Andy Casey (Wachovia Securities): What sort of potential incremental capacity are you looking at with respect to heavy truck engines for North America?

Tim Solso: We are putting in 15% more capacity for heavy-duty trucks. It will be in place by the second half of this year.

Charlie Rentschler (Wall Street Access): R&D expenses year-over-year rose from 2.8% to 3%. You are $23 million higher year-over-year in the quarter. Is there some specific projects going on or facility as you are staffing up for?

Joe Loughrey: We have been saying all long that now we are doing four engine platforms which is the most we have ever done at any one period of time. You have got light-duty diesel, you have got light-duty diesel with two displacements in China and then you have got 13-liter engine that we are doing in China as well. You have staffing up for that and spending money. In addition to that if you look at the components, you are also looking at the XPI fuel system, which is doing well. You have got new turbocharger platforms that are coming out as they gain market share. Emission Solutions has got big investments now. We have said that as a percent of sales not always, back in the 90s it was 5%. Now for the last several years we said our R&D expense would be 3% of sales. We are staying within the guidelines of what our guidance is. We consider this engineering expense a bet on the future, and we are going from like 890,000 engines produced last year of 1.6 million engines in 2010, and that is due to always new platforms that we are talking about.

Charlie Rentschler (Wall Street Access): How big the light-duty diesel is?

Joe Loughrey: We expect the introduction to be around 2010, beginning of 2010 timeframe that we have announced and has as Chrysler that it will be in Chrysler pickup truck base with the 1500 series. That is about as far as we have taken it publicly. You should not presume our only customer will be Chrysler and but basically we are continuing to move ahead with the plan we originally laid out the plant and the introduction of the engine and nothing is changing from that.

Charlie Rentschler (Wall Street Access): How are you doing with on-highway test of your 2010 heavy-duty truck engine?

Joe Loughrey: The reliability experience we have in the intervening years and the improvements we make as a result of that experience is all built into the future product. We are feeling good about where we are in terms of how the test plan is going both inside the company and in trucks on the road and also pleased with the great work going on between us and our OEMs and working together to ensure all of this goes well.

Tim Solso: That engine will have more new common rail fuel system, the XPI fuel system, which is in production now for both us as well as Scania. The outside world is telling us that fuel system is remarkable probably the best in the world and has a time advantage. That is one of the key things and that introduction and product launch has gone as well as anything we have ever done. We are pleased with that and that contributes also to our positive thinking about the 2010 heavy-duty engine.

Peter Nesvold (Bear Stearns): Historically you have had a sophisticated currency hedging program. I have been seeing some companies being able to lock in, commodity hedge gains in the quarter before they are taking surcharge pass-throughs from their suppliers. It seems like may be some unsustainable profits at some other companies. What has been the experience at Cummins this quarter?

Jean Blackwell: We do hedge a number of things. There are some commodities that are difficult to hedge because of how they are packaged, but we hedge copper, we hedge precious metal, we hedge a number of things.

Tim Solso: I would not describe Cummins hedging efforts as sophisticated. We try and keep it as simple as we possibly can and that we are not into exotic derivatives and that type of thing. We do hedge currencies and try and mitigate anything both positive and negative and do a reasonable job at it.

Dean Cantrell: I can give you color on copper because that is a big one in the Power Gen business and that we make alternators where there a lot of copper in there. All we do is forecast demand for copper purchases, purchase forward in the center layer of contracts and we basically buy forward less than our forecasted demand. We settled the contracts right when we purchased the copper and that is the end of it. It is a simple process to challenge across this forecasting the demand properly and then passing on price increases to your customers because over time the price does show up. Once the contracts are up, you do see the price in your purchases. So it is a relatively simple process but forecasting is important and that is where we spend our time working on.

Peter Nesvold (Bear Stearns): In distribution, you said that a surging aftermarket was driving a solid top line growth, which we did see in the segment but the margins were down year-over-year. What drove the year-over-year contraction in distribution margins?

Jean Blackwell: They did acquire one distributor early in the quarter and they are aggressively investing and building a strong distribution channel around the world which is a drag on their earnings right now but we see them continuing to improve.

Joe Loughrey: If you would have excluded the distributor acquisition in the quarter, the return on sales in the Distribution segment would have been 12.4%.

Peter Nesvold (Bear Stearns): You have been working on moving the capacity around, you have made leadership changes, but you have not seen that benefit of the margin line yet. Could you comment on that?

Joe Loughrey: As we have tried to characterize and looking at the four companies where we stand right now, as we still we have one company that is basically above the 7% to 9% range. We have another company that is at the bottom end of the range but right where we expect it to be. We have two that we would like to be sort of well in the range that are below the range. We think at least in terms of where we are right now with particularly CTT, the turbocharger company that things we have broken some bottlenecks and things are going much better and more strongly from the point of view our supply of product. Therefore, reducing particularly cost of goods sold for us so they have had in fact while they are not within the range yet, they have had two good quarters. Fourth quarter of last year was a good quarter compared to where they have been the last year-and-a-half or more and an improved the quarter, the first quarter of this year. We are expecting that while that they will continue to make improvements based on what we have seen and we are on our way to move in within the range from our turbo point of view. Our struggle is still the Emission Solutions business; we got a setback as we went into the year, because of what has happened in terms of the increase in precious metal prices. We have been aggressively going after that in a variety of forms. That is the place where we are behind plan in terms of getting to the margins where they need to be.

Peter Nesvold (Bear Stearns): If you look at one company like Tenneco, which arguably is a comp for this business they look at it on a value-add basis. They strip out the substrates and they allow people to evaluate the margins just on the value-add piece, because substrates can be such a growing piece of it. Have you looked at it that way?

Tim Solso: No.

Unidentified Analyst: What did you announce for year in terms of pricing, and in raw materials for the company?