Good day, ladies and gentlemen, and welcome to the Second Quarter 2013 Meritor, Inc. Earnings Conference Call. My name is Catena, and I'll be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Ms. Christy Daehnert, Director of Investor Relations. Please proceed.

Thank you, Catena. Good morning, everyone, and welcome to Meritor's Second Quarter Fiscal Year 2013 Earnings Call. On the call today, we have Chip McClure, our Chairman, CEO and President; and Kevin Nowlan, Senior Vice President and CFO. The slides accompanying today's call are available at www.meritor.com. We'll refer to the slides in our discussion this morning. The content of this conference call, which we're recording, is the property of Meritor, Inc. It's protected by U.S. and international copyright law and may not be rebroadcast without the expressed written consent of Meritor. We consider your continued participation to be your consent to our recording. And our discussion may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Let me now refer you to Slide 2 for a more complete disclosure of the risks that could affect our results. To the extent we refer to any non-GAAP measures in our call, you'll find the reconciliation to GAAP in the slides on our website. Now I'll turn the call over to Chip.

Thank you, Christy, and good morning. Let's turn to Slide 3. I'm proud of our team's performance this quarter. On a sequential basis, we delivered improved financial performance in the second quarter of fiscal 2013. Quarter-over-quarter, we expanded our adjusted EBITDA margin by 120 basis points. We delivered $12 million in incremental EBITDA in the second quarter, an increased revenue of $17 million, a 71% conversion as compared to our more normal conversion of 15% to 20%. This result was primarily due to higher volumes in South America resulting in a positive margin mix, net material performance improvements, seasonal aftermarket pricing actions, benefits of structural cost reductions and improving some labor and burden. This quarter, we have new business wins to tell you about in North and South America, Europe and India. Each of these are significant for us as we grow relationships with existing customers and develop relationships with new ones. Also this quarter, we completed the consolidation of our North American remanufacturing business announced in November 2012. This consolidation involved transferring operations from a facility in Canada that remanufactured commercial component to our North American center of excellence in Plainfield, Indiana. And in China, we initiated actions this quarter to move our on-highway business from its current location in Wuxi, China to our off-highway joint venture facility in Xuzhou. By consolidating these 2 operations in the same location, we're confident we can improve efficiency, preserve revenue growth potential and reduce overhead costs by leveraging existing footprint and overhead structure in Xuzhou. Additional actions in China include plans to streamline our corporate office in Shanghai and sublease the facility in Nanjing, previously intended to be used for our on-highway business. We realize the impact these decisions have on our employees and in each situation take appropriate actions to offer…

Thanks, Chip, and good morning, everyone. On today's call, I'll review our second quarter financial results, provide more detail around the recent announcement of our sale of Suspensys, and then close with a summary of our 2013 guidance. On Slide 9, you will see our second quarter income statement for continuing operations compared to the prior year. Sales of $908 million in the quarter were down significantly year-over-year by $252 million or 22%. The decrease was largely driven by lower production volumes in all geographies except South America. Gross margin decreased $39 million due to the steep decline in sales. And gross margin as a percent of sales came in over 10%, worst than last year but solid considering the revenue headwinds. SG&A was $65 million in our second quarter of 2013, $7 million lower than the prior year. The decrease is mostly due to a $5 million charge for a legal contingency we incurred last year that did not repeat. Restructuring was $11 million this quarter. We recognized $7 million in our Commercial Truck & Industrial segment, primarily related to employee severance costs resulting from our segment reorganization and Asia Pacific realignment. We recorded $1 million in our Aftermarket & Trailer segment, primarily related to employee severance costs. And finally, we recognized $3 million at our corporate locations associated with our segment reorganization. This quarter's restructuring expense was $8 million higher than the second quarter of 2012. As you'll recall, last year, we incurred costs associated with selling our French assembly operation back to Renault and the European headcount reduction plan. Restructuring charges are excluded from adjusted EBITDA. Earnings in our minority-owned affiliates were $10 million in the second quarter of 2013, about 30% below prior year. The decrease is mainly due to lower earnings from our affiliates in…

Thank you, Kevin. Let's now turn to Slide 18. As I referenced earlier on the call, today, we want to give you some insight into M2016, a detailed 3-year strategy that we believe will take Meritor to the next step in terms of the value it will provide for our shareholders, customers and employees. M2016 represents the next step of the journey for Meritor, moving us further down the path of achieving our vision to be the recognized leader in providing advanced drivetrain, mobility, braking and aftermarket solutions for the global commercial vehicle and industrial markets. Over the past several years, we've made significant progress to establish the foundation for greater financial performance. We divested our former light vehicle businesses so that we could focus in the areas of our expertise. We modified pricing for the value of our products and services, improved our global footprint, reduced our fixed cost structure and strengthened our execution. The hard work we've done over the past several years has put us in a position to deliver the level of performance our constituents expect from us, and quite frankly, we expect from ourselves. For shareholders, we believe this strategy will improve our profitability and cash flow, reduce debt and increase revenue. For customers, we'll design, develop and offer a broader, more advanced portfolio of innovative products and solutions with a focus on fuel efficiency, weight, performance and durability. Products like the 14X, 17X and 18X axles, the light commercial vehicle axle we've released in India, ELSA brakes, ProTec suspension for military vehicles and MTA trailer suspensions, are examples of the work we're doing in product development. We'll be even more alive in terms of quality and delivery and we'll provide the best cost for the value, while becoming even closer strategic partners with our…

[Operator Instructions] Your first question comes from the line of Brian Johnson representing Barclays.

Just 2 questions, one legal and the other strategic. On the legal side, I don't know if your counsel is on the phone. But could you maybe give us an update of the path forward from here, now that the Supreme Court has denied the defendant's appeal of the third circuit and lower court findings in favor of ZF Meritor?

Sure. Brian, this is Chip, and first of all, good morning. And yes, we're certainly pleased with yesterday's announcement. And at this point, it's been remanded back to the courts for a damages trial. A damages trial has been scheduled for the September time period, so we do expect it will be sent back there for that review in that time period. So that's really kind of the time frame that we see for it going forward.

Okay. And on the -- just quick housekeeping. When you talk about the impact of the JV being taken out, are you putting it into the discontinued ops next quarter or is it just really that 0.1% in 4Q?

Brian, it's Kevin Nowlan. Because it's an investment, it's actually not a business, it doesn't get put into discontinued operations. So it's simply once we no longer own the business, we'll stop recording the income through EBITDA.

Okay. And more on the strategic side. Upfront you talked a lot about the brakes, a couple of questions on that. Could you maybe remind us what part of your commercial vehicle business brakes are? Is that something you're seeking to grow? Are the margins higher there than in other parts of driveline? And then finally, does the euro requirement for autonomous emergency brakes, automatic emergency brakes in commercial vehicle help that business at all?

Brian, this is Chip to start. And obviously, we had announced a couple of years ago the breakthrough strategy. We've made significant investment and continue to grow our brakes. So let me start by saying, clearly, when you look at it, brakes is an important part of our business going forward. So strategically, we want to continue to invest in that, whether it's disc brakes or drum brakes. And as you know, we have that kind of coverage in a number of different markets around the world, where some require disc and some do require drum. So that is strategic, and we'll continue to look to grow that in the future and we'll continue to invest in it.

And did you get a boost from the emergency braking requirements coming in?

Yes. There's no question when you look at it, whether it's there in Europe or in other parts of the world, as you look at these braking requirements, there's no question we've got to continue to invest in that and innovation. So if I -- the answer to your question is yes. And if I look at the ones with the reduced stopping distance here in the U.S. last year, we were able to demonstrate the ability to be able to do that with our brake configuration. So yes, I do see that as an opportunity in the future as we continue to invest in, in brakes and as there continue to be the stricter and stricter requirements. Not just in the markets here in North America and Europe, but really around world, I think, positions us well for that in the future. And that's why we'll continue to invest in it.

Your next question comes from the line of Brett Hoselton representing KeyBanc.

If I recall your comments at the Analyst Day correctly, it's -- you had anticipated your second quarter margins may be a little better than your first quarter margins. And clearly -- well, they appear to be much better. And so my question is simply -- and maybe I just misunderstood, so correct me if I did, but if that is in fact the case, then my question is why not necessarily adjust your full year expectation at this point in time?

Brett, it's Kevin Nowlan. At Analyst Day, what we were signaling is that in the second quarter, we expected to see margin expansion over -- relative to the first quarter despite having flat revenue. And we thought it was going to be driven by the structural cost reductions and the aftermarket pricing actions, among other things, and that's effectively what happened. So as we thought about what we expected for Q2 and how that relates to the full year guidance, we think it's right in line with what we were expecting.

Okay. And then as we think about the M2016, Chip, the $400 million reduction in net debt and so forth, does that $400 million include the $195 million that I think you expect from the South American divestiture?

It does. And keep in mind on an after-tax basis and after fees, we expect to ultimately generate about $160 million dollars in proceeds. But yes, the $400 million reduction would include the benefit of those proceeds coming in.

Your next question comes from the line of Itay Michaeli representing Citigroup.

Just wanted to follow-up on the $400 million debt reduction target. So it looks like with the proceeds and maybe a modest cash burn, you maybe will get $100 million of that done this year. How should we think about the next couple of years and how does the pension play into there? Are you counting sort of pension contributions as part of the $400 million and assuming all else equal, or just help us out in terms of how you get the remainder of the next couple of years?

Itay, it's Kevin Nowlan. The pension contributions are absolutely an important part of the debt reduction strategy. As we look at it, right now, the way our contributions and our P&L is working, we have virtually no pension expense, but we're making pension contributions north of $70 million a year. Last year it was $100 million. So as we go forward and we have expectations of pension contributions to be in that $70 million to $75 million range, without an expectation of pension expense going forward, we would expect to see that simply be a reduction to our liabilities. Now of course, that's -- discount rates can come into play, asset returns can ultimately come in play. Our expectation is that we're not going to get help or get hurt by those movements in those rates, but those could have an impact one way or the other. Related to that, I would mention on OPEB, OPEB has a little bit of a similar phenomenon where we make cash payments of about $40 million to $45 million per year. But the OPEB expense that actually flows through the liability is maybe only a much smaller amount. So we're getting some deleveraging effect from our OPEB payments as well. So the combination of pension and OPEB, we expect to be a significant contributor to the $400 million debt reduction.

That's very helpful, Kevin. And then where there any restructuring savings in the quarter? And if you can remind us what the thinking for restructuring savings is now for the second half of the year?

You could see the structural cost reductions, that the impact going from Q1 to Q2 was about $4 million of help. And for the rest of the year or for the full year, we're expecting that to benefit us to the tune of about $18 million. And then next year when we're at full run rate on those restructuring actions related to the structural cost reductions, we expect that to contribute about $37 million on a full run-rate basis starting next year.

Great. And just lastly on the booked business that the $250-or-so million you expect to do in fiscal '16, do you have any guidance in terms of how we should think about the cadence of that over the next 3 years? Is it more back-end loaded or kind of split pretty evenly for modeling purposes?

I don't think at the moment we're giving any guidance towards that.

Your next question comes from the line of Patrick Archambault representing Goldman Sachs.

A couple of items. Yes, I guess just on Slide 12, a couple quick ones on the walk. Sequentially, is there anything that's kind of one-off in these items here like pricing that would not necessarily be ongoing pricing but like onetime recoveries? Or are most of the tailwinds here things that will carry into subsequent quarters, would be my first question.

Okay. This is Kevin again. The -- as you look at Slide 12, we believe the only one-timers, really, on the page are in that other net line, which is the negative $4 million. We booked some additional inventory reserves in the quarter that we don't expect to recur as we go forward. But the other items we all view as recurring and part of the baseline as we go forward.

All right. And then just kind of keying off of that, as we sort of walk to your 7% target, sequentially, I mean you've outlined volume, you've outlined ramping up to that $18 million in restructuring savings. Is there anything else that we should think about that sort of gets better as we go into the second half or are those the main items? And I've got one other follow-up.

Okay. I mean, I think, as you think about the 7% that we're guiding to for the full year, I think you can see the flight path coming off of this second quarter. Where if you adjust for that, the non-recurring inventory reserve that we just mentioned, and then you look at the expectation of revenue growth in the back half of the year, which based on our $3.8 billion of guidance would suggest, on average, a $100 million increase a quarter for the next 2 quarters, you just do normal contribution margin on that combined with the adjustment for the one-timer here. I think you can see the flight path as to how we get to the 7% margin.

Okay. Great. Yes, that's helpful. And then just finally, on the Suspensys transaction, forgive me if you said it before. But was this mostly just a balance sheet-driven sale? Was that the primary motivation? It's just that, clearly, this region has been such a focus for you guys and the outlook is good and the business seems to be performing. So was there another strategic rationale to sell it or was it mostly really just to sort of help you guys shore up some of your balance sheet targets?

Patrick, this is Chip. There's no question that was part of it. If you look at it -- and first of all, Brazil is an important market for us in the future. I'll also tell you that Randon is an important partner. We still have a very strong joint venture with them and Masters on the brake side. But as we looked at this, yes, some of it was driven by the ability to generate some cash to deleverage the balance sheet. But in the other case, really, when you look at this business, it was a lot of different suspension components and was not as strategic for us. And obviously, in our case, is a minority joint venture, we kind of looked at it that way. So I would say it was driven partially by the ability to deleverage the balance sheet but secondly, also as we just looked at it, it was not as strategic as either our other joint venture there in Brazil with the Randons or just our commitment to that market in general.

The next question comes from the line of Robert Kosowsky representing Sidoti & Company. Robert A. Kosowsky - Sidoti & Company, LLC: Yes. Just a question on the China restructuring. The consolidation, is this a commentary on the construction market not getting back to the strength that you might have seen a few years ago when you were building the plants?

Well, there's no question. As you look at that, first of all, part of consolidation was on the on-highway side. But also to address your question, the off-highway side, which is a construction side, there is a couple of dynamics going on, both on the plus side and the negative side. There's new leadership in place right now, and there are some infrastructure programs being put in place as they continue to expand further westward in China. So as you look at it long term, you still look at that as good potential that way. But as we kind of look at China for ourselves, it really is a 2014 and beyond story because the other side of it, on the off-highway side -- and then I'll get back to the consolidation in a moment, is the fact that there's a great deal of finished goods inventory in the pipeline. So as we kind of indicated at the last call and are reindicating today, as we look at our fiscal 2013, although we do expect that there will be some uptick with the market there in China, I don't believe it's robust as it was a couple years ago, to your point, Robert, but still picking up. As we look at the dynamics for us for the next 6 to 9 months just because of the finished goods inventory, our customers' finished goods inventory in the pipeline, I think you've got to kind of bleed that down before you see a material impact that way. On the on-highway side, really, what we're looking to do is to kind of take that opportunity to kind of better rationalize our manufacturing footprint. We've had a very strong joint venture with XCMG for the better part of 20 years in China. So it allows us to further strengthen that joint venture partnership and our footprint there, which is really what was driving kind of the move from Wuxi to Xuzhou. Robert A. Kosowsky - Sidoti & Company, LLC: Okay. That's helpful. And then can you talk about the cadence of your sales within the quarter and kind of how you're seeing build rates go throughout April, regionally?

Yes. This is Chip again. If you look at it -- if I start here in North America, we are starting to see, obviously, some continued pickup into kind of what I'll call this quarter and into next quarter. I think a number of the OEMs have kind of indicated that and we are starting to see that starting to move up and we're obviously preparing accordingly. When you look in Europe, as we've kind of indicated, it kind of bottomed out, but we are seeing some pickup there. And now that one may be tied a bit to the pre-buy for the Euro 6 emissions, which is taking place, what we kind of see the second half of this year. When I go to South America, very strong production numbers there. And we've kind of indicated that for the last quarter or 2. And again, they had a very strong harvest there. I think the FINAME activities the government is doing is working. So those are kind of a couple of the short-term catalysts. Longer term, there is a growing middle-class in South America and obviously, discovery of oil and natural gas, I think, helps that. So of all the markets, clearly, we're seeing the strongest rebound there in South America. On the flip side, India as we kind of indicated, until the new parliament's in place, I think there's a real concern about how that's going to go. And we've seen a significant down step there. And in addition, in India, the mining industry is essentially flat. So that's kind of it, plus what I've said on China before. Robert A. Kosowsky - Sidoti & Company, LLC: Okay. So should we assume that maybe fourth quarter won't be as seasonally weak as it usually is, meaning, you'll have sequential growth in third and then the fourth quarter as these build rates get more fully implemented?

Well, if you look at some of that, you've got -- you still have the shutdowns in the fourth -- our fourth fiscal quarter, which is the third calendar quarter in Europe. So we're still expecting that. So I think you'll still see some seasonality there. So it's kind of bridging from the third, fourth and into the first quarter of next year, you'll see that. But I think it's still safe to say that we'll still be -- some of that seasonality is represented by -- probably the best example is summer shutdowns in Europe. Robert A. Kosowsky - Sidoti & Company, LLC: Okay. And just one other question on the Suspensys deal. Was there any thought to waiting to do this transaction until after you saw what the settlement was going to be from Eaton?

Well, as I look at it, the Eaton settlement is truly separate. And that's still -- as I said, we're pleased with the progress that has been made, but that's got to go through the courts on damages. So I view those as kind of 2 independent actions or transactions or items at this point. So no, we did not tie the 2 together and just felt this was the time to do this with Suspensys, so it's very much independent of anything on Eaton.

Your next question comes from the line of Colin Langan representing UBS.

Can you provide color, you said the equity income coming out of Suspensys is $14 million. But when I look at the 10-K, I think last year it was $7 million in Aftermarket, and that was main joint venture. So is some of it in another -- in the commercial segment and is that the discrepancy between those numbers? And any color on what your guidance this year is kind of baking in, in terms of what you thought it would contribute for '13?

Okay. This is Kevin Nowlan. The $7 million you referred to from last year was what showed up in our Aftermarket & Trailer business. There's also a piece of our ownership stake. The other half of our ownership stake was through our Master joint venture, which actually flows up through our Commercial Truck & Industrial segment. So you should think about that Aftermarket figure of $7 million representing about half of the affiliate income from Suspensys. And there's another half embedded within the Commercial Truck & Industrial business through the Master's affiliate income.

And any color on what your guidance is implying for this year because that market has been fairly strong, so I think it would be up year-over-year.

I think you can get a sense on Slide 15 when we talk about the impact in Q4. We said it's going to have about a 10 basis point impact on full year '13. So if you think 1 quarter worth of income or thereabout, or affiliate income is being lost on a denominator of $3.8 billion, it would point you into the zip code of about $4 million of affiliate income in the fourth quarter. So I think that gives you the dimensions, kind of the size of what we are thinking for this year, at least for the fourth quarter.

Okay. Now that's very helpful. And any thoughts on additional divestitures? Would you ever consider divesting other JVs, like in particular the WABCO JV, which is -- it's potentially larger?

Well, Colin, this is Chip. And my comment on those things is never say never. But at this point, we don't have any of this, but we continue to evaluate all of the business kind of on a regular basis, which is just kind of our normal process at this -- as we look at that. So at this point, no. But I -- hopefully, we've demonstrated over the last few years that if it does make best sense for our shareholders, we're certainly willing to do that. And we continue to evaluate all our businesses throughout the process.

Okay. And just one last question. I just want to understand the M2016 incremental sales target of $500 million. Now is that accumulative through '16 or is that the annual run rate? I'm just trying to reconcile that headline versus some of the footnote on it.

Yes, so the $500 million represents the incremental business that we expect to secure to win between now and the end of 2016. That won't all flow through our income statement by 2016, so some of the run rate occurs after 2016. Our expectation is that about half of that $0.5 billion of new business wins will occur within the 2016 time frame, and the other half will occur afterwards. And then as you think about the guidance that we gave at Analyst Day, the $4.5 billion in revenue, that contemplates that business is being an offset to some of the military business losses that we were expecting over the same time frame.

Your next question comes from the line of David Leiker representing Robert W. Baird. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: I just want to follow-up on that last comment, because I'm not sure I heard that correctly. The $500 million is an annual revenue contribution?

That's an annual run rate of incremental revenue, correct. Some of which -- that we will secure between now and the end of '16 but that will hit our P&L, some of it about half of it before '16 is out, and some of it after '16. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay. So if you split it over 3 years or something, each of that would hit each of 3 years or some -- 4 years or whatever number like that?

We're not giving any guidance as to how that -- the cadence of that $0.5 billion or the half of that amount over the next few years. But you should expect to see us talk about the wins as they occur, and then on an annual basis scorecard ourselves against that objective.

David, this is Chip. One of the things I'd kind of characterize it, it probably will be lumpy based on when the businesses are awarded. So as we kind of look at that, we'll clearly kind of, as they become known, we'll let you know. But I would characterize them as being lumpy. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: And then different people use different definitions of incremental revenue. Is that excluding business that runs off or renewal of existing business? Just definitionally, what flows in there?

It's effectively gross. Think about it as gross. So if we did have business running off, we're not taking that as a deduct. That said, we're not expecting any meaningful losses as we look out over our guidance period. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: But if you've got a renewal contract first, then existing piece of business, that's not in there?

Correct. We're not counting the renewal business. We are counting true new product or new customer wins or significant market share expansion via new established relationships with a customer. But not simply replacement business because the contract expired and we rolled it over. We wouldn't be including that. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then if we look at $500 million -- $400 million to $1.5 billion debt reduction, net debt reduction, I mean, it looks between -- that the proceeds and the sale, the pension contribution, the difference in the OPEB, that you're probably right around $500 million with just those 3 resources themselves. So is the balance of that expected to come from fee cash flow or is there some asset sales that are in there or any other source of funds?

The target that we're establishing is that we'll achieve at least $400 million in debt reduction. So I think -- what I think I heard you just suggest was that maybe there's -- the math you're doing suggests something more than that. I didn't follow your question maybe. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Yes. Well, between the $160 million in proceeds, $75 million a year for pension, whether it's 2 or 3 years, and then the OPEB, I mean, your above that $400 million, I guess, is what I'm saying from just those 3 items.

If you add just those 3 items, I think that's right. And so that's why we are driving toward that and making sure that we achieve that target. That's our objective. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: And then that next swing of getting up between that and getting to $1.5 billion, is that expected to all come from fee cash flow or are you assuming in there that there might be additional asset sales or equity offerings or other access to other sources of funds?

I'd say the $1.5 billion represents what we expect the net debt balance including the retirement liabilities to be, after the $400 million reduction. So if you look at where we were at the end of 2012, we were at about $1.9 billion if you add our debt, our pension liabilities and OPEB liabilities and subtract cash, it's $1.9 billion. So the $400 million takes us to below $1.5 billion. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Understandable. So then, what's the anticipation that you -- given that you have, essentially, between those 3 items reach that number, what's the expectations for the use of free cash flow between now and then?

I don't think we're giving any additional guidance on that, beyond what we've said on the chart. But I think those are some of the key elements of the debt reduction that we're talking about, are some of the things that you've highlighted.

Your next question comes from the line of Ryan Brinkman representing JPMorgan. Ryan Brinkman - JP Morgan Chase & Co, Research Division: It seems your EBITDA decremental margins have been very well contained, 15% this quarter, 12% last quarter. What can you tell us though in terms of what kind of incremental margins you think you can earn when we do start to see higher year-over-year revenue? For example, as we move into fiscal 2014, the quarter-over-quarter result was, obviously, extremely strong in 2Q, but so strong that it seemingly is not very useful as a contribution margin modeling point going forward.

I would agree with that, Ryan. This is Kevin. I think, we continue to expect as we generate new business that you can assume we would generate incremental contribution on those sales of about 15% to 20%. Ryan Brinkman - JP Morgan Chase & Co, Research Division: Okay. Great. And then on Slide 12, you mentioned that volume mix and pricing, I think, you bucket them together as an $8 million help quarter-over-quarter. Are you able to tease out the impact of any mix or lumpier pricing actions in the quarter? What I'm really trying to do was just determine if you did experience a normalized underlying conversion rate on the stronger sequential revenue related to volume during the quarter.

Yes. I mean, I think, as you think about that $8 million number, revenue was up $17 million in the quarter. So you can think that our typical contribution being 15% to 20% is probably a good gauge as to what the volume impact was in the quarter and mix and pricing making up the rest of it. Ryan Brinkman - JP Morgan Chase & Co, Research Division: Okay. And then it seems your capital expenditures were sharply lower year-over-year and quarter-over-quarter, but -- obviously, the annualized that you're not going to get to $65 million to $70 million. Can you just help us understand the cadence a little bit better there and if there is indeed some sort of potential to track maybe a little bit lower than that guidance?

I think we're still expecting to be in $65 million to $75 million. I think sometimes CapEx, some of the projects tend to be lumpier and sometimes that CapEx doesn't hit in a particular quarter or materializes all in one quarter. So I wouldn't read too much into that versus our guidance, or are we pulling back from the guidance or constraining capital. We continue to expect that we're going to invest at those levels for the full fiscal year. Ryan Brinkman - JP Morgan Chase & Co, Research Division: Okay. And then just very last question. I know that you've always shied away from sort of -- and any kind of sizing of potential magnitude of proceeds from an Eaton settlement or lawsuit or whatnot. But even if you don't want to address that head on, at least could you talk about your priorities in relation to the proceeds, the use of such proceeds, and how that could potentially change at various different levels of proceeds? Is there any sort of possibility that proceeds, once you reach a certain threshold, could it be used for something other than shoring up the balance sheet?

Ryan, this is Chip. And first of all, I think it's far too premature for us to even kind of speculate on that. I think it needs to go back to the courts for the damages trial before we have any kind of discussion on that. I think the important message though, as we've kind of looked out on all of this, including the M2016 program, we're not counting on that as part of our commitment going forward. So that, as I said before, is independent of anything else that we're doing. But for me to really comment on it, I think, it really is too premature and probably can't do that at this point.

Your next question comes from the line of Kirk Ludtke representing CRT Capital Group.

Just a couple of follow-ups. With respect to the FMTV, it looks like the year-over-year decrease is unchanged for 2013. I'm just curious has the cadence changed within this fiscal year and when do you -- what's your expectation for an access to when it winds up?

Kirk, this is Chip. And actually it has not. In kind of, I think, one the charts we had in there, we do still expect a 30% reduction year-over-year from '12 to '13, and do expect it to wind down in 2014. I think the only thing that's changed in the cadence is I think -- and again, our customer, this is Oshkosh, has kind of indicated that they spread it out throughout 2014. So it'll probably go longer during -- throughout our fiscal year 2014. But our expectation is at the end of fiscal 2014, the program ends. So no real change in what we've projected for cadence in 2013, but 2013 does reflect a 30% step down. And in 2014, the only difference is the fact that it has been spread out over more months and throughout our fiscal year 2014.

Okay. That's helpful. And you mentioned an aftermarket price increase. Can you maybe quantify that and talk a little bit about how it was accepted?

This is Kevin. I can speak to that. It's embedded within our volume mix and pricing. Again, we're not breaking that out in terms of how much was pricing versus mix. You can get a sense by looking at our normal contribution and estimate how much of that $8 million was volume. So you can just assume pricing was an element of that, but we're not disclosing any more detail. In terms of how it was received, I think the market has been conditioned to accept these price increases on an annual basis in the aftermarket business, and we expect that to continue to be receptive to those increases going forward.

Fantastic. On the Eaton litigation, is there a range of as to when the legal process will be exhausted, time-wise?

Kirk, this is Chip again. And the answer is no. And obviously, we're pleased with yesterday's announcement that the Supreme Court denied Eaton's appeal and it has now been remanded back to the lower court for damages. So the liability side has been completed. And really, it's just the damages side and as I say, it has been remanded back to Delaware district court for this September. Now beyond that, I really can't put a time frame on that because, obviously, it's been going on for several years. But at this point, I think the important thing is it has been targeted to go back for district court in September. But beyond that, really can't comment on any kind of time line beyond that.

Okay. Still up to the judge?

It absolutely is, yes.

And then lastly, my impression is that you're not contemplating a prefunding of the pension plans. Is that correct?

I think we'll -- I mean, we're funding the contributions currently as we're required to. But as we think about deleveraging over the next few years consistent with the goal that we've established to reduce our liabilities by $400 million, we'll assess where the best use of the cash would be, whether that's paying down debt or funding our pension plans. We'll assess those things as we come into the cash.

Ladies and gentlemen, this concludes the question-and-answer session. I would now like to turn the call back to Ms. Christy Daehnert for closing remarks.

Thank you for participating in our earnings call today. For those of you who do have additional questions, please feel free to contact me directly. And that concludes our second quarter call.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.