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Okay, earlier this morning, we reported results for the second quarter, and we increased our outlook for the full year of 2010. And to start this morning, I'll summarize the quarter and the new outlook, and then Doug and Ed and I will take your questions. So let's start with the second quarter top line.Sales and revenues were $10,409,000,000, and that's up from $7,975,000,000 in the second quarter of 2009. And that's an increase of about $2.4 billion or 31%. The increase in the top line was primarily driven by the absence of 2009's dealer inventory reductions, coupled with improvement in end-user demand. And in terms of dealer inventory, our dealers cut their new machine inventories by about $1.2 billion during the second quarter of 2009, and as a result, Caterpillar essentially undersold end-user demand in last year's second quarter. During the second quarter of 2010 this year, dealers held inventory about flat, meaning that our machine sales were about in line with end-user demand. We frequently hear comments and get questions about dealer restocking, and to be clear, overall, dealers have collectively not increased machine inventories yet. They've just stopped reducing them. In fact, that comment goes for the first half of 2010, not just the second quarter. Inventories have remained relatively flat all year long. Dealer inventories in terms of months of supply are below historic averages. That's a good thing, and it's in keeping with our Lane Strategy that includes Caterpillar holding finished inventory in regional distribution centers to serve our dealers and customers. That said, inventories are getting tight in some parts of the world. And the higher sales are in our outlook range, the more likely it is that dealers will want to add some inventory. Okay, that's the situation with dealer inventory. The second major reason for the sales increase in the second quarter was better end-user demand. Demand has picked up substantially from the very depressed levels of last year. And that's because most of the world economies are in recovery after last year's severe economic decline.
World growth is being led by the developing countries of Asia, Latin America, the Middle East and Africa. And we're seeing continuing strong growth in our businesses in the developing world. That economic growth is also driving demand for commodities like iron ore, copper, coal and oil. And that's helping our mining and energy-related businesses around the world.The developed countries of the world, like the United States, in Europe and Japan, are also growing but more slowly. And while economic growth in developed countries has helped, we still have a very long way to go. Sales in North America and Europe, while better than the very low levels of 2009, are still depressed. So the 31% increase in our top line was primarily due to the absence of last year's dealer inventory decline and improving end-user demand. Just one more point about the sales increase, the vast majority was related to Machinery. Compared with the second quarter of 2009, Machinery sales were up 55%, while Engines sales were up 3%. Now let's turn to profit. Profit in the quarter was $707 million, a 91% increase from $371 million in the second quarter of 2009. Profit per share was $1.09, up $0.49 from $0.60 in the same quarter of 2009. Consolidating operating profit as a percent of sales was 9.4%, and that's up from 4.4% in the second quarter of last year. In Machinery and Engines, gross margin continued to improve and was 24.2% in the quarter. Read the rest of this transcript for free on seekingalpha.com