Jim and I will now review Praxair's second quarter results and outlook. We'll then be available to answer questions.

James S. Sawyer

Thank you, Kelcey, and good morning, everyone. Please turn to Slide 3 for our consolidated second quarter results. A first glance at the slide reveals the sales and earnings growth were subdued and fell short of our long-term objectives. But I want to emphasize that our results were significantly constrained by negative currency translation, lower pass-through of natural gas price and hires and sales, and deteriorating manufacturing conditions in Europe and Brazil.

Having said that, we had fantastic results in North America, which we expect will continue, and when Brazil and Europe turnaround, then we'll be back on our historic trajectory of double-digit earnings growth. We've taken restructure actions in Brazil and are evaluating additional actions across Europe and in surface technologies in European plants, which serve the manufacturing sector. These steps will ensure better results in these weak spots without waiting for a rising tide of economic conditions.

There's a chart on Page 11, I would like to refer you to in the appendix for the teleconference slide deck, which shows the volatility of our 6 major overseas currencies and also why we are lowering our guidance for the remainder of the year by about 3%. Year-over-year as of June, the Brazilian real has fallen 22%. The euro, 11%, the Mexican peso, 16%, and the Canadian dollar 4%, and the Indian rupee, 19%, and the Korean won, 8%. Our year-over-year sales declined 2% to $2.8 billion, but excluding a 6% negative currency impact and a 2% impact from lower gas pass-through of natural gas, sales would have grown 6%. More importantly operating profit, x currency, was up about 9% and EPS about 11%, demonstrating that we're still getting leverage down the income statement in productivity and strong cash flow.

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