilling market opportunity as well as in Houston with the onshore land drilling that’s taking place. So there’s some more opportunities for us in that part of the market. Robert Wertheimer – Morgan Stanley: Perfect. And I wonder if you could touch on compression as well. And then my second question would be, I guess that’s two, but the second question would be just margins on engines in the quarter. Your revenues were up quarter over quarter. Margin’s a little soft. Could you do – was that pricing or materials hitting you negative and that normalizes out in the first part of the year?

Well are you talking Q4 over Q3 or Q4 over Q4? Robert Wertheimer – Morgan Stanley: Over Q3. Sorry.

Yes. Compared to Q3 we were down – let me see if I can find my notes on this. Robert Wertheimer – Morgan Stanley: I had you at 8.8 ex the JVs versus 9.

Yes. So we’re down five tenths of a point. Volume is clearly a positive benefit. We did see increases in material costs. We did see product coverage going up from 3.6% to 4.7% within the segment. We did see higher spending on R&D technology cost in the quarter. Robert Wertheimer – Morgan Stanley: Okay. Thank you.

And our next question comes from the line of Henry Kirn with UBS. Please proceed. Henry Kirn – UBS: Hi. Good morning, everybody.

Good morning.

Hi, Henry. Henry Kirn – UBS: Since your revenue run rate’s already ahead of the 2011 guidance, could you talk about how much pre-buy demand you saw from North American off-highway and Europe in the fourth quarter?

Jerry, I think what we’ve or, Henry, we’ve talked about in the past is typically in the European market that we were aware that there were pre-buy underway. We ended up seeing probably close to 10,000 engines that were pre-bought in the European market. I can’t say that we really were seeing or have a way of identifying any pre-buy activity in the North American market. Obviously the EPA does not allow pre-buy for the Tier 4 market in the U.S. But in the European market it is allowed and we were aware of OEMs taking advantage of that. Henry Kirn – UBS: And is it possible to give some breakdown in what you expect for JV versus non-JV EBIT in 2011?

Yes. I think that’s in the presentation that Dean put on the Web site. We expect JV income to be up around 5% in 2011. We are temporarily capacity constrained at some of the larger joint ventures, most notably the Dongfeng Cummins joint venture in Xi’an. But we’re making a significant investment in capacity to increase that by 50,000 units by the end of this year. Joint venture income grew – sorry joint venture revenues grew 28% in 2010. We expect joint venture revenues to grow around 15% to 20% in 2011.

We also have been at capacity on the TCL Tata plant in Jamshedpur where capacity is 120,000 and they produced 146,000 last year. One of the plants that we opened two weeks ago is another engine plant that’ll have capacity of 60,000 with the possibility of going to another 120,000. And that plant will come online during the year. Henry Kirn – UBS: Thanks a lot.

And the TCL joint venture will actually be online this month, by the end of this month, starting production of its new 60,000 units.

And our next question comes from the line of Ann Duignan with JPMorgan. Please proceed. Ann Duignan – JPMorgan: Hi, guys. Good morning.

Morning, Ann.

Ann. Ann Duignan – JPMorgan: Hi. The first just a definitional question. Product coverage, is that totally warranty costs? Or is there anything else in there like ongoing additions of technicians or fixed costs (inaudible) ?

Ann, it’s total warranty costs. There’s nothing else in there. Ann Duignan – JPMorgan: Okay. Just wanted to make sure I got that right. And then my real question is, could you walk us through your outlook sequentially or year-over-year? North America heavy-duty versus medium-duty, just your shipments? Just given the lack of shipments Q1 this past year, what kind of ramp up should we see as we go through the year for your business?

I think on the heavy-duty truck in North America, I think about 35% to 40% of the full year shipments will take place in the first half of the year and then 60% to 65% in the second half of the year. On medium-duty truck, it’s a little bit more balanced, maybe 40% to 45% in the first half and 55% to 60% in the second half. Ann Duignan – JPMorgan: Okay, and then just one other clarification. On the JV investments, I think you said there was an additional $300 million being invested in the joint ventures, CapEx for joint ventures. Is that 50/50 your investment and your partner’s investments around the world? Or, could just talk about what your contribution to that $300 million is.

Yes, our contribution is minimal. This is investments in the joint ventures are funding themselves. Primarily it’s Donfeng Cummins. There’s a little bit of finishing up with Tata Cummins, but relatively little investment on these capital projects that we talked about in joint ventures.

Just to be clear, that’s not cash flow that you’re going to see in our cash flow statement, Ann, that – if you could look into the joint ventures and their cash flow statement, you would see them spending the – the joint ventures spending the $300 million in CapEx. Ann Duignan – JPMorgan: Okay. Perfect. That’s exactly what I wanted to make sure I got right. Okay. Thanks.

And our next question comes from the line of Eli Lustgarten. Please proceed. Eli Lustgarten – Longbow Research: Thank you. Good morning.

Hi, Eli.

Hey, Eli. Eli Lustgarten – Longbow Research: A little clarification. You gave us product coverage, I think you said in engines were 3.6 to 4.7. Can you give us a product coverage number for the corporation in the quarter and the year and how to work that out for 2011?

Yeah. So let me give you a little bit of overall view of what happened in product coverage. You go back to 2009, our product coverage cost was 4.1% of sales. And in our call three months ago, we had guided product coverage for 2010 to be 2.9%. It came out at 3%. So it was relatively close to the guidance we gave. For the fourth quarter, it was up at 3.9%, so it was higher than what we had seen for the earlier part of the year. But that was expected. We telegraphed that before as we introduced more 2010 products, they will carry higher warranties. We did have one or two additional campaigns on all the products, nothing to do with 2010 product, that we also increased accruals for. But overall, we came in at 3%, which was not far away from what we expected three months ago. For 2011, we do expect product coverage for the company to increase and will be somewhere between 3.5%, 3.6% of sales for the full year. Probably starts off around 3.4% and end up around 3.7% by the fourth quarter.

Those changes just reflect the mix of new engines versus older engines and the fact that we start with high accrual rates and bring those accrual rates down as we get more experience with the engines and our actual payments begin to match – begin to play a bigger weight in our estimate of accruals versus what our standard rate is when we launch the product, so that’s what’s happening with those rates as we go. As Pat mentioned, we are feeling very good about the product quality of our 2010 engines so we expect the rates to come down as actual experience begins to flow in and play a larger role in the accrual rate setting process. Eli Lustgarten – Longbow Research: And can you help me a little bit with the guidance of Engines because when I look at the – your assumptions, a lot of its EPA 10 compliant. And there’s a big price differential between EPA 10 and non-EPA 10. So how much of that 25% is because of the higher – the 25% is because of the higher prices of EPA 10 versus actual volume. I’m just trying to get some mix of how pricing because of the more expensive engine flows through here.

I think, Eli, the way you should think about it and the way that we’re looking at it when we give you those bridge to the 2010 to the 2011, is we introduced the 2010 product in 2010. It carried a higher price increase relative to ‘09. And so as we’re bridging 2010 to 2011, we’re not really talking about price changes on EPA 10 product, we’re talking about volumes increasing. Eli Lustgarten – Longbow Research: Yeah, but as I said, you’re going to have, a huge step up, 125% increase in heavy-duty shipments, 40%, 110% in medium-duty, and that’s all much more expensive engines versus what would have been shipped before. I just want to know whether...

But not more expensive than was shipped in 2010, right, Eli? We didn’t ship any non-EPA compliant 2010 engines, everything had to be compliant in 2010 for us to ship, so like for like. Now if you go back to ‘09, you’re right that there’s both volume and price. Eli Lustgarten – Longbow Research: And, I’m just trying to get some idea of that mix change, because the prices are up substantially.

Yeah. I think maybe you could, Dean could give you that if we went back to ‘09 because we don’t have those numbers handy with us relative to ‘09. But we could definitely say okay, from ‘09 what was the volume increase and what was the price increase in terms of the mix change. We just, but because it was all in ‘09 we don’t have numbers with us handy. Eli Lustgarten – Longbow Research: And one final question. Could you talk about market share expectations for ‘11 versus ‘10 specifically in the North American market?

Yeah. In heavy-duty trucks, we expect to be around 35% market share for the year. We obviously started out higher when much of the transition was happening. We finished the year right around 38% for the full year and so we expect to go into that year at that run rate. We expect to be around 35%. We’ll see how we go. We’re trying to help our customers obviously take share from folks that aren’t our customers and if we do better at that, our share will be higher and we’ll be working hard to do that. Right now we’re estimating 35%.

And it will be over 50% in the medium-duty. Eli Lustgarten – Longbow Research: Okay. All right. Thank you.

Yeah. See you later.

Our next question comes from the line of Andrew Casey with Wells Fargo. Please proceed. Andy Casey – Wells Fargo: Good morning, everybody.

Andy. Andy Casey – Wells Fargo: A couple of questions, first on supply chain potential to keep up with the ramp. Are you seeing any constraints at all, whether it be within your supply chain or elsewhere?

We do see some, Andy. There’s no one thing that’s causing issues, but we are seeing ramp up issues in high horsepower. So, as we talked on our previous call about how we had gone to work on making sure that we had enough high horsepower engines by starting early with the supply base. I’m grateful that we did that because in fact demand did come faster than we expected and we were able to stay up with the ramp. But now on the QSK60 engines where demand has really increased quickly with all the market segments that we discussed earlier, mining and power gen, et cetera we are now extending lead times a little and that’s frustrating to us so we are trying to increase capacity again to keep up. And again, most of that is supply base, right? Our issue is not assembly capacity primarily; it’s making sure supply base keeps up. So that’s one issue that we’re dealing with. And then if you go back in the chain some Turbochargers we’ve had some issues ramping up in that area too, with suppliers. Assembly capacity is okay but keeping suppliers up has been a bit of a challenge. But again there’s nothing that’s unique or different. It’s stuff that we deal with every time we see ramp-ups. But we’re working on it pretty aggressively to make sure that we can have enough capacity to meet our growth. And Tim and Pat talked a little bit about where we are with our joint ventures and trying to expand capacity there. We’re working really hard in India and China to make sure those supply bases keep up as well because we have really big growth opportunities there and so we have a big focus on keeping supply chain free flowing. Andy Casey – Wells Fargo: Okay. Thanks, Tom. And then if I could flip to cost. You walked through it for Engines. Could you give some sort of bridge for the Components because there was a lot of stuff that went on this year. And it looks like the 13% to 18% implied incremental margins might be a little conservative given the growth and the anticipated absence of the second half operational cost issues you encountered.

So you’re asking about the 2011 guidance on Components? Andy Casey – Wells Fargo: Exactly, Pat.

Okay. Yes, so we go from 9% EBIT in 2010 to between 10% and 11% so call a midpoint of 10.5% this year. So my calculation, that’s 16% incremental EBIT margins which for that segment would be pretty impressive given the track record. Obviously, a big part of that is coming from volume. With sales being up 25% and given it’s going to come through in Emission Solutions business in particular. I think that will be a catalyst, if you pardon the pun, through much better margins. We do see material costs probably close to 0.5% favorable in the Components segment compared to the average of last year but we are making some fairly significant investments in this segment also on research and development that will drive the net margin down from what you think it might have to be for an incremental basis. Again, 10.5% – somewhere in the 10.5% range would be a – obviously a new record for the segment. And if we can get there – I think we’re getting on top of the issues that Tom talked about last quarter in our manufacturing plants and the Turbo business and Infiltration business that were dragging margins down in Q3. They were 8% there. And we got back to 9% in Q4. So we’re on track there. So you can expect to see that above 10% next year or this year.

And really, Andy, on the incremental margin front, what we’re trying to do is balance the – gaining as much of the increased revenue we can in terms of leveraging the profits but then making sure we’re continuing to make the investments that we think continue to drive the growth forward. We’ve talked about the growth that we’re investing in India and China. But a big growth driver for the company going forward is going to be the Component segment, too. So we are definitely, significantly – we’re taking a share of our profitability and investing it back in R&D growth in products in the Components segment because we believe that’s going to drive a lot of growth. And that’s both in emerging markets and developed markets. So that’s definitely where some of the money is going. But most of the operational issues are getting behind us now and we expect to get a lot of leverage of increased revenues in 2011. Andy Casey – Wells Fargo: Okay. Thank you very much.

And our next question comes from the line of Tim Denoyer with Wolfe. Please proceed. Tim Denoyer – Wolfe: Hi. Good morning.

Morning, Tim. Tim Denoyer – Wolfe: Quick question still on the Emissions Solutions. There’s been a couple of announcements recently in terms of the sale of the Tube business. Can you give us a sense of what kind of impact that’s going to have in terms of it and how that plays into the incremental margin discussion for components in 2011?

The size of that business is around $100 million so definitive guidance that we’ve given, the $16 billion, that is not included within that guidance at all obviously given the announcement in the last week or so. In terms of EBIT, it really doesn’t have any impact on the EBIT when you look at 2010 versus 2011 either, not material. Tim Denoyer – Wolfe: Okay. Was that a – so non-material for the margin or the actual EBIT?

It’s not detrimental, not incremental to the EBIT margin year-over-year. Tim Denoyer – Wolfe: Okay. And then just strategically in terms of that sale, was that just a low value-added business or what’s the rationale there?

Yeah. So the sale of business – the strategy was trying to make sure we’re focusing on our primary commercial markets and not focusing on light-duty and passenger car and not focusing on the less value-added pieces. These pieces go back to an acquisition we did some years ago. And what we’re doing is keeping the pieces of that, that really have to do with our forward looking Emission Solutions and Filtration businesses. And the ones that really aren’t part of our segment going forward, they’re either serving markets that we don’t serve or they’re not utilizing the technology development we’re doing on Emission Solutions. And those are really the parts that we cobbled together and put into the sale. Tim Denoyer – Wolfe: Got it. Thanks. Just one other quick one in terms of the non-segment items, Pat, there was $20 million in the fourth quarter. Can you give us a sense of what that was?

Yeah. That’s the normal elimination of profit and inter-company inventories. The levels of inter-company inventory came down at the end of the year. That’s a trend we normally see. So we were able to release some of that profit that was held up. Tim Denoyer – Wolfe: Great. Thanks a lot.

And our next question comes from the line of Tim Thein with Citigroup. Please proceed. Timothy Thein – Citigroup: Thank you. Good morning. First question was just going back to the Engine segment in terms of the margin outlook for 2011. Is there any way you can quantify potential mix impact from the aftermarket piece presumably, especially in heavy-duty, is going to represent a much smaller piece than it was in 2010? Is there a way to put any numbers around that?

There may be, but I don’t have it with me just now. So that’s one you need to follow up with Dean afterwards rather than guess at it. Timothy Thein – Citigroup: Okay. And, Pat, while you’re there, did you say the total unconsolidated revenue growth that you’re projecting for this year is 15% to 20% for the whole piece? Or was that just, in the slide that’s showing China and India, up 17%? Is that what you were referring to? Or?

I was giving you all our unconsolidated joint ventures. We expect that the revenues will grow somewhere between 15% and 20% in 2011. Timothy Thein – Citigroup: Okay. So that – again, I’m still having a harder time. I understand all the investment as it relates to the equipment ops, but if the Distribution piece, presumably that implies double-digit growth and I’m still having a hard time seeing as to why, especially that business, wouldn’t contribute more than, get you to more than 5% growth year-on-year in JV income. Can you just help me with that?

Again, we’re making fairly significant ramp up in our capacity in the joint ventures. And that’s adding cost to those businesses from what we have today. I think that the largest joint venture Dongfeng Cummins had a fantastic year in 2010. We went from 120,000 engines last year, sorry 2009, to 220,000 engines in 2010. And that is, by far, the most profitable joint venture that we have. But temporarily, capacity is constrained in that joint venture and will be for all of this year. So we’re making investments in the other joint ventures, but we’re not getting the additional profit leverage that we would have got had we had additional capacity for an additional 50,000 units at DCEC. Timothy Thein – Citigroup: Okay. All right. Thank you.

Our next question comes from the line of David Raso with ISI. Please proceed. David Raso – ISI: Hi. Good morning.

David. David Raso – ISI: A couple of small items, on the inventory, typically third to fourth quarter, your inventory goes down. This quarter I see it went up a bit and on a year-over-year basis, it’s been a while when inventory’s grown faster than sales, in this case a lot faster. You did have a couple Distribution acquisitions during the quarter so maybe that explains some of it. But can you take us through that unique action in inventories versus sales?

Yeah, I think in inventory actually we’re pretty pleased the way it came out for the year. Our inventory turns at the end of the year, were close to six which was better that what they were at the end of third quarter and much better than what they’ve been all through the year and at the end of 2009. We are ramping up as we see stronger demand come ahead of us in 2011. When I look at working capital in total, David, I’m pretty pleased the way it came out, even though it went up in dollar terms obviously when you look at a percent of sales, it’s lower, as I said our inventory turns are better. Our receivable past dues are lower, our DSOs are much better than what they were a year ago. We only wrote off $3 million of bad debts in 2010 and we normally run at $9 million to $10 million a year. Overall, for the company, I’m feeling okay with working capital just now.

You know what, Dave? The only thing I would add, I’m never really satisfied with inventory levels. There’s definitely improvements I think we can make but I think that the principal difference in this end-of-year situation versus prior is that we are seeing, continuing to see strong sales in Q1 and so in several of the places where we sometimes have lower inventories we actually didn’t lower inventories getting ready for sales in Q1. So that’s one seasonal or notional difference than you might see in previous years. David Raso – ISI: Would that be related particularly to North American truck or industrial for construction, just to get some indication because it is bullish on the first quarter shipments given that inventory. It is unique, that movement.

You’re right, but it’s all those. It’s high horsepower demand which is staying high both in Power Gen and Engines, it’s North American trucks and then it’s also construction. So all three of those areas are still staying strong and so therefore, we have higher inventory levels than we might otherwise.

The one thing to keep in mind as you build your models out for the first quarter, and this is not trying to give you colossal guidance, but keep in mind the fourth quarter was a 14-week quarter and the first quarter is a 12-week quarter. So even though demand per day is still increasing, we’ve got two fewer weeks in the first quarter than the fourth quarter when you do your models. David Raso – ISI: As it relates to the working capital changes and cash flow, we don’t yet have the detail on the operating cash flow. But the implied operating cash flow in the quarter was about $387 million. But when you look at the balance sheet, the working capital was a use of cash of about $350 million. How do we square that up? Is it accrued expenses? Or what’s the number that gets you to that strong a cash flow for the quarter of working capital with that much of a use?

Yes let’s take that one up after the meeting. I don’t have that number in front of me just now. David Raso – ISI: I appreciate it. Thank you.

Okay. That’s all the – Anne, that’s all the time we have for questions today. I – we’ll be available today for your questions throughout the day so I appreciate everyone for dialing into our fourth quarter earnings call today. Thank you.

Ladies and gentlemen, we thank you for your participation in today’s conference. This concludes the presentation and you may now disconnect. Have a great day.