Laura D. Brown - Senior Vice President of Communications & Investor Relations William D. Chapman - Senior Director of Investor Relations

Hello, this is Laura Brown, Senior Vice President of Communications and Investor Relations. With me is Bill Chapman, Senior Director of Investor Relations. The purpose of this podcast is to provide you with additional information regarding Grainger's 2013 third quarter results. Please also reference our 2013 third quarter earnings release issued today, October 16, in addition to other information available on our Investor Relations website to supplement this podcast. Before we begin, please remember that certain statements and projections of future results made in the press release and in this podcast 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. For purposes of this podcast, we are excluding the $76 million in reserves, or $0.66 per share, we announced in last year's quarter related to litigation with the General Services Administration and United States Postal Service. Today, we narrowed our guidance for the full year and now expect sales growth of 5% to 6%, and earnings per share of $11.45 to $11.65. While we expect to achieve record results for the year 2013 with 10% to 12% EPS growth, this year has been a tale of 2 halves. In the first half of the year, we experienced solid operating margin expansion, increased gross margins and strong earnings leverage. As our growth initiatives and IT projects spending have accelerated and our gross margin expansion has eased, the second half of 2013 is resulting in more modest operating leverage. For the 2013 third quarter, we were pleased with the volume growth in our U.S. business, given the challenging economic environment. Earnings growth in the United States was in line with our expectations. However, our businesses…

Thanks, Laura. Since we've already analyzed company operating performance, let's jump right into performance by a reportable segment. As a reminder, results in this discussion will exclude the $76 million in reserves or $0.66 per share we announced in last year's quarter related to litigation with the General Services Administration and the United States Postal Service. Operating earnings in the United States increased 6% versus the 2012 third quarter. This performance was driven by the 7% sales growth and positive operating expense leverage. Gross profit margins for the quarter decreased 30 basis points versus the prior year driven by strong growth and share gain among large customers, which carry lower margins. In addition, unlike the past 2 years, the company did not implement mid-year price increases due to a lower inflationary environment in 2013. Operating expenses grew at a slightly slower rate than sales, despite the increase in incremental growth-related spending of $36 million, on areas such as new sales representatives, eCommerce and advertising. The operating margin for the U.S. segment decreased 20 basis points to 18% versus the prior year. Let's move on to our business in Canada. Operating earnings decreased 7% versus the prior year in U.S. dollars. The lower operating performance was primarily the result of approximately $3.5 million in incremental spending for the new IT system scheduled for installation in late 2014. Excluding the IT investment, the business generated positive operating leverage. Gross profit margins increased 40 basis points. The gross profit margin improvement was due to cost savings from freight consolidation and higher supplier rebates. The operating margin in Canada decreased 80 basis points to 11.7% versus the prior year. The Other Businesses generated $6 million in operating earnings in the 2013 third quarter versus $9 million in the 2012 third quarter. The earnings decline…