Jeffrey D. Hammond - KeyBanc Capital Markets Stephen E. Volkmann - Jefferies & Co., Inc. David M. Raso - International Strategy & Investment Group, Inc. Deane Michael Dray – Citigroup Global Markets (United States) Nigel Coe – Morgan Stanley & Co. LLC Jeffrey T. Sprague – Vertical Research Partners, LLC Terry Darling – Goldman Sachs & Co. Steven E. Winoker – Sanford C. Bernstein & Co., LLC. Andrew Millard Casey – Wells Fargo Advisors LLC Joshua C. Pokrzywinski – MKM Partners LLC. Shannon O’Callaghan – Nomura Securities International, Inc. Stephen Tusa – JPMorgan Securities LLC Robert F. McCarthy Jr. – Robert W. Baird & Co.

Good day, ladies and gentlemen, and welcome to the Ingersoll-Rand First Quarter 2012 Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, today’s conference is being recorded. I would now like to introduce your host for this conference call, Ms. Janet Pfeffer. You may begin, ma’am.

Good morning. Thank you, Kevin. Welcome to our First Quarter 2012 Conference Call. We released earnings at 7 AM this morning, and the release is posted on our website. We’ll be broadcasting, in addition to this phone call, through our website at ingersollrand.com, where you will find the slide presentation that we will be using this morning. The call will be recorded and archived on our website. If you would please go to slide 2. Statements made in today’s call that are not historical facts are considered forward-looking statements and are made pursuant to the Safe Harbor provisions of Securities Laws. Please see our SEC filings for a description of some factors that may cause actual results to vary from anticipated. This release also includes non-GAAP measures, which are explained in the financial tables attached to our news release. Now, I’d like to introduce the participants on this morning’s call. We have Mike Lamach, Chairman, President and CEO; Steve Shawley, Senior Vice President and CFO; and Joe Fimbianti, Director of Investor Relations. With that, please go to slide 3, and I’ll turn it over to Mike.

Thanks, Janet. Good morning and thank you for joining us on today’s call. Earnings per share from continuing operations for the first quarter were $0.31, $0.08 above the midpoint of our guidance range of $0.20 to $0.26. As this is usually the case, there were some puts and takes in the quarter. The tax rate and other income expense went favorable by about a $0.01 each. We had a favorable stock-based compensation adjustment of $0.03 that was not in the forecast. Restructuring spend was about in line with our estimate, higher than expected inflation was offset by favorable overhead spending, the margin associated with the higher revenues was essentially the difference between the midpoint of our guidance and the $0.31 we reported. Although, it was somewhat better than our expectations, markets were generally in line with our outlook with slow growth environment. In the first quarter, we saw revenue growth of 3%, excluding the Hussmann refrigeration business from the 2011 comparison. We experienced moderate growth in revenues in Industrial and low growth in Climate and Security. Residential revenues were down year-over-year as residential HVAC revenues declined high single-digits, but residential security revenues were up high teens. As a reminder last year’s first quarter HVAC revenues were strong up 12% from channel restocking. Excluding Hussmann, the orders were up 6% and 7% excluding currency. Operating margin for the quarter was 6.7%, down 30 basis points versus prior year. If we exclude Hussmann from last year, margins in Q1 were down 90 basis points from the first quarter of 2011. Although, margins improved from pricing and productivity, they were depressed by higher planned restructuring and investment spending year-over-year as we discussed in the February earnings call. All of our businesses continue to realize positive pricing and in the first quarter, our pricing…

Thanks, Mike. Please go to slide number 5. Orders for the first quarter of 2012 were up 6% overall, 7% excluding currency. During the quarter, we saw positive year-over-year bookings in all sectors, global commercial HVAC and residential HVAC bookings were up high-single digits. Transport demand was up slightly, with strong demand in North America offset by soft European truck trailer orders and significantly lower marine demand. Commercial Security orders in the quarter were up 3%. Industrial orders were up slightly with strong growth in the Americas offset by weaker activity in Europe and Asia. Please go to slide 6. Here is a look at the revenue trends by segment. The revenues excluding currency, shown on the bottom of the chart, give a better view of our organic growth. Note, the Climate and the total data for the first quarter excludes Hussmann from the comparisons. First quarter revenues were up 4% excluding currency. Climate revenues increased 4%. Industrial had a strong, but moderating growth at 9%. Residential was down 3%, as well our HVAC revenues more than offset residential security with revenues. Commercial Security revenues were up 2%. On a geographic basis, revenues were up 4% in the U.S. and up 1% in the international markets, up 4% internationally, excluding foreign exchange. Please go to slide number 7. This chart walks through the change in operating margins for the first quarter 2011 were 7.6% to first quarter 2012, which was 6.7%. This data excludes Hussmann for comparison purposes. The positive impact of volume was more than offset by a negative mix particularly in the residential HVAC business and foreign exchange creating a 50 basis points headwind in the margins. Our pricing programs continue to outpace material inflation adding 140 basis points to margin. Productivity offset by other inflation was neutral…

Great, thanks Steve and please go to slide 14. Our revenue outlook for 2012 is essentially unchanged from the guidance that we gave you in February. Activity to date and our outlook continue to indicate low-to-moderate growth across our portfolio. Europe has been weak as expected, Asia has been somewhat within our expectations year-to-date, U.S. is a little bit stronger in commercial HVAC and as expected we saw moderate growth in transport markets in North America with some contractions in Europe. We think continuation of the current conditions in residential markets as single-family housing starts and consumer confidence remain at low levels. We expect R-22 and lower SEER units to remain at significant portion of the flattish market in 2012. For commercial security we expect to see a continuation of challenging conditions in the U.S. non-residential new construction market for the remainder of the year, particularly in our key institutional markets. Foreign exchange will be a headwind in 2012 adversely impacting growth by about two points. We are maintaining a revenue range for full-year 2012 of $14 billion to $14.4 billion, that’s flat up 3% compared with 2011 revenue, up $14 billion excluding Hussmann. Excluding FX the organic growth rate is 2% to 5%. Please go to slide 15. Similarly we are maintaining our full-year EPS from continuing operations guidance range of $2.90 to $3.10. We continue to expect to generate available cash flow of about $1.1 billion. Second quarter revenues are forecast to be $3.8 billion to $3.9 billion. Revenues on a comparable basis excluding Hussmann are forecast flat up 3% versus second quarter of 2011 that includes FX which will be a headwind of about two points. And then excluding FX, revenues will be up 2% to 5%. Earnings per share are forecast to be $0.85 and $0.90.…

(Operator Instructions) Our first question comes from Jeff Hammond with KeyBanc Capital.

Hi, guys. Good morning.

Good morning, Jeff.

Good morning, Jeff.

So just trying to understand the moving pieces a little bit better in 2Q, so your share counts weigh down and the offsets are the China gain and the higher tax rate. But how should we think about your incremental margins on the modest revenue growth relative to some of the negative leverage you signed in 1Q?

Jeff, we will just give you a bit more of a Q2 bridge share and then we can talk about the pieces inside that. But last year second quarter, of course is $0.92 and it included $0.7 from Hussmann and $0.5 from the gain on sale we mentioned about the plant in China, which brings us $2.80 starting point. The share count, you’re right. $3.50 to $3.15 is the share count, which add back $0.09. The restructuring spend will be about $0.03 higher this year and then if you add volume price mix, it adds about $0.05, assuming a 50% conversion on that. And then if you look at higher investments, productivity and inflation, lower interest and taxes and FX and that’s about $0.03 negative and that gets you back to the $0.88 midpoint. When you pull out sort of the one-time last year and look at the leverage in Q2 we’re estimating at about 20%.

Okay, that’s helpful on the bridge. And just quickly on residential, can you talk about what’s driving some of the improvement, is it weather related or you are seeing some traction from R-22 in Ameristar?

Yeah, our mix of (inaudible) level system which is up quite a bit, we would have been running at about 62% in the past, we’re running at about 66% today. So as strategy we’re trying to play across, the whole portfolio is working in terms of unit volumes for us. Actually, January and February were very slow for us, March was a very big, important month for us. And so it’s tough to look at a trend there up one data point in March, but there are some signs that you are seeing, some progress here in the market. In addition, we’re in the market with product at a price point that’s competitive and the fact within supply chain are working as they should. So that’s really kind of where we are right now in that business.

Okay. Thanks guys.

Thank you.

Our next question comes from Stephen Volkmann with Jefferies. Stephen E. Volkmann - Jefferies & Co., Inc.: Hi, good morning, guys.

Hi, Steve.

Good morning. Stephen E. Volkmann - Jefferies & Co., Inc.: I’m wondering if you could just comment a little bit, it sounds like the raw material cost inflation has been a little ahead of what you’ve been expecting, what surprises me a little bit. Can you just sort of flush that out or maybe I’m just reading it wrong?

Yeah, actually material inflation for us has been fairly well behaved so far this year, in fact first quarter material inflation was actually somewhat below our original expectations, and our material forecast for the whole year 2012 is not significantly different from what we told you in February. What we’re seeing is some other inflation, and that’s going to be in areas like trade and logistics, fuel for our service vehicles, and some benefit related costs. Stephen E. Volkmann - Jefferies & Co., Inc.: Okay, good that’s helpful. And then, can you just sort of remind us the way that the restructuring is likely to kind of go through, I think most of it’s coming in the first half and do we expect it to still be a headwind in the second half or actually turn and be a tailwind in the third and fourth quarters?

Our first year forecast for the full year is unchanged, what we said back in February and the spend, you’re right it’ll be front-end loaded, so versus prior year it’s about $0.07 higher for the full year, despite being favorable year-over-year in the second half. So, we commented about $0.07 in Q1, we essentially we’re on track with that. We got a bit more to do here in Q2 and then we’ll get favorably in the back half of the year. So, in total it’s about $0.07 on the year.

When I speak about the tailwind in the second half is in fact we’re spending it in the first half, we’re also getting the productivity and cost reduction in the second half. So, it’s less spend and more savings in the second half. Stephen E. Volkmann - Jefferies & Co., Inc.: Great, that’s helpful. Thanks very much.

Welcome.

Our next question comes from David Raso with ISI Group. David M. Raso - International Strategy & Investment Group, Inc.: Hi, good morning. On the second quarter revenue growth ex-FX, ex-Hussmann, it’s modestly slower than you saw in the first quarter. But your orders accelerated the year-over-year growth rate. Can you give us an update what you’re seeing so far quarter-to-date or square up why an acceleration in order growth in the first quarter given you slower core growth in 2Q than 1Q?

Yeah Dave, I’ll give you some puts and takes on that relative to what we’re thinking, last time we were on a call. One of the surprises for us in Q1 was the strength of the North American unitary business and there we had bookings in the quarter North America, up 17%. That’s also one of the value streams we’ve been working on now for a couple of years, mainly around cycle times and quick ship on products. And so, in a lot of ways the orders that we took in January and February in that business, we were able to ship in the quarters. So the turn on that business was very quick for us. We also had similar event happening with products and service where we sell products and service booking and the Climate business up about 15%. Again very quick turn ship on that in terms of the ability to deliver services in that area of the business. So, some of what we saw in terms of the high bookings in quarter one were evidenced in the revenues in quarter one, where we’re able to book and ship that pretty quick. Probably a third one that comes to mind is the security business in the Americas, where we actually had a quarter which was a little bit better than we expected in the Americas and for a lot of that business we’re able to ship that in a matter of hours and a few days as opposed to weeks or months, so that’s relatively quick ship as well. So, I think it kind of normalizes back down to a view, so that we had initially for Q2. On the flip side of that saw a slower activity in China, up tick in HVAC. We saw slower than a pretty negative outlook that we had in the container business globally. So that was a little bit of a slowdown for us beyond what we anticipated. So in that we think it’s a pretty realistic forecast for Q2 revenue. David M. Raso - International Strategy & Investment Group, Inc.: Well I guess that quick turn of order into shipment in the quarter, basic question, would you mind giving us the backlog year-over-year, March 31 versus the year-over-year backlog growth at the end of the fourth quarter?

Yeah, Dave, I don’t have the backlog numbers in the front of me, but we can get to the backlog numbers here probably offline. David M. Raso - International Strategy & Investment Group, Inc.: Okay. Then last question is the back half of the year, you touched on it earlier about some of the tailwinds you’ll have year-over-year, but obviously, the implied second half year-over-year growth is also pretty modest and you expect to turn on to some pretty big margin improvements? Could you quantify the savings Steve, you mentioned some of the actions you’re taking now, which businesses are they in, and how quick it turn, I mean, do you quantify it? That is not the only issue around the guidance, maybe the revenue is conservative potentially maybe not debatable, second quarter margins don’t look that difficult, but the back half is asking for some expansion in margins that we haven’t seen in 1Q nor we expect in 2Q? I’m showing a real better clarity around the cost savings you expect in the back half in some of these first half actions?

Yeah, I think if you look at the productivity piece of (inaudible) first half to second half, we would see at least $60 million to $70 million pick-up in additional productivity. It is because of the early spending of restructuring, cost effect just getting traction on everything we’re working on. So we definitely see that type of a jump in just productivity or savings first half or second half. And if you look at the amount of restructuring spend, there is probably another at least say probably about $20 million, $25 million less. Restructuring spend in the second half or the first? David M. Raso - International Strategy & Investment Group, Inc.: Okay. Yes that’s the big number Steve. The $65 million alone on the implied second half sales would almost be 90 bps right there and then the productivity lower, I mean, that’s the lower spend you decided of $25 million nor the 30 bps plus a 120 bps right there, it’s really that 65 of savings is the amount if you want to see it play out if you really can get it. But that $65 million is a big number, that’s only about 100 bps margin right there. So the question about where is that? Which businesses you expect that [figure] save after first half?

Yeah, Dave it’s Mike. One of the things we’re going to see is that, what we will do in the residential business essentially, we have a plan profit increase in the second half of $27 million more than last year on lower revenues there. So that is really working itself out over time as well, back half of the year as well would have a couple hundred million dollars in revenue for us. So that would leverage up particularly coming into the Climate business I would assume. David M. Raso - International Strategy & Investment Group, Inc.: Okay. That’s really helpful. Thank you.

Our next question comes from Deane Dray with Citi. Deane Michael Dray – Citigroup Global Markets (United States): Good morning, everyone.

Hi, Deane.

Hi, Deane. Deane Michael Dray – Citigroup Global Markets (United States): I was hoping to get more color and how March actually played out, because one of the surprises pleased to me at that Analyst Day was how the last two weeks of March can really drive up to 40% of the quarter sales. So, how did that actually play out and longer-term how might you change either the sales incentives to get a more level loaded quarter or is it just the nature of your end markets?

Really in the residential HVAC, Deane, I don’t think that incentives are going to drive the different behavior there, although it’s interesting to think about that from a dealer and distributor point of view. But the dynamics in the industry are pretty well set in that regard. Yeah, that was a place that we really saw the most res, so we would have started January kind of down around 20% but it seems February down around 7% and March is just the phenomenal month up more than 40% in terms of the overall booking. So, you can get a feel for the kind of risk that goes into a quarter particularly in the back half of the month of the, I hope March, and even the last week or so. So if we were together at the meeting, we were looking for a big March and we got a little bit bigger March than we even thought, so that was a positive sign for us. The other business is a lot more linear than that. The exceptions are going to be those that are either Climate related, which would be like commercial, office space, where we have unitary product going into that market it would be a bit more seasonal, as well as the construction cycles, for some of the institutional market schools in particular would drive little bit of non-linearity for us in our outlook. Deane Michael Dray – Citigroup Global Markets (United States): And then over on the Climate side, in the marine market this quarter, you saw high profile competitor enter the marine controls market. Now, this is not a captive player, but does it change any of the dynamics from your perspective?

Yeah, we are aware of that. There are suppliers to us in a few areas, I don’t think it changes the dynamics much on that that we both have our own controls and we partner with Emerson or before that JCI in that business. So I don’t think it changes a whole lot. Deane Michael Dray – Citigroup Global Markets (United States): Great, thank you.

Welcome.

Our next question comes from Nigel Coe with Morgan Stanley.

Thanks guys, good morning. Morgan Stanley & Co. LLC: Thanks guys, good morning.

Good morning.

Good morning.

So I just want to dig into the sense that you quote out in the North American new entry market, do you think that’s a fundamental turn the market versus a little bit of weather impact? Morgan Stanley & Co. LLC: So I just want to dig into the sense that you quote out in the North American new entry market, do you think that’s a fundamental turn the market versus a little bit of weather impact?

Yeah, Nigel it’s really, it is interesting because the dodge even data were support in the non-institutional markets that was an area of growth in the quarter. I think, it’s a combination, it was really in our office and retail and that’s going to effects that include sort of aging systems much like you see in Res business as well as some seasonal factors as well as the of course warm winner and a little early spring and summer. So I think all of that kind of combined. Our focus has been on really trying to look at some that discretionary quick shift business we’ve been targeting that. I think we have some success there as well and being able to convert some of that business and they compete little differently on cycle times there, but I think that contributed as well.

And how would you characterize your applied market? Morgan Stanley & Co. LLC: And how would you characterize your applied market?

It is very interesting Americas were strong in terms of a bookings, EMEA was okay but expected, Asia was weak and Asia for us whereabouts with 50% China, 50% rest of Asia. Rest of Asia was okay, China was very weak. But I was in China and India couple of weeks ago and China actually early April and we picked up an order there from a customer for 100,000 tons (inaudible) on a single order. So that is spread over the course of the year, so this was the large orders that can swing us still are therefore I think that the market is going to recover in China. I think by the end of the year we’ll see sort of a recovery take place, but the first quarter was very weak.

But then going from 1Q to 2Q, some companies we cover I am talking about visibility in China getting better, growth rate is picking up in 2Q, are you seeing that in your markets? Morgan Stanley & Co. LLC: But then going from 1Q to 2Q, some companies we cover I am talking about visibility in China getting better, growth rate is picking up in 2Q, are you seeing that in your markets?

Yeah, I mean, I’ve evidenced the order that we got when I was there, we would be decided. But also just going through the reviews inside the company there was a lot of visibility that was happening in the market. I didn’t get a sense of the activity level was down. I walked away feeling good about balance of the year.

And then just quickly digging into the upper leverage with 2Q, you talked about 20% underlying incremental margins in 2Q, if we take away residential, I’m sure that will be impacted. How does that look for the rest of the businesses? Morgan Stanley & Co. LLC: And then just quickly digging into the upper leverage with 2Q, you talked about 20% underlying incremental margins in 2Q, if we take away residential, I’m sure that will be impacted. How does that look for the rest of the businesses?

Well Res is a contributor, no question about that but the security is the one where we probably get the most of our restructuring going on there.

Yeah. Morgan Stanley & Co. LLC: Yeah.

So security alert, you know, the idea I think if you pull out restructuring they’re doing there, they are actually going in the right direction there, but that will be the one where we will see the restructuring that takes place and of course the high margin business that will hurt.

Yes. Morgan Stanley & Co. LLC: Yes.

In final it will be a little less than you would expect because of the mix shift we will see more obviously Trane commercial equipment in the quarter, which benefits the mix down a little bit.

Okay and then just finally potential margins in 2Q? Morgan Stanley & Co. LLC: Okay and then just finally potential margins in 2Q?

Yeah, 2Q margins, I think you’re going to be kind of in that 7% maybe to 8% range in the quarter. We will look at some growth there probably 1% to 4% for us that that support little bit of what we saw in March continuing through here in early April.

Okay, thanks, Mike. Morgan Stanley & Co. LLC: Okay, thanks, Mike.

Yeah.

Our next question comes from Jeff Sprague with Vertical Research. Jeffrey T. Sprague – Vertical Research Partners, LLC: Thank you, good morning, everyone.

Hi, Jeff.

Hi, Jeff. Jeffrey T. Sprague – Vertical Research Partners, LLC: Hey, Mike, I’m wondering if the March order strength you saw constitutes any efforts to rebuild the inventory at this point or Steven, kind of early warrants in April kind of starting any kind of figures probably too strong order, but kind of urgency around channel inventories as we look into the season.

Jeff, I’d say rebound now for about a year trying to work on a whole different sort of inventory model for our wholesalers and for the dealers and for our wholly-owned wholesale teams. And so the replenishment rates that we’ve got is much faster than ever used to be in a high design. So, we are not a good judge of looking at sort of channel inventories and being able to engage the model restocking that’s going to take place, but I don’t see any additional comments in it.

Yeah, what we had to do, Jeff, is look at our independent distributors and we looked at the inventory levels in that channel that’s probably flat. So we think there were some pull through in even March for what’s all true. So, right now it didn’t look like there’s any problem on the horizon in terms of inventory build in the channel. Jeffrey T. Sprague – Vertical Research Partners, LLC: All right. And then, can you give us a little color on what you are seeing in the energy retrofit markets incline and I’m wondering if you’ve seen the public spending fall off and if there is any pickup as it relates to kind of more commercially driven activity?

Well, institutional markets in general has been weak, total markets have been weak, but healthcare and education aren’t too far behind. Interestingly, we’ve had couple of large wins in the performance contracting area, in the area of education. So this is that our dynamics that happens when funding gets little tighter, but do see some of the vertical markets particularly education and healthcare, which tend to result more to performance contracting to services to pay for the retrofit. So we saw some of that in the first quarter and there is some large active proposals in those verticals, outstanding in the second quarter. So, I do think that there is a little of bit of shock absorber in that as it relates to performance contracting and we did see a little of bit of a pick up in the size and in volume, our proposals in that area relative to straights that retrofits. Jeffrey T. Sprague – Vertical Research Partners, LLC: And just finally, can you give us just a little more granularity on how weak marine was and kind of what was going in the Europe truck, trailer market to Thermo?

Yeah, I know that container was down, I think, not sure of the number here.

About 30%.

30%.

Revenue.

Truck and trailer were up a little bit better than we expected, (inaudible) was above what we expected. Container was down to offset the favorability in the Americas. Jeffrey T. Sprague – Vertical Research Partners, LLC: Okay. Thanks, guys.

Our next question comes from Terry Darling with Goldman Sachs. Terry Darling – Goldman Sachs & Co.: Good morning, guys.

Hey, Terry. Hi. Terry Darling – Goldman Sachs & Co.: Hey, Mike. Sorry for the confusion here. Did I hear you say that the quarter has $0.03 favorable from lower compensation expense that you expected?

Terry, stock-based compensation, yes, there was $0.03 of favorability that we had not forecasted. You are correct. Terry Darling – Goldman Sachs & Co.: Okay. And so we should not think about repeatable or are there some positive on a full-year basis, they extend forward?

We’ve actually just changed the run rate going forward. We were calculating it differently and so we made the adjustment in the quarter. So going forward, just part of run rate going forward, but no, will not be an incremental pickup year-over-year. Terry Darling – Goldman Sachs & Co.: Okay. That’s helpful. Jumping back to the Resi business on the down for the HVAC fees, wondering if you might break that out, unit versus price?

Terry, I missed the first part of your question. What particular part of HVAC? Terry Darling – Goldman Sachs & Co.: Resi solutions.

Yeah. Terry Darling – Goldman Sachs & Co.: In fact revenues down 8% in the quarter, so I want to get a feel for price versus units there?

Yeah, price is still positive. We’re getting a couple of points of price across each of the businesses. So I think gas volumes were down probably about 10%. Terry Darling – Goldman Sachs & Co.: Okay. And I guess you will take out…

That would be the total motor bearing unit market, okay. That would be our piece of the total motor bearing unit in the whole thing, okay, all equipment lines. We were down about 10% in volume, okay.

The market was down 13%. We were about down 10% and we picked up a couple of points back up in price. So that’s how I got (inaudible) Terry Darling – Goldman Sachs & Co.: Maybe you just answered my next question, but we are picking up that just on the resi side that you are seeing some increased price discounting or some of the increases from the last fall. We’re not speaking here, maybe it’s just March reactions at a weaker volumes in January, February, people hedging their client load as you look into the second quarter. How do you guys feel about the price dynamics in that market right now? And is there a chance for some upside on the unit side as well as you see what’s going on in April so far where you just not have an update on April so far to go that far?

Sure. One thing I think that hopefully is going to play a lot for us in Q2 is the fact that last year we didn’t have a competitive product, the 13, 14 SEER and so, what we’re doing was doing with that through some price. Now it is as we find is competitive situations out there, we got competitive 13, 14 SEER products. So we are not having to switch Trane brand or Ameristar brand into the opening price point where they will be able to (inaudible) so there is an advantage there that I think we got Q2 and how we deal with that. So the substitution would have been last year what occurred to the same extent this year. Terry Darling - Goldman Sachs & Co.: Okay. And just how you’re feeling about the approach competitors are taking with price?

Well, I’m not hearing a lot about sort of people dropping price from the marketplace. It’s been competitive for two, three years to this point really. So, no new ways coming out or ways to panic around anybody dropping price. There is lots of price adjustments going on, I think, as people are fine-tuning what would have been a 2009, 2010, more of a blanket approach for pricing. So I have heard particular models and combinations going up or going down based on just fine-tuning now that approach to the marketplace. Everybody took more of a (inaudible) spread around price to move it quickly into the marketplace and again anything that’s fine-tuning takes place now I think. Terry Darling - Goldman Sachs & Co.: Okay. And are you just using the Ameristar brand and R-22 or are you using the Trane brand as well?

Now we’ve got Ameristar and both 410A and R-22. Terry Darling - Goldman Sachs & Co.: Okay. Thanks very much.

Welcome.

Our next question comes from Steven Winoker with Sanford Bernstein. Steven E. Winoker – Sanford C. Bernstein & Co., LLC.: Good morning.

Good morning.

Hi. Steven E. Winoker – Sanford C. Bernstein & Co., LLC.: I’m just trying to make sure I understand the guidance question for the full-year. Since you didn’t [flow the B through] from the quarter at all, you held your full year guidance relative to the B. Just help me understand what again is either you’re spending more in the investment side, where is the disconnect that I’m missing, why didn’t you flow it through?

Well, the revenue was quite a bit above the midpoint, $75 million above the midpoint, and I see that moderating, Steve. I just don’t see that really. I don’t see that as a trend. I wouldn’t call the month of March a trend here. We’d want to see more data points before we would gotten away and then say that we’re seeing a sustained recovery in the residential or in commercial HVAC. I really need to see at least from a quarter of that sort of recovery and indeed before I would really want to take a range off or change things. Steven E. Winoker – Sanford C. Bernstein & Co., LLC.: Okay. So it’s really a top line. It’s not additional investment, additional restructuring or additional – or a lower conversion or any of that?

No. Everything pretty much stays the same. It’s just we felt like we saw a lot of volume and we don’t want to get carry away here at a sustained recovery. Steven E. Winoker – Sanford C. Bernstein & Co., LLC.: Okay, great. And then, just again as always trying to make sure that I have a handle on the beat of traction in productivity and how that’s progressing across the business units. I know you do reference it in a couple of spaces in detail, but if I look at that chart again on page seven, and I’ve got a zero, how big was the – you talked about mostly just the other inflation side being a little bigger than you expect. By my view of the marketplace, I am expecting that other inflation to be about 3% or so. Am I way off on that?

No, you’re not. Steven E. Winoker – Sanford C. Bernstein & Co., LLC.: Okay. And therefore that would sort of imply the same thing around productivity. Are there any other, I mean, do you see accelerating, but Mike can’t see, are you seeing accelerating improvement on that productivity metrics that we used to watch?

There is so much investment in Q1 and Q2 there to see that, absolutely have to accelerate Q3 and Q4. The restructuring we signed up for the investments we made whether it’s specific to productivity or a pay back that we expect to get is late in the fourth quarter, but we expect to get them. Steven E. Winoker – Sanford C. Bernstein & Co., LLC.: But even this past quarter, if you just take out the restructuring, all that and just look at the value streams, look at the impact of those, are you seeing the financial impact?

Yeah, I mean, we are seeing that. We are operating within our capability here. We’re pretty accurate at this point in time about being able to forecast that. So there were no surprises in Q1 around, I would say productivity, when you pull out the investments in the restructuring. I think that we’ll see additional material productivity towards the back half of the year. We just want that team fully in November, to get the feet underneath them going forward that that plans or strategies didn’t impact. But that takes time to actually make those changes both whether at [this current price or at this prior] change itself and that typically will be more backend loaded, but I don’t see any breakdown or surprise in Q1. Steven E. Winoker – Sanford C. Bernstein & Co., LLC.: And that material productivity did that show up in the price material inflation segment or the productivity other inflation segment? And …

Price material inflation. Steven E. Winoker – Sanford C. Bernstein & Co., LLC.: Okay, great. And are you [tie up]? I know we see no. Are you making progress on the [tie up] side and for example Resi (inaudible) when you talk about March in the quick, or in the light commercial and quick ship that means that you [tie up] processes have got to be getting better, also is that your perspective or…?

Yeah, so I mean we’ve really from a (inaudible) process were sorting out the sourcing organization, was put in place, an independent separate materials organization throughout the business, and then work on this whole set, planning with the materials organization. So we’re definitely seeing that. We’re seeing in a working capital. We’re seeing that as well in just our days outstanding the customers in terms of (inaudible) and days past there we’re seeing. It’s a benefit. It’s a primary focus across all the businesses. Obviously, the Resi HVAC folks are working on that very diligently. Ameristar is a good sign for us. We began taking orders in March. We began shipping in April and we are able to match that up fairly well. Steven E. Winoker – Sanford C. Bernstein & Co., LLC.: Thanks. Okay.

If you look at the growth balance sheet statistics, our inventory returns in the quarter were six times of returns better than they were in Q1 last year.

Yeah.

So it’s going well through the enterprise. Steven E. Winoker – Sanford C. Bernstein & Co., LLC.: Yeah, I saw that. That’s great. All right, thanks.

Our next question comes from Andy Casey with Wells Fargo. Andrew Millard Casey – Wells Fargo Advisors LLC: Good morning, everyone.

Hi, Andy.

Hi, Andy. Andrew Millard Casey – Wells Fargo Advisors LLC: Just a couple of quick questions, on the order data that you provide, are you including pricing in that, could you remind me?

Yeah, that would be as reported. Yes. Andrew Millard Casey – Wells Fargo Advisors LLC: Okay, thank you. And then within the Resi Solutions in your outlook, you kind of provided something. I forgot to ask the question 1% to 4% for the growth in Q2 margins of 7% to 8%. Could you provide that for the rest of the business units?

Yeah, Climate, we look for a growth of 1% to 3%, OI in the 10.5%, 11.5% range. In Industrial, I think, you will see kind of a minus 1% to 2% in the quarter, so slowdown there that we will see. Full year, I expect we’ll still 110, 130 basis points of improvement in that business. As we talked about Security, flat to minus 3% for the full year, minus 3%, minus 5% for Q2, and then net of restructuring all and it should be flat in terms of operating margin. Andrew Millard Casey – Wells Fargo Advisors LLC: Okay. Thank you very much.

Welcome.

Our next question comes from Joshua Pokrzywinski with MKM Partners. Joshua C. Pokrzywinski – MKM Partners LLC.: Hi. Good morning, guys.

Hey, Josh.

Hi. Joshua C. Pokrzywinski – MKM Partners LLC.: Wanted to follow-up on [Ameristar] and kind of early traction there. The way I understand is that is you guys actually use third-party manufacturing for that and just correct me if I’m wrong and I guess if that is the case, how is conversion on that versus the Trane model?

Josh we use the combination. So there is these parts and assemblies that we outsource, some are retained, quite a bit of flexibility even in these outsourced relationships to build a product we choose to do that. So it’s very dynamic in terms of how do you want to do this. It’s actually a bit exciting because we’ve been able to think outside of box, I think about what’s possible in terms of some of these relationships. But, so that’s the way we’re handling that aspect. While it’s pretty early March, I think, orders and April shipments is a little fusing to tell in terms of anything around real traction, the margins, gross margins are lower than what we would normally see. The core costs are very low compared to what we would see. So the contribution is actually accretive to the full year margins that we’ve laid out. Okay, but it’s a different model. It’s a lower gross margin, much lower support model, contribution again accretive. Joshua C. Pokrzywinski – MKM Partners LLC.: Got it. Thanks guys.

Welcome.

Our next question comes from Shannon O’Callaghan with Nomura. Shannon O’Callaghan – Nomura Securities International, Inc.: Good morning, guys.

Hi, Shannon.

Hi. Shannon O’Callaghan – Nomura Securities International, Inc.: Hey. Can you just walk through? You had the $0.07 of restructuring in the quarter and you talked about that, I guess, as the $23 million, but it was suppose to be a total $16 million with the cost reductions and the growth investments. Do you have the other numbers that roll up to the total?

I missed again on $16 million.

Right now what we can tell, we were pretty close to what we expected to spend, Shannon. Shannon O’Callaghan – Nomura Securities International, Inc.: All right. And then, so, well in Q2, so you had the $0.07. I guess in the 1Q, you’re going to have $0.03 in Q2 right. What about the cost reductions and growth investments in 2Q?

Yeah, there is definitely more on top of restructuring in Q2 in the investments lines, probably based on what I target by probably another $25 million something in that range. Primarily, two areas there, I guess the biggest pieces would be the systems component, getting that really moving now and second building out in our industrial business and continuing to build out in our train business, the service organizations, particularly internationally. Shannon O’Callaghan – Nomura Securities International, Inc.: Okay.

System spend is going to be picking up, so if we talk about putting an integrated systems around the world that will be a significant piece of that going forward. Shannon O’Callaghan – Nomura Securities International, Inc.: All right and then, so on the industrial piece, you just mentioned kind of slowing down into 2Q when you see the orders have come in, what do you see there happening in 2Q and then sort of where does it go in the second half?

Well, in ITS in Europe, in their equipment business, Q1 was actually a pretty solid quarter for them, low teens kind of in the quarter because of the backlog. We saw that backlog change, we saw the bookings rate change and so we see that going kind of negative single-digit type numbers in Europe as well. Club Car had a pretty good quarter, it was a positive territory. I think that might go negative in the quarter as well for that group. So that sort of the pressure that we’re seeing. Shannon O’Callaghan – Nomura Securities International, Inc.: And then do you have any view to that changing sort of in the second half after 2Q or?

Well, we think it’s going to slowdown to moderate. We thought that the industrial business, we’ll probably see in an overall growth of 2% to 4% (inaudible) will be about 5% to 7%, so even imply lower quarter. So, I think quarter three, quarter four, we’d probably see more of a pickup again in Asia and a bit more of a pickup in Latin America, which was a litter softer as well. So that will kind of moderate your backups and some of the Q2, very low kind of zeroish number, a flat number to the up and something to give us a full-year about 2% to 4%. Shannon O’Callaghan – Nomura Securities International, Inc.: Okay, all right. Thanks, guys.

You’re Welcome.

Our next question comes from Steve Tusa with JPMorgan. Stephen Tusa – JPMorgan Securities LLC: Good morning.

Hi, Steve. Stephen Tusa – JPMorgan Securities LLC: Yeah, I think what Shannon was trying to get out of it, I just want to kind of maybe go from a higher level. So you guided to $50 million in the first quarter of restructuring and other investments, correct?

Right. Stephen Tusa – JPMorgan Securities LLC: So that number came in at what?

Right about that.

Very close to that. Stephen Tusa – JPMorgan Securities LLC: Okay. So then what would that number be in the second quarter?

We got restructuring of about 14.

14.

So the balance of that would be investments. Stephen Tusa – JPMorgan Securities LLC: All right. So, in total about $40 million in the second quarter?

Yeah. Stephen Tusa – JPMorgan Securities LLC: Okay. And then that would step down kind of as we move to the third and the fourth quarter, you’re kind of pulling that stuff into the first half year?

Right. Restructuring looks positive, right.

Particularly, restructuring, yeah. Stephen Tusa – JPMorgan Securities LLC: So, when you say the $65 million in kind of productivity benefits that you highlighted in the second half or whatever that was, does that include the favorable year-over-year impact from assuming you run your inventory at more of a normal level? Does that include that impact or is that kind of over and above where we should see in the fourth quarter from when you shut your plants down last year?

If I understand your question, the productivity we would get in the fourth quarter in res business would be in the productivity number, in other words the loss absorption would be in the productivity number. Stephen Tusa – JPMorgan Securities LLC: Right. So you say that would be, it wouldn’t be additive to that. Okay.

Right. It’s only the reason why we think is reasonable way to look at it, okay, because you’re right that benefits from res is predominantly in the second half. Stephen Tusa – JPMorgan Securities LLC: Right, right, right. And then just on the resi I mean you’re plus 40% in March, that’s obviously in orders number correct?

Right. Stephen Tusa – JPMorgan Securities LLC: Okay. You talked about how quickly these orders turn into revenues, but I mean 40% up in March obviously, didn’t convert because your revenues in the quarter was still down 8. So, I mean how come that not make you feel a little bit better as we kind of moving to see, I mean you think that like low single-digits in the second quarter is, maybe just a bit conservative, I mean I understand all of a sudden we’ve gone from having no inventory, people concerned about it having too much inventory. I just can imagine it. The inventory dynamics are that dramatic, the sell through it’s actually been pretty good.

I hope you are right, Steve, but the bookings order last week, 10 days of March, we saw a dry January and February where so, gosh the same thing happens here with June and July okay, in this business and so. We really need to see something more constrained here than a weeks worth of bookings, but I hope you’re right. Stephen Tusa – JPMorgan Securities LLC: Okay. And then one more question, how much of Thermo King now is Europe, truck on a quarterly basis, or (inaudible) whatever or whichever works?

You just want the European truck numbers? Stephen Tusa – JPMorgan Securities LLC: Yeah, yeah, European trucks. Whatever is levered to kind of the European economy there, I guess?

Yeah, Steve, so rather than to give a global container in there as well rather than just kind of (inaudible) why don’t we follow-up with you that one? Stephen Tusa – JPMorgan Securities LLC: I mean it’s not a predominant, it’s a driver of the business, but it’s not a make or break part of the business, correct?

Are you talking about the numbers in the $35 million to $40 million range every quarter? Stephen Tusa – JPMorgan Securities LLC: I mean in revenues?

That’s for truck, just truck. Stephen Tusa – JPMorgan Securities LLC: Right, right. In revenues?

Yeah, trailer is going to be more that kind of $80 million range. Stephen Tusa – JPMorgan Securities LLC: Right, so on those $3 billion quarterly revenue base that’s kind of sound like peanuts.

Possible. Stephen Tusa – JPMorgan Securities LLC: Okay, yeah, perfect, thanks a lot for the color.

Good peanuts.

This will be our last question.

Our last question comes from Robert McCarthy with R.W. Baird. Robert F. McCarthy Jr. – Robert W. Baird & Co.: Thanks for taking my question. Glad we got the investment spending question straightened out. I wanted to ask about price versus inflation again. You’d talk coming into the quarter, you thought you get about 90 basis points spread, you got 140, but you’re talking about not seeing any better relationship for the full year? Can you tell us what kind of spread you expect to see in the second quarter and can you talk about, I mean as this rapidly comes down is this a function of inflation comparison getting worse or is it that price realization declines dramatically, sequentially, as we go forward?

Yeah, Robert there is various sets of pricing first I will turn to (inaudible) the pricing we saw of full three points across the business in the quarter. Robert F. McCarthy Jr. – Robert W. Baird & Co.: Yeah.

Which was a little bit above our initial forecast and then we would think going forward, we expect lavation keeps you about 1.5 and that should moderate down to a point for the back half of the year, of course, you’re starting to laugh now pricing increases, so that’s what obvious. The material inflation was fairly subdued, so that was good news, but other inflation is higher for us. But if you’re looking just for the relationship between price and material inflation, I think Q2 would be about a 120 basis point positive. Robert F. McCarthy Jr. – Robert W. Baird & Co.: But you are leaving other inflation out of that categories.

We normally talk about it as price versus direct material inflation, but you are right, other inflation is where we get a surprise the other way. Robert F. McCarthy Jr. – Robert W. Baird & Co.: Yeah, okay. The 3% number that you talked about earlier.

Yes. Robert F. McCarthy Jr. – Robert W. Baird & Co.: Okay, very good. Thank you.

Okay, thank you everyone. And Joe and I will be around for any follow-up questions. Have a good day.

Ladies and gentlemen, that conclude today’s presentation. You may now disconnect and have a wonderful day.