Laura D. Brown – Senior Vice President, Communications William D. Chapman – Investor Relations

Hello, this is Laura Brown, Senior Vice President of Communications and Investor Relations. With me is Bill Chapman, Director of Investor Relations. We are pleased to share with you an update regarding Grainger’s Third Quarter 2011 Results via this audio webcast. Please also reference our 2011 third quarter earnings release issued October 18th, in addition to other information available on our Investor Relations website, to supplement this webcast. Before we begin, please remember that certain statements and projections of future results made in the press release and in this webcast constitute forward-looking information. These statements are based on current market conditions and competitive and regulatory expectations and involve risk and uncertainty. Please see our Form 10-K for a discussion of factors that relate to forward-looking statements. We are excited to report that Grainger delivered another record quarter. Strong sales growth and gross margin expansion was the story for the quarter. Thanks to the success of our growth drivers, we continued to gain market share during the quarter just as we did throughout the downturn. Our growth drivers include expanding our product line, increasing our sales force, enhancing our eCommerce capabilities, growing our inventory management services and investing in our international operations. One of the highlights of the quarter was the acquisition of the Fabory Group. Fabory is a leading European distributor of fasteners and related MRO products. The closing of the acquisition took place on August 31st. We are also very pleased to announce that we have raised our guidance for the year. As noted in the release, we are now expecting sales for 2011 to grow 11% to 12%, with earnings per share of $8.80 to $9.00, excluding unusual items. Please note that our guidance reflects higher growth-related spending for the remainder of the year, which we will discuss…

Thanks Laura. Let’s jump right into performance by segment since we have already covered company operating performance. Reported operating earnings in the United States increased 15% versus the 2010 third quarter and operating margin increased 130 basis points to 17.7%. If you exclude the benefit from the PTO change in 2010, operating earnings in the United States increased 19% and operating margins expanded 180 basis points versus the prior year. This performance was driven by 7% sales growth and a higher gross profit margin. Gross profit margins in the United States increased 180 basis points. The gross margin expansion was primarily due to managing product cost inflation below price increases, coupled with favorable selling price mix, strong sales of private label products and lower sales of sourced products related to the clean up of the 2010 oil spill. Operating expenses increased 9%, 7% excluding the PTO benefit from the prior year. The growth in operating expenses was driven by volume related costs and spending on growth initiatives such as sales force expansion, eCommerce, advertising and the start up of the new distribution center in northern California. Our business in Canada delivered improved performance in the quarter, a continuation of the strong results seen in the first half of 2011. Third quarter operating earnings increased 72% versus the prior year. Strong sales growth, coupled with higher gross margins and effective cost management contributed to a 290 basis point increase in operating margins to 10.1%. The gross margin expansion in Canada was driven by the same factors as seen in the United States. Operating expenses increased 12%, aided by improved productivity and lower utility costs resulting from milder weather. For the fourth quarter, start up costs for the new distribution center in Saskatchewan will result in sequential operating expense growth. Despite these…