Good day, ladies and gentlemen, and welcome to the Colfax Corporation Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Scott Brannan. You may begin.

Thanks, Mimi, and good morning, everyone. Thanks for joining us. My name is Scott Brannan. I'm Colfax's Chief Financial Officer. With me on the call today is Steve Simms, our President and CEO. Our earnings release is available in the Investors section of our website, colfaxcorp.com. We will be using a slide presentation to supplement the call, which can also be found on the Investors section of the Colfax website. Both the audio of the call and the slide presentation will be archived on the website later today and will be available until the next quarterly call. During the call, we'll be making some forward-looking statements about our beliefs and estimates regarding future events and results. These forward-looking statements are subject to risks and uncertainties, including those set forth in our SEC filings. Actual results might differ materially from any forward-looking statements we might make today. The forward-looking statements speak only as of today, and we do not assume any obligation or intent to update them, except as required by law. With respect to any non-GAAP financial measures during the call today, the accompanying information required by Reg G related to those measures can be found in our press release and in the supplemental slide presentation, again in the Investors section of the Colfax website. As a reminder from previous calls, it is important to note that, while we are able to report pro forma sales, including Howden and ESAB, for 2011, we do not have pro forma adjusted operating income, adjusted net income or adjusted earnings per share for 2011. Accordingly, we are unable to make comparison of results other than sales on a pro forma basis to 2011. And with that, I'd like to turn it over to Steve.

Thanks, Scott, and good morning, everyone. Today, I will review our fourth quarter results and provide a brief operational update, and then Scott will provide more detail on the financials and our guidance for the 2013. And then we'll open it up for questions. We're pleased with the progress made in the fourth quarter on our improvement plans and growth initiatives, though actual results fell short of our targets. As you'll see, however, this was mostly due to the factors specific to the quarter. Overall, we believe the strong order rate at Howden, as well as the actions taken in 2012, position us well for 2013. In gas- and fluid-handling, bookings were in line with expectations, with orders up 4% for the quarter. This was driven by Howden, whose bookings hit an all-time quarterly high, partially offset by the decline in fluid-handling orders which we've been experiencing all year. Revenues were down slightly year-to-year due to a very strong 2011 fourth quarter at Howden. Despite this, profit margin percentage for the segment was in line with expectations as cost control and the benefits of our restructuring initiatives offset the impact of lower volumes. In fabrication technologies, sales were down 1% compared to the 2011 fourth quarter. We were extremely pleased with the performance of our Soldexa acquisition in November and December, which contributed over $3 million in operating profit before transaction costs and acquisition accounting items totaling $5 million. With the bulk of these nonoperating charges behind us, we expect Soldexa will make a substantial contribution to 2013 performance. Most other ESAB regions continue to experience relatively soft demand consistent with the third quarter due to the weakening of the global economic environment. As discussed on last quarter's call, we expect a slight decline in operating margins at ESAB as…

Thanks, Steve. As Steve mentioned earlier, sales were $1.03 billion, down 2.5% organically as compared to the pro forma 2011 fourth quarter sales. Adjusted operating income was $88.9 million, representing an adjusted margin of 8.7%. Excluding Soldexa, ESAB's operating -- adjusted operating margins were 7.2%, as Steve just discussed. Gas- and fluid-handling's adjusted margins were 12.1%, in line with expectations. Corporate and other costs were lower than typical as about $2 million of transaction costs recorded at corporate and earlier quarters were allocated to the operating segments as deals closed and certain litigation claims and costs were resolved for about $1 million less than previously provided for. Excluded from adjusted operating income are restructuring costs of $17 million incurred in connection with the cost-reduction projects discussed earlier today and in previous calls; $15.6 million of significant year 1 fair value adjustments related to acquisition-related inventory and contract backlog, which is now complete at the end of this quarter; and $4.1 million of costs associated with our asbestos insurance coverage litigation. Interest expense was $23.3 million, and that includes about $4 million of noncash amortization of debt discount and deferred issuance costs, as well as facility fees, the cost of bank guarantees and letters of credit. We made $2.25 million of debt principal repayments this quarter. Our effective tax rate for adjusted net income and adjusted net income per share for the quarter was 15%. This rate was reduced by 15 percentage points by the impact of a 4.3% reduction in the Swedish corporate tax rate which was enacted into law in December. This is a noncash benefit, as the lower tax rate is applied to our net deferred tax liabilities in Sweden. There is no impact on tax -- taxes expected to be paid for 2012. Operating cash flow of…

Thanks, Scott. As I said at the beginning of the call, we're not fully satisfied with the results we delivered in the quarter, but we are pleased with the progress we continue to make in our improvement plans and growth initiatives. A key pillar of our Charter acquisition thesis was the potential for cash flow and margin enhancement through restructuring and process improvement. This has been a top priority throughout the year, and as we discussed earlier on the call, the results are generally reading through well, with more to come. We also recognize that organic growth needs to be an essential element of our shareholder value creation. Accordingly, over the course of the year, we've intensified our focus on innovation and the customer experience. I'm excited at the results we're beginning to see. Just a few examples are ESAB's new Warrior product line, which was developed in record time with the support of our CBS accelerated product development tool. While we're pleased with the improved speed to market of the ESAB product development process, we're equally excited with the market's acceptance of the Warrior product line which includes user-driven features like improved set-up, easier operation and improved well-quality versus competition. We are also pleased with the project wins which Howden continues to chalk up, including an Australian coal mining order which was the largest contract the company has received in the last 15 years. None of our efforts will be successful without a world-class team. And I, together with our most senior leaders, spend a substantial portion of our time on this critical priority. Supporting this over the past year, we significantly strengthened our talent management process, which has resulted in nearly 20 internal promotions. In addition, we continue to attract top external talent and have added nearly 70 associates at the mid to senior levels of management. On key -- one key recent addition is Lynn Clark from Mead Johnson who joined our leadership team as our Senior Vice President, Global Human resources. So in short, 1 year into the transformation of Colfax, which as we said before will be a 3-year journey, we remain very excited about the future, both our opportunities to improve and grow the business organically and the opportunity to strengthen and expand our business through acquisition where the pipeline remains strong for each of our operating units. With that, I'll open it up for Q&A.

[Operator Instructions] Our first question comes from Nathan Jones of Stifel, Nicolaus. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: Can you start off talking about -- your revenue forecast for fluid for next year is a little bit lower than I thought it was going to be. Can you talk about what the main drivers are for the reduction in revenue in 2013 there?

Yes. I think, as we've been saying consistently over the last 3 or 4 quarters, the bookings level has simply dropped off a bit in the fluid-handling segment. And in light of the -- well, the level of backlog in that segment, we estimated revenues to fall within that range. If we were to get some pipeline orders or some improvement that we have not yet seen, we could perhaps be at the upper end of that range or even exceed it. But based on what we know today and the backlog that's in place, we think that would be a prudent estimate. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: Would cast iron be a big opportunity there?

That would be an opportunity, yes. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: And if I could just get a couple things on the guidance. The noncash portion of interest next year?

About $15 million. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: And your noncontrolling interest line, what are you forecasting to come in there?

Well, that's up a little bit due, as we've talked consistently, to strength in South Africa and China where we do have minority shareholders. And there is also a minority interest in the Soldexa business, so that's the -- that's only about 9%. That's the reason for the increase in noncontrolling interest. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And can you just talk about why the absorption in the fourth quarter was lower than you thought it was going to be, kind of what happened there?

I'll take the accounting estimate. I'll let Steve give the operational. We did -- we have been decreasing inventory since the first quarter. So our guidance expected a certain level of inventory reduction. Because we were able to successfully implement the demand pull technique, we were able to bring the inventory down by about twice as much as we originally planned. And in order to do that, we shut some plants earlier but -- we did some things to eliminate variable costs, but there was a certain level of fixed cost that flows through into the results. So that's the accounting end, so I'll let Steve give a little operational detail.

Yes, I think that -- as we've spoken on previous calls, specifically, Clay Kiefaber and his team have done a great job of using demand pull as a way of driving down inventory and improving responsiveness and service level. They were unbelievably successful within our Vamberk facility in the Czech Republic. They've accelerated the rollout of demand pull toward the fourth quarter and certainly will pick up additional momentum in the first part of 2013. So because of that success, we were able to drive out far more inventory, and as Scott mentioned, the loading on the facility was down below what we anticipated. We think that that's clearly the right thing to do. We believe that that's the right position to set ourselves up for 2013. We will always reduce our inventory and improve our free cash flow as best we can. And we think that's the right decision or the right trade-off to make. The next part of the question probably is, what do we think in terms of overall sales and how do we think about our manufacturing footprint in light of our flexibility and responsiveness? And one of the things that Clay and his team are doing -- in fact we're doing that in all of our businesses, is to continually examine and re-examine our manufacturing footprint. As we gain this flexibility, as we gain the responsiveness, we certainly have the opportunity to leverage more volume and, in the instance of ESAB, as you've seen already, to aggressively reduce that manufacturing footprint with 7 sites coming out in the last 9 months. So the key driver was our flexibility from demand pull. We took the trade-off consciously to experience a hit from an absorption standpoint, with the objective of improving free cash flow while improving service level. Nathan Jones - Stifel, Nicolaus & Co., Inc., Research Division: I agree that it's the right trade-off to make. Do you -- is there an anticipated impact from similar shutdowns in 2013?

That's factored into the guidance. There is a planned inventory reduction but it is factored into the guidance.

Our next question comes from Mike Halloran of Robert W. Baird. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: So could you just talk a little bit about how you're expecting the cost savings that you guys have anticipated to ramp through the year? Is that more back-end loaded, as it stands today? And just maybe a little thought on the progression there.

As we've said before, and I think I alluded to it in the comments, we've targeted a range of $55 million to $65 million. The projects that we've identified sort of fall into those broad buckets that I outlined before. Some of those projects, like the manufacturing restructuring, is well -- are well underway. In fact, most of those have been completed in 2012. Others, like the restructuring I spoke of in China, India, Europe, so forth, will continue on in 2013. So we really don't seasonalize that, but I think we'll see a stronger improvement in margin beginning in the third quarter and heading into fourth quarter as well. But we do expect to see that full impact in the fiscal 2013, of that $55 million to $65 million improvement. Slightly stronger in the third, stronger again in the fourth. Michael Halloran - Robert W. Baird & Co. Incorporated, Research Division: It makes sense. And then on the incremental margin assumptions, the 20% to 25% that you put in your 2013 guidance. When I think about the blended average, I would have thought something maybe a touch higher than that. So could you talk about what you view the sustainable incremental margins at -- are -- not necessarily for '13, but as you push through these restructuring initiatives, if you expect that to start tracking higher and any thoughts on that side?

We do. I mean, it's obviously dependent on the specific products expected to be sold in each division. I think -- looking on a post-restructuring, longer term, something in the higher 20s would probably be realistic.

Our next question comes from Jeff Hammond of KeyBanc Capital Market.

Just to follow-on on the maintenance question on fluid-handling. Is oil & gas the primary detractor within the end markets? I mean, it sounds like commercial marine, a little bit of growth; general industrial, kind of flattish; and power gen, generally pretty good. Is that right?

I think -- Jeff, I think that's a pretty good summary. We've continued to struggle in oil & gas all year long. It hasn't improved. We see some glimmers of improvement but nothing to really factor in to change our outlook. So we continue to believe that this is going to be a slow sector for us through most of the -- let's say, the first half of 2013. So unfortunately, that trend has been with us and we expect it'll continue at least for the next 6 months.

Okay. And then I was a little surprised at the 4% to 6% number for Howden just given that I think that's been talked about as kind of a high single-digit grower and just all the regulatory tailwinds. What's driving maybe a little more conservatism to that growth rate?

Well, we've scheduled the jobs out over the year. As you know, some of the Howden jobs take longer than 12 months to complete. And as Steve mentioned in the comments, on the fourth quarter, there were a couple of very large compressor jobs that got started a little later than we expected them to. So we're highly confident in that number, but having looked out at the schedule of jobs, that's a growth rate that we were comfortable we could achieve.

Okay, great. And then just finally, on fabrication technology. Can you maybe just go around the different global regions and talk about where you're seeing demand strength or demand weakness into '13, or any inflection points in the demand trends?

Well, I think, as we've alluded before, we don't get into the details on a market-by-market basis. And I think -- as I alluded before, I think that in fabrication technologies, we see the industry still falling in line with the local strength of the economy. So for us, if we look at it on a year-to-year basis, we've seen strong performance in the higher-growth or emerging markets, but that growth rate isn't as strong as it had previously been. So certainly, in Russia, South -- excuse me, South America, Africa, those regions continue to perform very well, with most of the other markets being sort of flat to slightly down. And we think that, as we get into 2013, we'll see somewhat of a continuation of that certainly through the first half of the year where it'll certainly be slower in the first quarter, certainly slower in the second quarter and perhaps a slight improvement in the back half. But at this point in time, we see things generally in line with what we saw in the fourth quarter.

Our next question is from Kevin Maczka of BB&T Capital Markets. Kevin R. Maczka - BB&T Capital Markets, Research Division: First, on footprint. You mentioned always evaluating it. And of course, you've taken some actions. You're closing 7 plants in '12. The new facility that you're opening, the consumables facility in the U.S., can you just talk a little bit more about that? We've talked a lot about reducing footprint with all the cost initiatives you have in ESAB, but what about future adds? Are there more of those that need to happen yet that we should expect in '13?

Yes, thanks, Kevin. That facility is -- that project began under the Charter leadership and was associated with the shutdown of our Ashtabula operation in Ohio. So that plant was up and running when the acquisition started. As we've pointed out several times before, the startup of that plant has not been a very smooth one. It frankly hurt us in North America in terms of our delivery. We certainly have lost some business as a result and have not been able to fully participate in the growth in the North American marketplace. I think we've been open about that, and that's just where we are today. However, we've improved the performance of that plant. And in talking with Clay and his team, they believe that we will be back on-track to meeting our demand on that particular site. So we've been able to get that plant back to where it needed to be. We think the shift from Ohio to our Midway facility will produce ultimately the kind of savings and benefits that were originally targeted. So we feel good about that. Answering the second part of your question, we are continuing to shift volume from different plants around the world, typically to lower-cost facilities wherever that may be. We don't see a lot of new construction on the horizon for our manufacturing sites. We have a very strong manufacturing footprint to begin with. And ideally, what you see with the benefits of CBS is that we're able to produce more product more efficiently and more effectively in the same footprint that we had a year ago. And so we're able to produce more and more products in the same footprint, so as the volume and the business grows, we're hopeful and believe that there will not be a significant investment in new manufacturing facilities. We do not see putting up a greenfield site for quite some time. Kevin R. Maczka - BB&T Capital Markets, Research Division: Okay...

Did that -- did I answer your question there, Kevin? Kevin R. Maczka - BB&T Capital Markets, Research Division: You did. That was helpful. Second question. You're ramping up, you mentioned, innovation. You're focusing more on that now. You're calling out the Warrior line specifically. I don't know if you can talk to that one specifically or not, but can you just kind of comment on new product innovation, new product introduction? What kind of contribution we ought to expect over the next year or a couple years from those type of efforts?

Yes. That -- the way we think about it is that, for ESAB, they have totally revamped their product development process. They've installed the accelerated product development tool that we use in the Colfax Business System. The Warrior product has gone over extremely well. We're having the -- certainly all the orders that we can take. It was launched into North America, South America and the Middle East. That product line will deliver a nice, healthy boost to the overall business. It carries with it solid margins being in the equipment side of the business. It's one of the first significant new products from ESAB in many years. What we've done now is to start to integrate our product planning to include consumables as well as our equipment. We think that there are opportunities to create unique value-added products when you bring our consumables and equipment together to provide an end-user experience that's vastly superior to his using of competitive equipment or using competitive consumables on our equipment. So we believe bundling our consumables and our equipment together, long term, will offer a unique value to the customer and an advantage to our competition. That's a major driver in our product development strategy that Ken Konopa and his team are leading. So we've focused on a couple things. One is speed to market; two, improving the quality of the voice of the customer integration with our product development process. I think, historically, ESAB had taken an approach where they design products from a fairly narrow perspective. In any -- many instances, it was sort of what we felt was right as a team of engineers, as opposed to integrating the end market and the end-user feedback to really drive those designs and drive our product planning. Under Ken Konopa's leadership…

No, we've pretty much forecasted what we think the overall markets will be in the regions we participate. We haven't factored a share gain into the guidance.

Kevin, what we've tried to do here is to build our plans for 2013 around an assumption that these markets don't improve and that our growth is minimal going into 2013. We want to deliver the operating improvements that we've described without the reliance on volumes. And so we're not counting on volumes to achieve these numbers. It certainly would help, but we're not counting on that. And we don't see a significant change in the pattern of growth that we've experienced in the 2012 -- or frankly, in the first -- fourth quarter of 2012.

Our next question comes from John Inch of Deutsche Bank.

So if we've taken all this working capital out, why are our variable contribution margins only 20% to 25%? Is that just because volumes are still pretty sluggish at 1% to 3%? Is that -- on an organic, basis, is that really the crux of the reason?

That's the major principle, as well as we're not finished with the working capital reduction. So we have factored that into this guidance, a continued inventory reduction next year as well.

Is that based, Scott, or Steve, on historical observation? Or is that just what you think you're going to do? I realize it's -- sometimes there's a bit of an art and science. I'm just trying to understand -- and I realize you're conservative. I'm just trying to understand the context of your guidance.

Well, no, we've -- it's not based on historical because ESAB does not historically have the track record of delivering this. This is based on the application of the CBS tools. And as I think we've tried to be very open about, we got off to bad start last year in the first quarter, but we've been making good improvement in working capital beginning with the second quarter of 2012, and we had a very strong fourth quarter. We expect to keep that momentum going and the incremental margin does include a continued expectation of that momentum going up. There is some seasonality to it. It's not going to be equal across every quarter, but we do expect a -- to have a significant inventory reduction in 2013 based on our plan and our CBS tools, not based on history.

And John, what we're doing is really changing a culture, which I think is what Scott's also mentioned there. And that is not only being able to brute force these improvements but to be able to do this quarter to quarter, every single time. And so as I mentioned, in the third quarter, we weren't happy with what we delivered in cash flow, and inventory was a major, major part of that. We really drove aggressively with CBS and we really went through a weekly series of meetings with every facility to look at those tools and how they were being used. And I would say that we saw significant improvement in the fourth quarter. I would say there's a-- it's a combination of both CBS and, frankly, still some brute force. As we get this further behind us, we continue to change the culture, we will see a culture where this just becomes a continuous way that we run the business. So we're getting there. We're not there yet, but there are certainly positive signs, I hope. As you see, with over $160 million in cash flow here, that's a pretty good start.

I don't disagree. Clay has been very optimistic, though, about the restructuring and profit upturn prospects at ESAB. Based on what you've seen thus far, I mean, could there be upside to the $55 million, $60 million -- $55 million, $65 million this year or even the long-term target?

Now, I'm sure, if Clay was here, he'd probably want to commit to over $100 million, but I think that $55 million to $65 million target in the next year is a good target, a stretch target, and I think Clay would reinforce that point. I believe we've targeted additional improvements in 2014 and '15. Keep that in mind, John. I think we've been in the neighborhood of another $70 million coming out after this. So that $55 million to $65 million is a robust target here this year. And we have another plus or minus $70 million to go in the next 2 years after that.

Yes, I would just reaffirm. I think that's a pretty balanced range. If everything went perfectly, we might do a little better than that. But realistically, everything doesn't hit on exactly the day you think it's going to hit. So I think it's a pretty balanced range.

What were your start-up costs in the quarter associated with Warrior? And are there incremental costs in '13 versus '12, again associated with this product?

Well, I think Steve gave some comments in the script that there's $3 million of costs along that nature, in which about half of that number is specific to Warrior.

Yes, I just meant -- but actually, my -- the context of my question was, were there other associated costs that were not perhaps direct costs of the $1.5 million? And then just, are there extra -- I don't know that you actually said this. Are there incremental costs in '13?

No is the answer to the '13. I think we tried to isolate the additional costs when we did that sequential quarter-to-quarter comparison. I'm sure we didn't get everything, but that should be the bulk of it.

My other just sort of last question is, here, did the quarter miss toward the end? I mean, the obvious sort of question is, if you exclude your -- the tax benefit, I mean [ph], why didn't you preannounce? And -- I don't know, I'm just -- you're trying to build a track record. Companies that tend to have very significant earnings beats or misses typically sort of preannounce. Is your philosophy not to do that? Or did things just sort of come together at the end of the quarter? How would you like to...

Well, I -- I mean, that's obviously a judgment call that -- you have to consider the facts and circumstances each time. We are on a 4-4-5 reporting cycle. December is obviously a key month to us. And we considered that and decided not to do it. Certainly, we like to be transparent with the market and keep everybody well informed, but we didn't feel the need to do that this time.

I'm sorry. I don't understand, Scott. You didn't feel the need because you thought things were going to be better as December played out? Or you didn't think $0.09 of miss was -- or whatever, $0.08, $0.09 of miss was enough?

No, I mean, we're obviously, as Steve said, not satisfied with that performance. We tried to get the information into the market as fast as we could. And when we had numbers that we were confident in, and we felt this was the appropriate course of action.

I think, John, in the future, as we go forward, when we have a miss of this magnitude, and as I alluded to that, we're -- we feel good about many of the things that we've done here. We feel that we're well positioned for 2013. We don't like the way that the fourth quarter ended for us. I think, in the future, we'll probably be able to communicate a little bit more if and when we have a miss of that magnitude. So philosophically, I think we're closer to that. As Scott points out, we want to be transparent. And well, we'll certainly be able to do more and more of that as we get into the next year.

Our next question comes from Jason Feldman of UBS.

Could you comment a little bit on your expected kind of use of cash this year? I think you've got nearly $500 million of cash in the balance sheet. Interest expense guidance is forecast only nominally declined relative to '12. I'm sure part of that is based on rates. But how do you think about balancing debt paydown this year versus M&A?

Well, I think we've been fairly open that we have a reasonably robust M&A pipeline. We are looking to do bolt-on acquisitions -- not transformational acquisitions but bolt-on acquisitions that we could do out of our cash flow. We can't really forecast acquisitions. Hopefully, there will be a reasonable split between how much of that cash will go towards acquisitions and how much of the cash will go towards debt paydown. So presumably, either one of those activities should be beneficial to the overall guidance. But since we -- and since we can't forecast the timing of acquisitions, we just let -- we didn't assume that either of those things would happen.

Okay, got it. So the $90 million interest expense assumption, and you gave us kind of the rate assumptions underlying that, assumes no incremental paydown this year?

It assumes only the required mandatory paydown, which is a small paydown on the term loan B. And we've prepaid a significant portion of the term loan A so the amortizations are reasonably minor. So I think there should be some upside there.

Okay. Now you've talked a couple of times in this call about kind of organic growth initiatives, new products, product development cycles and whatnot. When you think about funding those projects going forward, have you built into your guidance kind of a ramp-up or an increase in the amount of spending there? Is that one of the reasons why the incremental margins are kind of where they are? Or is that just kind of net [ph] of the cost savings? Or is there just kind of at a constant level relative to '12?

I think we've built that into our guidance already. And part of what we're doing, I think -- again, ESAB is a good example. They are aggressively examining the SG&A structure and made a number of reductions in that area, much of which will go toward improving our operating income margins here, but part of it will be redeployed in those areas where we can grow the business more aggressively. And we're redeploying those dollars, in some instances, both from a geographic standpoint where some markets have more opportunity than others, and so we're moving more investment into those areas. We're also focused on products like Warrior which seem to be going extremely well, and we're putting extra investment behind that. But that's included in the guidance that Scott has provided, and we're freeing up those dollars through leveraging CBS. We're freeing those dollars up by reductions in SG&A, and that's how that is sort of being funded.

Okay, that's helpful. And the lastly, I mean, I'm sure, once we get the 10-K, we'll get some details. But on pension, it sounds like, again, you're funding a fair amount of ongoing expense. How much of an EPS headwind in 2013 is the incremental pension expense itself?

There's no EPS headwind. The pension expense is very comparable for 2013 versus '12. As you know, there are significantly lower interest rates which essentially offset each other. They increase the level of the unfunded liability. But you then apply a lower interest rate against a larger target and you end up with fairly close to the same answer. So from a GAAP -- our plans are frozen, so interest is the largest component of cost. So there is no significant change in GAAP. The disclosure in the slide deck is for cash flow modeling purposes. We do have fundings greater than the GAAP expense. The numbers come down a little bit from last year as we had higher top-up payments in the U.K. in 2012, but due to the underfunded nature of the pension plans and the difference in funding assumptions versus GAAP earnings assumptions, there will be a cash flow headwind for pensions for the next few years.

Our next question comes from Joe Mondillo of Sidoti & Company. Joseph Mondillo - Sidoti & Company, LLC: Just the $55 million to $65 million of cost cuts, I was wondering if you could just break out how much of that is related to closing, consolidating facilities versus other costs. And also, the $70 million in the out years, how do you see that sort of playing out in '14 and '15?

First, on the $55 million to $65 million, we really have not -- we don't -- we haven't broken those savings out by project area. I think the bullet point list of activities that we're involved in are pretty good examples of the kind of projects that we're implementing and successfully executing. So that's the -- that's sort of where we're dealing with in terms of the external communication. In terms of the additional $70 million, we haven't really provided guidance on that. It's probably split almost evenly between those 2 years, but we're focused, for the most part, on the $55 million to $65 million that we're delivering in 2013. Joseph Mondillo - Sidoti & Company, LLC: Okay. And just in terms of the fab tech margins you saw in the fourth quarter, it seems like the sales were pretty comparable to the first quarter, and the operating margin was also very comparable. And I was sort of thinking that, given sort of the closing, consolidating and the cost cutting that you've already done throughout the year, that you might see some higher margin there. So I was just wondering if you could talk about that, and is it a product mix, or what's going on there?

I think we tried to cover that in the prepared remarks. We have a big difference in manufacturing activity. We had inventory build in the first quarter. We have a substantial inventory takedown in the fourth. We had those other costs that Steve mentioned in the first quarter -- I mean, in the fourth quarter. They were not there in the first. And those are the main differences. There aren't any other particularly significant items. Joseph Mondillo - Sidoti & Company, LLC: Okay. And those plant shutdowns, what's the status on those going into the first quarter?

Could you ask that one again, Joe? Joseph Mondillo - Sidoti & Company, LLC: The plant -- the temp plant shutdowns that you're seeing in the fourth quarter. What's the status there right now? And what's the expectation in the..

Yes, there were actually 7 plants that were closed. They're essentially complete. There's a final transition of Laxa into Poland, which is continuing to proceed, but that is really almost -- we've almost unwound that completely. I've talked about Midway, which is the other one. The Midway transition started earlier in the year, as I mentioned, under Charter. We've picked it up and it's been slow in coming up the curve. We think we'll eventually get the savings and the ongoing benefit associated with it, but it's been a pretty painful startup. So in the heart of your question, of the 7 facilities and transitions involved here, I think the team at ESAB has been a pretty good job. Six have been executed without any disruption to service level. They certainly are in the zone of -- delivered the kind of gains or improvements in the bottom line that we anticipated. So 7 sites done: 6 down and up, and the others that picked the volume up have come up very nicely; 1 that's a bit of a struggle but it'll be online here in 2013, in fact, towards the end of the first quarter. Joseph Mondillo - Sidoti & Company, LLC: Okay, great. And then just lastly, the corporate expense line, I don't know if you mentioned this, but was considerably lower than past quarters. What's going on there, and expectations going forward?

Yes, the prepared remarks did address that. We have acquisition costs that were transferred from corporate. We hold acquisition costs at corporate, not knowing whether a deal is going to succeed or not. Once the deal closes, we transfer that to the segment. And then we had some settlement and costs related to some legal matters that were less than previous accruals. So I don't think you should expect any significant change in our corporate run rate. The fourth quarter was abnormally low, for those 2 reasons. [Audio Gap]

Burke of Janney Capital.

On the power generation side. Both Howden and Colfax serve that vertical. Do you see continued strength in coal, particularly in China? Or are there any other areas that saw strength?

If we look at the coal markets, 2 things are going on there for us, as you probably remember from prior calls. When we look at our Howden business in terms of coal production, they -- power production, they are benefiting from environmentally-driven compliance, particularly in China. So that's had a very, very positive impact on the business. We're also seeing -- we've seen some new build activity in Southeast Asia and certainly a lot of great improvements in the maintenance side of things in South Africa. So those are the largest driver in what we've seen in the coal segment for power generation. We think the trends that we have experienced will generally be with us and continue into 2013. I think we highlighted on our last call, the forecast for a lot of the environmentally driven opportunities is that will go out through 2017, if I recall correctly, so significant opportunity not only in China but increasingly in the U.S. as well.

And on the fluid side, the pump business benefits from natural gas and combined cycle stations. So you have a little bit different dynamic. But we've had -- particularly here in the U.S., we've had positive demand in -- on the pump side as well. So that's been a very good end market for us, both in pumps and in the gas-handling.

Okay. And on fabrication technology, you mentioned South America was stronger. In some of your other emerging markets, are you seeing any price competition? Or has that eased up?

We've been -- I think that the team in ESAB has been pretty thoughtful in their strategy for pricing. And we were pretty aggressive with that in the spring of last year. We have not seen any pricing erosion in any of our key markets, at least thus far.

Our next question comes from Jim Krapfel of MorningStar.

What does your 2013 guidance assume for segment-level adjusted operating margins? And if you can't give numerical ranges, would it be correct to assume that fabrication technology sees the larger year-over-year advance given the large cost-reduction efforts there?

We do not give segment-by-segment guidance. However, if you look at Slide 35, which gives the detail, most of the organic growth is coming in the gas and fluid segment, and the specific cost actions are principally related to the fabrication technology segment. So I believe we've given you sufficient information that you should be able to come up with a reasonable estimate of that.

Jim -- the only thing I would add, Jim, is don't forget that we've talked about taking Howden from the high single-digits to mid-teens operating income and we feel comfortable with our ability to do that. Ian Brander leads that business and has put together a very compelling strategy to get there over the next 3 years. So the margin improvements are nearly as significant in going from the high single-digits to mid-teens on Howden as they are at ESAB going from the single digits, mid-single digits to low teens. So significant opportunities on both sides of the business, to be sure.

All right. And the second question was, to what extent does your relatively high exposure to Europe constraint your organic growth expectations for 2013? And generally, what are you seeing there?

Well, I'd challenge the premise to your question, to start with there. Our exposure to Western Europe is less than the Western Europe's contribution to worldwide GDP. So although Europe is a very important market for us, we do not feel that -- particularly on the developed portion, that we have any sort of overexposure. We do have an overexposure to Eastern Europe and Russia, which we believe to be positive. Growth-wise, Europe has been reasonably flat all year. We haven't seen any -- we don't have any expectation of that changing in 2013.

Our final question comes from Jeff Hammond of KeyBanc Capital Markets.

Guys, just -- you gave some good qualitative color on working capital and targets on '13 in the pension. Can you just give us a sense for how you're thinking about free cash flow for the year?

Well, we are thinking that working capital should contribute at least 1% of sales, as a contribution. The principal headwind is the pension funding. And then we do have about $30 million of restructuring plan, which is in the slide deck. So if -- those are the main nonoperational, or your nonprofit-related cash flow items. So I think the...

And the restructuring number, is it cash restructuring?

That's a P&L restructuring, but I think the cash number will be expected to be similar to that.

Thank you. I'm showing no further questions in the queue. I'll turn the call back to management for closing remarks.

Well, thanks, everybody, for attending. And we look forward to speaking with you again next quarter. Have a good day. Thank you.

Thank you. Ladies and gentlemen, this concludes the conference for today. You may all disconnect, and have a wonderful day.