Good day, everyone, and welcome to the Manitowoc Co. Inc. Second Quarter Earnings Conference Call. [Operator Instructions] At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Khail. Please go ahead, sir.

Good morning, everyone, and thank you for joining Manitowoc's Second Quarter Earnings Conference Call. Participating in today's call will be Glen Tellock, our Chairman and Chief Executive Officer; Carl Laurino, Senior Vice President and Chief Financial Officer; and Mike Kachmer, President of Manitowoc Foodservice. Glen will open today's call by providing an overview of our quarterly results and business outlook. Carl will then discuss our financial results for the second quarter in greater detail. Mike Kachmer is our guest speaker this quarter, and he will offer insights into the market conditions for our Foodservice segment and we'll also discuss the 2010 National Restaurant Show. Following our prepared remarks, we will be joined Eric Etchart, President of Manitowoc Cranes, who will participate in our usual question-and-answer session. For anyone who is not able to listen to today's entire call, an archived version of this call will be available later this morning. Please visit the Investor Relations section of our corporate website at www.manitowoc.com to access the replay. Before Glen begins his commentary, I would like to review our Safe Harbor statement. This call is taking place on July 28, 2010. During the course of today's call, forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, will be made during each speaker's remarks and during our question-and-answer session. Such statements are based on the company's current assessment of its markets and other factors that affect its business. However, actual results could differ materially from any implied projections due to one or more of the factors explained in Manitowoc's filings with the Securities and Exchange Commission, which are also available on our website. The company does not undertake any obligation to publicly update, or revise any forward-looking statements, whether as a result of new information, future events or other circumstances. With that, I'll now turn the call over to Glen.

Thanks, Steve, and good morning, everyone. Yesterday, we reported second quarter results that were consistent with our expectations, in spite of the many external challenges resulting from the prolonged weakness in the global economy. The operating environment during the second quarter was largely a continuation of prior quarters, with signs of further stabilization in more mature markets complemented by a sustained demand in emerging geographies. While these improvements are encouraging, given the market volatility of the past several months, we are mindful of the uncertainties and remain focused on those factors that are within our control. During the second quarter, we made further progress against our three near-term strategic priorities, and we believe our fundamental to protecting and enhancing our leadership position in both of our businesses. First, we made great strides toward our goal of smoothly integrating our Foodservice businesses. As we move forward with this market-leading business, our dedicated focus on innovative technologies and new products has created organic growth opportunities with new and existing customers globally. We also continue to leverage various economies of scale, which include operational cost reduction, lean initiatives, as well as procurement savings. Secondly, even with the significant challenges that the economic environment continues to post for our Crane segment, we continue to invest in operational efficiency improvements and lean manufacturing principles. In addition, we remain focused on emerging market opportunities, building on our previous investments in China, India, Middle East and Latin America. Our success in achieving these initiatives is illustrated by the improvement we reported in the second quarter operating margins for this segment. We are confident that the hard work we've put in over the last several quarters will pay dividends as the economy improves and this segment returns to growth. And finally, prudently managing our cash position and optimizing…

Thanks, Glen, and good morning, everyone. Reported net sales for the second quarter were $877 million, which is an increase of $155 million, or 21% from the first quarter of 2010. Net sales declined by $158 million, or 15% from the second quarter of 2009. The year-over-year decrease in net sales during the second quarter was driven primarily by a 31% decline in the Crane segment, which was partially offset by an 11% increase in Foodservice. The sequential sales increase reflects signs of further stabilization, as well as the positive impact of seasonality in both businesses. Second quarter 2010 consolidated operating margins before amortization and one-time items were 9.5% versus 8.1% in the second quarter of 2009 and 5.9% in the first quarter of 2010. Sequential margin improvement was driven by the Crane segment, which experienced higher volumes, a positive product mix and the impact of favorable receivable collection activity in the second quarter. Year-over-year, operating margin improvements were largely a result of the cost-cutting actions implemented in 2009 and the realization of synergies resulting from the integration of the Enodis acquisition. Moving forward, we continue to target additional actions to further reduce our cost structure and improve operating efficiencies. GAAP net income for the second quarter was $14.1 million, or $0.11 per share versus a net loss of $12.3 million, or $0.09 per share in the second quarter of 2009. Second quarter 2010 earnings included $0.01 per share related to special charges. Excluding these and other unusual items in both quarters, second quarter 2010 EPS was $0.12 per share versus $0.23 for the second quarter in 2009. Looking at the balance sheet, we reduced our net debt position by $12 million during the quarter, and we remain committed to our debt reduction goal of $200 million for the full…

Thank you, Carl. When I last spoke to you at the end of the fourth quarter, I said that we had entered the new year on a very strong position, and as Glen suggested, we are on track with our full year expectations while generating greater momentum with each passing quarter. Despite the market volatility, we continue to see across several global business sectors, the overall restaurant industry is showing positive improvement this year after two consecutive years of contraction. While Europe remains challenging, we are nearing double-digit growth in Asia-Pacific and high single-digit growth in North America. The most recent forecast by Technomic, a leading independent organization, which tracks the U.S. Foodservice industry, projects an approximate 1% nominal increase in sales with higher growth in limited service restaurants, convenient stores and supermarkets. With our focus in these stronger growth areas, Manitowoc is well positioned to capitalize on these opportunities. Through our acquisition of Enodis, we solidified our position as a global industry leader. And as we further integrate our combined Foodservice businesses, we continue to identify and accelerate synergies, leading to more efficient operations and significant new opportunities for growth. One of the fundamental points of our strategy is to build strong relationships with customers by offering a broad range of innovative products, which allow them to enhance their profitability, create new menu items, expand their footprint and enact sustainability initiatives. We are clearly viewed as a key partner in helping them reach their goals. In the first two quarters of 2010 alone, we have launched 20 new products, including three at the recent NRA Show, which garnered Kitchen Innovation honors. Since its inception, KI has recognized Manitowoc Foodservice with 18 innovation awards, more than twice the number of awards than any other manufacturer in the industry. This year,…

Thanks, Mike. To reiterate Mike's comments, we continue to see significant opportunities for growth at our Foodservice segment through increasing global demand for our products, as well as opportunities for driving enhanced operational efficiency. Further stabilization across our geographies, as well as increasing demand in emerging markets, give us a feeling of encouragement as we move through the balance of this year. Our focus continues to be on controlling the areas of our business that we can and driving innovation throughout our business to expand our leadership position. We are confident that the initiatives we are pursuing in our business segments will spur significant revenue and margin growth as the markets recover. We will now open the call for questions. Christie?

[Operator Instructions] And our first question comes from Robert Wertheimer from Morgan Stanley.

So my first question on the margin in the Crane segment, was the contribution from favorable receivables collections material to the margin? Or could you quantify that, please?

It was meaningful, Rob, we'd say about 100 basis points.

The order cancellation, was that, let's say, under 50, under 20? And was it U.S. and do you feel like it's widespread? Or was it a particular issue with the customer?

Rob, obviously, this is one of those areas where we don't talk about specific customers, but it was one customer, and I think it's notable that the cancellation was done by management, by us. This is not the customers desire to cancel the order and it still hasn't. They still want the crane, but I think when you look at the credit markets as they are today, we felt that there was a chance that this may not get financed. I think when you look at the resiliency of the rest of the backlog, it's still good. I don't think this is any reflection on that. And I would also say it's not a reflection on the customer's current financial condition. I think this is a victim of the credit markets as they've evolved to today. But the number in the backlog -- it was closer to your second number, which was around the $20 million area. Ben Elias - Sterne Agee & Leach Inc.: And you're able to -- I don't know whether you've started production, but are you able to re-market it if you have?

Yes, we are definitely -- there's other customers that are looking at it and the current customer -- if there's somebody else comes along, he's been working with us very closely. So I mean, it's a good relationship. We felt at this point in time, it was more prudent to take it out of the backlog.

And your next question comes from Ann Duignan with JPMorgan. Ann Duignan - JP Morgan Chase & Co: Can you talk again about the collections -- better receivables, collection on the Crane side? I mean isn't that just pulling forward our reported revenues? And shouldn't we anticipate that you'd give back that 100 basis points of margin in the next couple of quarters?

Yes, I mean it was the unusual situation that was a fully reserved receivable because of the location of the equipment, difficulty in getting it dispositioned and conservatism, I guess, as it relates to how we carry our receivables, but it was collected. We got the cash. And therefore, it benefited the quarter to the size level that I mentioned. Obviously, the performance in the -- if you exclude that specific benefit, we were still in the mid-7s from a margin performance standpoint at Cranes, which is obviously very good. From an incremental margin standpoint, Cranes takes it down from about 40 to the mid-30s. Ann Duignan - JP Morgan Chase & Co: And in that context or leveraging on to that, can you talk in more detail about your plan for debt reduction? I mean it looks like you've got a huge hole in the back half. I know you said operating cash flow is a key focus point, but I don't see much leverage there, I don't see many opportunities to really drive operating cash flow up. I'm just, kind of, scratching my head on how your going to pay down $200 million in debt for the full year?

I think, Ann, I think people are scratching their head at this same time last year, trying to figure out how we were going to get to the additional $450 million. And I think if you go back historically, the back half of the year is exactly when we generate the most cash. So when you look what we've done to date, we feel very comfortable with what we have. I mean, we have a list of items that, there's several things that people are working on, whether it's speeding up the inventory turns, whether it's forwarding some of the collection on the receivables. I mean, there's a lot of things you can do to manage the working capital, and there's also other things you have to do with "other assets," whether it's some of the properties that we have for sale around the United States or the rest of the world. I mean, everybody's working towards that same objective, so I wouldn't shake your head and think there's no way to do it because this is typically when we're at our best, is the second half of the year. Ann Duignan - JP Morgan Chase & Co: But you may consider other options, like did you just say, selling assets?

I said selling idle assets. We've done some consolidations around the world in the different factories and we have factory sales, we have land sales. I mean, there's a lot of things we picked up in the Enodis acquisition that we still think that are on the market, so it's those types of things. It's not anything significant from that standpoint to get to the $200 million. Ann Duignan - JP Morgan Chase & Co: Finally, real quick, you didn't generate any incremental profits in the Foodservice segment quarter-over-quarter, sequentially. Can you just talk about why not? Is there mix? Is there seasonality? What's going on there?

I would say it's not seasonality, but mix definitely played a factor. We have a benefit of a sizable rollout in the first quarter. It was a very successful product that I think was helpful to the quarter, that was difficult to replicate in the second quarter, so we certainly have products. Cost increases that has put pressure on the margin from a pricing versus cost standpoint, that also. And then the employee cost that we mentioned in our prepared remarks that has an effect for us. Second quarter over first quarter, to some extent, and also for the balance of the year, which is part of the reason for the comment about the tempering of the year-over-year margin improvement in the back half.

And our next question comes from Charlie Brady with BMO Capital.

Could we just talk about on the crane margin? I don't want to beat a dead horse here, but even backing out the receivables, 7.5% margin at this volume level is pretty impressive. And I guess, I'm trying to look towards the back half of the year, your guidance is quite frankly, a little bit vague, even above 3.5% last trough. Can you give me more granularity about what the crane margins might look at in the back half? And really, how much of this 7.5% was driven by mix as opposed to just volumes going to the plant?

Well, Charlie, I think when you reconcile for the unusual item, obviously, that knocks it down a bit to the level, kind of, mid-7s as I described in the earlier question. If you look at the back half of the year, you're thinking about the ability to sustain that. I think the impact, as you know from the significant European operations that we have and the European holiday, traditionally, you'd see a compression in the margin results. There would be no reason to expect why we wouldn't see that again this year. And then the fourth quarter tends to be seasonally softer, so you have that impact as well. I would say, obviously, with the tremendous performance we had in the second quarter, just supposed again, it's a very difficult first quarter, from both the volume and a mix standpoint and efficiency standpoint, that lends a lot of credibility, I think, to that 3.5 and makes it pretty easy to achieve.

Charlie, you also have to recognize, last year, we talked about the significant cost we've taken out of the business. And last year, we only got three quarters of that because on an annualized basis, and you're starting to see some of that come through, and I think that's sustainable. So when you look at the objectives that we've had from a cost cutting standpoint, whether it was in the United States or you're headed to Europe -- I mean Europe has a -- it's a much tougher -- it's much longer process to take some of those costs out. And so you're seeing some of those benefits as they come through. And as business and volumes come back, that's the type of the incremental margin that you would expect to see as volumes come back.

Would you expect that if Q2 x in receivable was around a mid-30% incremental, would you expect that kind of incremental in the second half?

Again, I would say the things that would work against us in our ability to be able to deliver on that kind of margin performance, would be things like the European activity being significantly down in the third quarter, which hurts us from an absorption standpoint pretty significantly and the seasonal impact in the fourth quarter would be the two discreet items, as well as the fact that we did get some decent mix in the second quarter as well.

On the other expense line, five-some-odd million, is that mostly currency related?

Yes.

And then CapEx in the second half of this year, it looks it's about -- from your guidance, it takes a step up. Anything specific in why that would be up?

I think just the regular scheduling of the projects as we see them. And obviously, a modest levels of CapEx that we have been investing in over the last year or so.

And our next question comes from Meredith Taylor with Barclays Capital.

I'm hoping I can follow on Charlie's line of question about the margins in the backlog for cranes. I mean can you kind of compare and contrast the backlog and how the margin mix shakes out relative to what we saw in the second quarter?

Maybe tempered a little bit from what we saw in the second quarter.

And then maybe if you can give us a little color, I appreciated your comment about the gross orders relatively flat, second quarter relative to first quarter. But should we take that to mean that the cadence of orders was pretty, pretty steady over the course of the quarter? Or maybe you can give us a little bit more color as to how it trended on a month-by-month basis and maybe layer on top of that, where you saw absence flows a geographic standpoint as well?

Meredith, I don't think it's noteworthy to go month-by-month. But what I would say is it's lumpy. I think that's the word Carl used in the first quarter that as we go through this period in 2010, that's exactly what we're going to see. And I think, even as we said here at the end of the first quarter and you look forward, sometimes you get significant orders, whether it's 20 tower cranes, or it's 10 ATs, or it's a different order of crawlers. It's just the timing of the customer and I think when you read anything in the financial papers today, sometimes it's the availability of credit. It's a matter of do you have the equipment when the project kicks off. And so that can go over the quarter, it could be something that comes in and actually goes out in the quarter. So I think the best word we have for that is, it's lumpy, but I would say that I think in Carl's comments that in the backlog, you'll see, I think it's like 40% of the orders are coming from the emerging markets out of that total. So again, it stays with what we've been seeing since the early part of the year.

And just one quick follow-up, I mean how should we think about the volume of book and ship in the quarter and of services revenues in the quarter on the crane side?

Without the question about book to bill in the first quarter and obviously, my answer, I think was held through when we reported this quarter. In the trough year, you have certainly no guarantees that you're going to be able to continue to build backlog in any discrete quarter. But I think we're pretty generally with the tone and tenor and have a believe that the worst is behind us from a crisis level. Pleased that we were able to get to that growth level of orders that we did realize in the second quarter, and to Eric's comment that there's a reasonable activity out there.

I was wondering, the volume of service revenues in the quarter on the crane side?

Service revenue is about mid-teens percentage. That's parts and service.

And our next question comes from Robert McCarthy with Robert W. Baird. Robert McCarthy - Robert W. Baird & Co. Incorporated: I don't remember who made the comment, but I guess it was Charlie even without the minor items, terrific performance in Crane. And I did hear you say, Carl, that mix did contribute. So I was just playing around with numbers, and they have incremental -- first quarter incremental margin was solid performance and to put up a number even remotely in the same territory in the second quarter would have implied operating earnings maybe as much as $10 million below where they were in Crane. So my question is, can mix have had that big an effect? Or is looking at it this way, comparing first quarter and second quarter incremental is the wrong way to do it because of the significant seasonal, if you will, step up in second quarter production?

I think the answer is much closer to the latter notion that you proffered, Rob. You are at the traditional strongest quarter. You get the mix benefit I talked about some of the things that are headwind for us in the back half of the year. So the volume is certainly placed, especially when you're at this level of business, changes in the volume have a pretty significant impact. And as you look at the -- when you disclose, when you look at the conversion margin historically, recently, it's obviously been a negative number. We've gone to a huge positive number, so it's volatile at this point in the cycle. Robert McCarthy - Robert W. Baird & Co. Incorporated: And then I wanted to pick up on a comment that Mike made right near the end of his comments about Foodservice and the outlook, et cetera. He said something along the lines of the slow, tenuous second half outlook, tenuous being the word that I picked up on. And it strikes me that second quarter number, of course, very strong and raises the question of what is the market doing? And what is Manitowoc doing relative to that? And if there's a fairly large gap and it's been created by some first half introductions, does that mean in the second half that one of the reasons that the outlook is tenuous is because Foodservices growth profiles will likely to look a lot more like the rest of the industry in the second half? Can you help us there?

Well, Rob, what I would say there is one thing that we'll start to see I think as we continue to do more and more business in the chain, comparables get tougher as Mike mentioned when you have some rollouts in one quarter to the next and you don't have them, they come out. I think that's always -- that's why it's a challenge, and Mike mentioned some of that in his reports. But I think when you look at where some of the markets have been, the positions that we have in light of the markets, you heard us say before and any time that we want to be growing, certainly, greater than the market but with the specific comments that you made on the individual markets, I'll let Mike talk to those.

I think it's really important to look at it on a couple of dimensions. As noted, the Americas, specifically North America, has done well. Asia-Pacific is growing at a very healthy rate on a low base, given its portion of our overall business. The toughest market that we face is Europe. It is what it is. The team has absolutely taken the right actions, simplifying the business, delayering the business, still investing in the core products that we produce and sell out of Europe. But the Americas trend will remain positive. It will be a little bit lumpy as it relates to things like the rollouts. It's just tenuous as it relates to spending in areas like projects, for example. So some caution but overall, we still feel very favorable about the future trends. Robert McCarthy - Robert W. Baird & Co. Incorporated: Did you have a specifically incremental contribution from new product rollouts in the second half of last year that you have to compete with?

Nothing that would be unusual, Rob. Robert McCarthy - Robert W. Baird & Co. Incorporated: And then to clarify what you said about Europe, at first I thought you were just talking about revenue being down in part because of -- it almost sounds like strategic decisions about product lines and customers and the like. But then I hear you talking about investing, and that tells me that the business is a drag on profitability. So am I getting that right? It's really both issues?

I would say that the upside opportunity as it relates to a market beginning to expand has probably been delayed versus earlier expectations. I wouldn't consider it to be a major drag on profitability, but we're not seeing the uptick as early as we might have anticipated a few months ago. Robert McCarthy - Robert W. Baird & Co. Incorporated: And with the investments that you've already made, you're not able to absorb them quite as well as yet. Okay, got it.

And our next question comes from Seth Weber from RBC Capital Markets.

Again, going back to Charlie's question, I mean, I appreciate that there is seasonality in the business, in the Crane business, but in order for you guys to hit your second half Crane revenue target up year-over-year, your revenues would have to expand in the second half relative to the second quarter. So why wouldn't there be better absorption then?

I think it's because of the magnitude of the operations that are coming out of the European base, and not necessarily fairly being able to absorb those with the other factories around the world would be the key. It'd be the reason for that.

How much of the production is done in Europe at this point?

Well, there's -- majority of the AT [All-Terrain] business is done in Europe, and the majority of the self-erecting and large tower cranes, so the facilities in Portugal, Italy and the ones in France. So that does have it, that does play a part in what Carl is talking about. The other side of it is some of the lattice-boom crawler cranes, you have that in the mix that comes through the first part of the year. And then also you have some of the opportunities that we've have had in China with the tower cranes and the truck cranes. So the Truck Crane business in China, while still good is -- there's really not a big change there. But the Tower Crane business in China is expanding, given the markets that we have there. So your comments are valid with what you see from a volume standpoint, but some of that goes out up ahead of what you've already had in the current backlog. But again, the month of August becomes a drag on many of the operations. And I think that's consistent with what we've had for many, many years ever since we've acquired Potain.

One of your competitors recently was out talking about and they said that it's taking relatively longer for them to, I guess, get crawler orders or get high-capacity orders on paper. Have you seen that as well? Or it's just taking longer to get deals done for the higher-capacity cranes?

Eric, do you want to address that?

Yes. It's correct that we have seen some kind of slowdown of the larger mobile cranes, particularly in Europe. This being said, we have also seen an uptick in demand for tower cranes and you may recall that the tower cranes was the first product line to collapse back in early 2008. So I mean, we already are like eight or nine quarters in trough for tower cranes, and we have seen some uptick in demand, a little bit in Europe, but also from the emerging markets. From a development standpoint, I think we are seeing better and better signs.

And then just a couple of clarifications. Was there any deposit or progress payments that you guys were able to keep on the order that was canceled?

What we did is we had every opportunity to do that but again, a very good customer and the decision was done on a collective basis to remove the deposits to give them back and continue to work on different options for the order.

So that didn't contribute to the margin?

Correct.

Right.

And then just lastly on the issue that the order where the financing came into play, was that -- the financing that you're talking about, is that related to the crane or financing related to the project?

It's specific to the equipment.

And our next question comes from Henry Kirn with UBS.

How much more runway do you have to take out costs and find revenue synergies in Foodservice?

Henry, you went out right at the end. In what segment?

In Foodservice, in the notes.

Well, I think that there is always opportunity, and I would hate to say that we've gotten to the end of the runway on that. We have -- as you heard Mike say, we certainly feel comfortable with the $80 million year-to-date. I think the number is right around $40 million is what we have on an annualized basis. So there's a lot of things that we have to do, and I think with what I'd like to say now is it doesn't become part of that synergy number anymore. As we start getting the last quarter this year, I mean, when Mike starts putting things together, it's part of this plan. It's just part of operating the business. So it's not part of integration, it becomes part of the strategy. And so I think there's still some things that aren't part of that first 18 months when you acquire a company. Now there's some other things that come to light as you get into the business more and more. So there's still a lot of opportunities in the Foodservice segment on a consolidated basis, whether you want to call it synergies or we want to call it just managing the business better. Mike, do you have any additional comments?

No, I would just extend those points, Glen. I think that we are pursuing scale economies in a very logical way across many categories, be it related to manufacturing strategies, the sourcing of key materials globally and also the way that we manage customers. And we've not ran out of opportunities as it relates to those scale economies, and it's part of the strategy, and it will continue to be the strategy for the next few years.

And is there any way to quantify where we are today versus normal restaurant buying activity? Sort of as a percentage of normal?

It's still depressed versus what would have been considered norms. If you take a look at the National Restaurant Association indexes that track same-store sales and anticipated capital spend, we're starting to see movement back towards normal levels. But we're still depressed versus normal levels in the U.S. The European markets have taken a bigger hit, as I mentioned earlier responding to a question, and those have a bit further to go and probably will lag the recovery in the U.S. Asia continues to really move forward very positively for us with a double-digit growth that was referenced earlier.

Is there any way to quantify that?

Which portion of it?

Well, I guess each of the markets. Are we at 25% below normal, 50% below normal, 5% below normal, so we can frame it?

Based upon just looking at some of the industry metrics, 2009 is obviously the biggest year-over-year shift and that was circa 20%.

And our next question comes from David Wells with Thompson Research Group.

First off, just kind of going back to the Crane business, trying to get a sense, I mean, it sounds like you're feeling more conservative about operating margins in the second half of the year, but you're looking at the top line. I'm trying to get a sense of -- certainly, you've given some directional color about being up versus last year, but has the magnitude of that direction changed appreciably and you're thinking from where we are today versus two or three months ago, the last time we spoke and especially in light of your commentary about orders picking up for towers. I mean, do you feel more comfortable with that part of the forecast, and it's margins that you're more concerned on? Any help on that will be great.

Well, I think when you look at that, how do we feel about it, Dave, and I can let Eric add some more to it. But, I mean, I don't think that, that outlook and the top line has changed. As Carl said, we've given our guidance, which kept it right where it is. I think as you said here three months ago, different things change all the time. You went through some things in Europe. People are certainly more concerned of what's happening in Greece, and then what does that do to every place else. But then there's other pockets that show up. So I think overall, that's why we're talking about the guidance that Carl has given on the top line. So I think that's where it becomes that lumpiness that we've talked about in the margin. I don't know that we're necessarily concerned about it because we still believe that the margins will exceed the prior trough levels. But yes, you're right. You said, "Boy, that was a nice quarter for all the right reasons. What continues the back half of the year?" Eric, do you want to talk about some of the year outlook?

Yes, I think we're not changing the outlook. We have mixed signs from the market. I did mention towers, it's only good signs. But on the other hand, I mentioned higher mobile cranes being down in Europe. If you look at North America, we have seen a slight improvement in utilization rate in the rental fleet. We've seen our dealers continuing to deplete their inventory, and this is encouraging. But again, however, we do not foresee a substantial restocking of the dealers until we see a better outlook in the construction and in North America. So it's a kind of mixed things, and overall, we believe rental rates are still not in the door as rental rates are still at the trough. And again, that's not going to trigger massive investment in the rental houses for the time being. So it's mix of things and that isn't really, when you put that together, that doesn't change really the outlook that we gave in the previous quarters.

And then I guess secondly, inventories up a little bit from the first quarter. As you look at the second half of the year, I mean, do you anticipate inventories being a source of cash? And any kind of metrics and ranges you could put around that would be helpful.

Yes, David, we do. Obviously, whatever happens from a demand level will affect things one way or the other. But based upon the guidance that we've given and the outlook that we have, we expect to be able to generate some cash out of inventory. And it's in keeping about the comment that Glen made about the debt reduction. We tend to be consumers of cash in the first half of the year and generators of cash in the second half, and a lot of that is due to the seasonality in both businesses and the order patterns and our delivery schedules. And from that perspective, we would expect to generate cash out of working capital in the second half of the year.

And our next question comes from Nicole DeBlase with Deutsche Bank.

So a couple for you. First of all, a clarification on your asset sale comments. Do you plan to set up asset sales from historical levels?

Say that again, Nicole?

When you're talking about selling some assets, do you plan to step up your asset sales from what we've seen historically?

No, not at all. I mean, that's again -- the comment is idle or unused or unneeded assets, not things that we're currently using. For instance, land in the U.K. There's properties here in the U.S. that are idle, basically, from consolidations that we have, and you can imagine trying to sell real estate in these markets. People are just knocking down our doors to get at it. But I think there's some things that we can do, and those are the types of other items I was trying to get to Ann's comment that you don't just see in working capital. My point is when look at the incentives that we have for our people and our businesses when it comes to capital and working capital and EVA and everybody's incentivized by it, everybody is focused on getting it done, and they know they have to get it done by the end of the year. So those are the kinds of things that I wanted to talk about that are other than typical operating initiatives.

And then on working capital, I hate to beat a dead horse here, but I understand that you typically have seasonally stronger cash flow in the second half, but given that we're seeing, embedded in your guidance, a pretty big sequential step up in Crane volumes in the second half, what gives you confidence that you'll be able to see much improvement in working capital in the second half?

Well, it's the focus on it. As Glen said, the delivery schedules that we know about and to be consistent over time, year-over-year. And that's the reason for it, and I would make a comment relative to the -- and what we said was year-over-year increase in the revenue from Cranes in the second half versus the second half of last year. But I don't think we characterized it the same way you did in your question.

And then on finished goods inventory, can you give the balance at the end of the quarter?

Finished goods inventory?

Yes.

About $180 million.

I would mention, Nicole, to just follow-up on that, the other thing is when you're seeing some of the orders come in, many of the -- in the Crane side of the business, particularly many in the lean initiatives that we've had, have reduced the lead times of a lot of the equipment that we sell, whether it's in Shady Grove or whether it's in Manitowoc or whether it's in Wilhelmshaven, there are many initiatives that we have taken, and I mentioned them over the 2007, 2008, 2009, the ability to get things through the production process today, as long as the material is available, is a lot quicker than it was three, four years ago.

And our next question comes from Joel Tiss with Buckingham Research Group.

Just can you give us a sense, when you look at the E&C [engineering and construction] companies' backlogs and you start to think about the flow of business longer term, and I'm not trying to pin you down on 2011, but just to look at the flow of businesses. Are things -- in your view, are we past the bottom here? Are you starting to see some improvement? Or is it just going to be steady as it goes for a little while because there's a lot of global inventory that needs to be absorbed?

Well, there's a couple of things in there, Joel, that I think you're getting at is, one is the E&C companies. When you look at the backlogs of the E&C companies, they're substantial. And you combine that with what I think one of the articles in the USA Today was the amount of cash that's sitting on the sidelines. I had a conversation with a customer yesterday that said this is the first time in his 40-year career that all the projects, that heavy equipment, that the equipment that's working that's on, not one of them is privately funded. It's either a stimulus package job or it's something for the government. And he said he's never seen that, both the people he talks to and the people he works with, the backlog is there, the demand is there, they're just waiting to see what's going to happen from an economic standpoint. So there's a lot of things that are out there that cash is available. And so I think there is this pent-up demand. Now what does that do for us? I think you will see pockets of the equipment that's being used. It's a slower trajectory than it has been in prior upturns, and the reason because it's more on the large-scale projects, which is the larger-type equipment, the higher-capacity equipment versus the residential and commercial construction, which use a lot of the small RTs, the small self-erecting tower cranes and the boom trucks. So when you take those out of the equation, you're going to see the higher-capacity crane. I think the other thing that comes into play here is why -- will we use that as some of the inventory, but what gives us a little bit of advantage in North America, and I'll put it to North America, is the comment that Eric or Carl made. When we track our dealer inventory and utilization rates on a weekly basis, and when you see the levels of the dealer inventory right now, they are carrying some of the amounts that they had in the past, and I think some of it is because they're just tenuous. And so that gives us, as we look across our entire dealer inventory in North America, we have some indications of where we think some of the strength is going to be. So I think, again, that creates an uptick in one project as it comes about, but it doesn't necessarily mean they're restocking their inventories. So I think it's a long-winded answer to your question. Yes, I think E&C has big backlogs. They're ready to go. I think they're holding off, but at the same time, I think our customers are holding off also until they absolutely have the project in hand. And that leads to a little bit of a slower recovery I think than you've seen in the past.

Also, is it fair to say that as the market becomes like the availability of cranes gets a lot better and all the different suppliers have availability, that the customers would want to trade up? Because I think there's some confusion, Terex made a comment that they're a little bit worried about their fourth quarter, and it doesn't seem like we're seeing the same trends out of you guys. So would that explain it?

Well, it depends what product it is. And I would say that you are seeing people, as you mentioned, trading up. Yes, there are certain customers that have, whether it's in the U.K., whether it's in the United States, a crane rental company, they're saying, "I don't need this many of three-axle, 50- or 70-ton, small-capacity cranes. I'd rather have two of the larger-capacity crane." Now does that mean that some of these become available on the used market? It does, but I don't think it dilutes it any different than we have seen in the past and any other upturn. This is a normal pattern that we see every time. But it does -- the bigger concept there is every time you had a downturn, when people want to upgrade their fleet, they do want to get rid of something that they don't need in their fleet, and that's just a general dynamic of an upturn.

And just last cleanup, how come that the share count is up by 2 million shares in the quarter?

Just because of the earnings having the impact on the dilution and the option exercises.

And our next question comes from Ben Elias with Sterne Agee. Ben Elias - Sterne Agee & Leach Inc.: I just wanted to follow up slightly on the last question. Your competitor has had two quarters of pretty weak orders, down 30% sequentially. And your orders, at least the gross orders, continues to be -- it was relatively flat. It has increased. What's happening in terms of market share? I think the last time we met, you said you captured share in five or seven segments. Is it product market share? Is it the geographical different markets that you have exposure to? Can you just walk us through that?

Ben, it's Eric. I believe we continue to hold strong market share in most markets and particularly emerging market. As we have developed our presence since 2003, the net probably of the upstream cycle in view of the anticipated infrastructure dividend in most emerging markets. So we have a global footprint. We have that presence. We have built that infrastructures, and I think we are reaping the results to some extent to that. I would be -- having knew that, we certainly lost market share in China, and market share doesn't feed the family, and sometimes collection is also very -- it's more critical. And the Chinese market is having a strong growth and probably, that's an area where we've lost market share to some extent, and you also know that the Chinese are producing larger cranes right now. And for us, it's more difficult now to sell these imported cranes as we don't produce in China for the time being, and that explain also the potential also of market share in China. But outside of China, I think we hold market share.

I'd also add to that, Ben, and Eric's probably being a little modest. I think when you look at the strategies that we've employed, once we've had the global footprint that we do with the towers and the mobiles and the crawlers, our strategy, sometimes people have different business models, different strategy. And I think when you look at what we get out of our Crane CARE side of the business from a support standpoint, sometimes that helps in a down market. I would say another thing that's helping us a lot is the Manitowoc finance area. It's a strategy that we implemented back in 2003 I think it was, after we saw on the last downturn that many of the customers couldn't get credit. And so with our relationship with DOL and some others throughout the world, I mean, it's been a differentiator, and that's what we had hoped for. So that's why I think maybe there's a difference. Ben Elias - Sterne Agee & Leach Inc.: So that would explain the variance over the last two quarters?

It should explain the variance over the last five years. Ben Elias - Sterne Agee & Leach Inc.: Second question, what have been the impacts of your global purchasing program. That's kind of new, it's a new initiative. And how do we sort of factor that in going forward on the Cranes side?

I would say enterprise-wide, Ben, it's certainly a component of the $125 million in year-over-year savings that we expect to realize, and we'll realize in 2010 over '09. It is a component. Another significant component is the synergies in Foodservice, which procurement is probably the single largest piece of that among others. So that's the best description I can give you. Ben Elias - Sterne Agee & Leach Inc.: And finally on the Foodservice, did I hear correctly there was a second launch in the smoothies or was that a mistake?

Ben, let me clarify that. What I mentioned was that we are currently in the process of testing a second variation of our smoothie product lineup. We had a major launch beginning last year that continued on into this year. We were simultaneously developing additional smoothie-related machines that are being customed for other markets and other customers. It's going to be a growing category for us. We feel very positive about it. Ben Elias - Sterne Agee & Leach Inc.: So it's not the same customer?

No.

And that's all the time we have for questions today. I now turn the call back to Mr. Khail for any closing or further remarks.

Before we conclude today's call, I would like to remind everyone that a replay of our second quarter conference call will be available later this morning. You can access the replay by visiting the Investor Relations section of our corporate website at www.manitowoc.com. Thank you, everyone, for joining us today and for your continued interest in the Manitowoc Company. Have a good day.

That concludes our call today. Thank you for your participation.