Ladies and gentlemen, thank you for standing by. Welcome to the Eaton Second Quarter Earnings Call. At this time all participant lines are in a listen only mode, and later there'll be an opportunity for questions. As a reminder, today's conference is being recorded, and I'll now turn the floor over to Don Bullock.

Good morning. I'm Don Bullock, Eaton's Senior Vice President of Investor Relations. Thank you all for joining us for Eaton's second quarter 2015 earnings call. With me today are Sandy Cutler, Chairman and CEO and Rick Fearon, Vice Chairman and Chief Financial Officer. Our agenda today includes opening remarks by Sandy highlighting the performance in the second quarter along with our outlook for the remainder of 2015. As we've done on our past calls, we'll be taking questions at the end of Sandy's comment. The press release from today's earnings announcement this morning and the presentation we'll go through today have been posted on our website at www.eaton.com. Please note that both the press release and the presentation do include reconciliation to non-GAAP measures. A webcast of this call is accessible on our website and will be available for replay. Before we get started with Sandy's comments, I'd like to remind you that our comments today will include statements related to expected future results of the company and as such, are therefore forward-looking statements. Our actual results may differ materially from those in the forecast due to a number of risk factors and uncertainties that we've outlined in our earnings release and in the presentation. They're also covered in the 8-K. With that, I'll turn it over to Sandy for his comments.

Great. Thanks, Don, and thank you all for joining us this morning. I'm going to work from the earnings presentation which is posted on our investor page. But before I start through that packet, let me share a couple of overall comments. Our second quarter results we believe were solid and they're really highlighted by the very strong segment margins and terrific enterprise-wide cost control which allowed us to offset the originally higher – offset the what we had originally anticipated in terms of slightly higher volumes. You'll recall at the end of the first quarter, we had said that, when we looked into the second quarter, our guidance was based upon that volumes would step up about 4% from the first quarter to the second quarter, and in fact, they increased only about 3%. And in that guidance at the end of the first quarter, you may recall we had anticipated that the volumes on our Electrical business would then increase slightly further for the balance of the year beyond the second quarter, while we anticipated revenues in the Hydraulics, Aerospace and Vehicle businesses being pretty flat for the remainder of the year. That would be the second, third and fourth quarters. Well as you saw from our earnings packet, our bookings in the second quarter were disappointing in our Electrical, Hydraulics and Aerospace businesses, and as a result, we believe it reduces the likelihood of more robust revenue growth in the second half. And I'm talking here about revenue again, because there is a time difference between when we book orders and when we ship them. So in this context, we think that we're in an environment where cost control, operational excellence and structural cost reduction are really critical. And that has to be coupled with operational focus…

All right. Operator will give the instructions for the question and answers.

Thank you.

Our first question comes from Steve Winoker with Bernstein. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Thanks. Good morning, guys.

Morning, Steve. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Hey. Just a couple of questions. First, in terms of the acceleration that you're expecting, the 2% to 3% in Q3 relative to the down 1% in 2, and tough in Q1 and then the bookings deceleration. So where should investors count on that acceleration to take place?

Again, I would say 2% to 3% is not a big number to start with. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: It's all relative.

That's third quarter versus second quarter. Richard H. Fearon - Vice Chairman, Chief Financial & Planning Officer: It's from Q2 to Q3, sorry. Don't confuse that, Steve, with year-over-year. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Right. Okay. Okay, but where is the acceleration that you're – the 2% to 3% is just a sequential increase? Richard H. Fearon - Vice Chairman, Chief Financial & Planning Officer: Yeah. That's correct. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: What's your year-on-year?

Boy, I'd have to go look because you've got ForEx differences and all and that's why we focused on the – we gave our guidance for the second quarter based off the first quarter as well, and that's the same way we're providing this because the ForEx gets to be pretty confusing when you start to look at that year-to-year. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Okay, so, but basically you're just telling us that it's normal seasonality.

Correct. Richard H. Fearon - Vice Chairman, Chief Financial & Planning Officer: Yes. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Okay. And no acceleration?

No. I think, Steve, I think there is an element I think where there is some conflicting data out there generally, and others may have the same question and that would be in the U.S. nonresidential market. Because you did see, I think everyone saw the ABI index came out at 55 last month. Many people regard that as a predictor of the commercial side of nonresidential and that you may see the commercial side start to strengthen through here. You know that we use an index for nonresidential that also includes oil and gas and mining. Some do not do that. And so we do think you're going to see the nonresidential market for this year that doesn't include oil and mining probably go up between 4% and 5%. By the time you put in an anticipated 25% reduction in the oil and gas markets, those numbers become closer to 1%. So you may hear some very different numbers quoted by different people. It has a lot to do with what they include in their index. We do think the small project side has strengthened a little bit. But we don't see that this is an 8% to 9% nonresidential year not including oil and gas. Our view is that you do see ABI bounce around a little bit month-to-month. We too are encouraged but we really would like to see those orders getting placed and that wasn't our experience in the second quarter. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Right. And when you talk about initial thoughts on 2016 and expecting continued slow market growth, you're talking about growth that's consistent with where you're exiting 2015. Is that correct?

Well, we haven't put a specific number on it next year but it just, it feels like we're still in this global GDP condition that is similar to the full year this year. And as we look forward at this point, without putting a specific forecast on it, if you continue to see the U.S. grow kind of at rates like they are now and Europe more or less like it is, it's hard to point to other major economies that are going to accelerate. There are questions, obviously, in China. Everyone's got their own view of that. India is perhaps the one area that is accelerating but it doesn't have that big an effect on global GDP. And so it feels to us more like we're in a period of rather prolonged slower growth. And that's why we felt the right proactive action here is get structural cost out so that we can continue to grow EPS even if markets stay relatively slow. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: And that's at that normal 25% or 26% incremental margins that you would usually use or...

Yeah. We used 20% in our guidance this year. We haven't put a number on it next year, but I do think what you heard from us, obviously, is we think there's two big propellants of earning growth next year, the $130 million year-to-year that comes out of the additional savings for our restructuring plan and then lower restructuring plus Cooper. So we've got two big pluses going into next year. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Right. But excluding those, it's in that same 20% range.

Yeah. I think at this point it's a good number. We'll be able to tune it when we get into this fall. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Okay. And just lastly on the buyback, the 1% to 2% programmatic buyback, why not think about that in terms of a larger number, at least given where the stock has been earlier in that period, (33:17), or how are you thinking about that, Sandy?

And I think the way – and thanks for the question because it's one I think that's important to everyone who's a shareholder, is that at these kind of price levels, clearly our preference, or first priority is the share buyback. And so we always tune these things to kind of the value of our stock vis-à-vis what we can create in terms of value of the – with an acquisition. And that's why when I stated my kind of summary at the beginning, I said our priority is a commitment to maintaining a strong dividend. It's repurchasing shares both in the second half of this year and each year going forward and then, as a third priority, undertaking value-creating M&A. Steven E. Winoker - Sanford C. Bernstein & Co. LLC: Okay, great. That's helpful. I'll pass it on. Thanks.

Our next question comes from Nigel Coe with Morgan Stanley. Nigel Coe - Morgan Stanley & Co. LLC: Yeah. Thanks. Good morning, everyone.

Morning. Nigel Coe - Morgan Stanley & Co. LLC: So Sandy or Rick, I think the product margins obviously, Sandy, you mentioned that they were disappointing and you talked about the impact of the exchange problems and the inability to price against that. I'm wondering what actually improves in the second half of the year to get us from a 15% handle into an 18% handle for the back half of the year.

Yeah, I would say a couple things. One, a slight volume increase because these are products that have attractive margins on them. Our embedded is getting less as we're going – change is getting less as we're going through the year. And then third is, normally our peaks occur in the third quarter. And so that we would expect to have that kind of strong seasonal lift that has to do with some of the mix that occurs within the business. I'd say those are the three main items, because we'll continue to get synergy savings, but that's in both segments and in products. Nigel Coe - Morgan Stanley & Co. LLC: So it's richer mix combined with a waning FX headwind. Okay. Yep, yep. That's pretty clear. And then on Hydraulics, obviously you've taken another bite out of that one, but I'm wondering, is the down 6% to 8% enough given the order numbers? And if I run the numbers through my model, it implies that sales seem to stabilize at 2Q levels. And I'm wondering, normally we see sales down sequentially in 3Q and 4Q. So I'm wondering, is that appropriate given the fact that you mentioned that orders haven't stabilized yet?

Nigel, I think it's a very reasonable question. This has been a challenging one for us to get as well. So I'm not going to stand on a pulpit and tell you we know this one to a decimal point. Clearly we're spending a lot of time with our customers really trying to understand their order patterns and their degree of visibility. We were slightly encouraged that the ag piece, at least for a quarter, appeared to bottom. I'd like to see that for a few more quarters. We're not seeing that turnaround yet in global construction. And clearly the oil and gas side still is pretty tough in this area, because we're more exposed to fracking type of oil and gas here than we are in electrical. And clearly it's been pretty flattened, if you will. So our assumption is that we're going to be able to operate it at relatively similar volumes here for the balance of the year, but it's one that I wish we had a little bit better visibility to as well. Nigel Coe - Morgan Stanley & Co. LLC: That's fair enough. And then one final one, if I can. You've given us some good framework for 2016 in some of the non-operating items. One more might be pension and I'm kind of just talking about pension tailwind in 2016. And I'm wondering, do you have the data point if you snap the line today on pension? What would that tailwind be for 2016? Richard H. Fearon - Vice Chairman, Chief Financial & Planning Officer: Well, Nigel, I'll jump in. It's a little bit hard this early in the year to make an estimate, because it does very much depend upon the discount rate. And the discount rate is, depending on Fed action over the next several months, may well change. I will tell you just to give you a couple of data points, we did end the second quarter at 88% funded in our U.S. plan, so pretty nice level of funding. And that is a help, of course, as you look at expense for next year. So modestly optimistic signs about lower expense next year, but it's really too early to make a precise forecast. Nigel Coe - Morgan Stanley & Co. LLC: Okay. Fair enough. Thanks a lot.

Our next question comes from Ann Duignan with JPMorgan.

Hi. Good morning. First, maybe, Sandy, you could give us some color on your outlook for the remainder of the year, maybe into next year but break out Electrical Products versus Electrical Systems & Services.

Yeah, see I think that when you get within, let me just start on Electrical Systems & Services, because there are a number of different businesses within that. And if we think about our view of markets as to what's going on, we continue to see on the utility side that that's a pretty flattish market at this point. I think you're hearing fairly similar numbers from, and I'm not talking about the transmission side. I'm talking about primarily the distribution side here. And I think you're hearing those from others. On the harsh and hazardous sides of the market, and not all of our Crouse-Hinds business is harsh and hazardous, but that portion which is really in and around oil and gas, we continue to think oil and gas is like a negative 25 marketplace. That's very much where we started off the year. Industrial, we think really two very different things going on with industrial. There are some very, very large industrial projects going on. Those tend to be around liquid gas. Some of these projects are some of the biggest projects that have been seen in the U.S. in many, many years. But all the electrical for them has not yet been awarded. So you're seeing some of these projects show up in big construction put in place numbers, but the actual awards haven't been made yet. And so we think the numbers are getting pushed around. So I'd say on the very, very big projects, there are a couple of really big ones. But then if you get to the industrial MRO and the machine builder, that's where we describe the industrial malaise is still very much in place and seeing markets, individual segments kind of 0% to 1% in those areas. So that's one of…

Wow, yeah. Good color, Sandy, because I was just curious about the very large manufacturing infrastructure build that's going on and whether you'd seen any orders in that sector yet. But are those orders on the up-and-coming, you think, into 2016? They just lag the actual construction? Is that the way we should think about it?

Well I think two things, and thanks for the follow-up, because it's very much on point, is that some of those have been awarded. The largest portion of them have not yet been awarded, but then the second issue is that even if they're awarded in the third quarter, those very big projects may be nine months to a year or a little longer before they get shipped. So those big projects will not have an impact upon 2015 shipments. There'll be much more of an issue of middle of or second half of 2016.

Okay. Thank you. And just a quick follow-up then on the restructuring. Could you at least – I know you're not willing to give us guidance by segment, and I appreciate that. Could you give us some feel for what percent of the cost in savings will be in the segment line items and what percent you think might be in the corporate line item? Could you break it down that way for us?

Well, the segments themselves will – it's about three-tenths of 1% is how that net of cost and benefits this year will reduce segment profits this year. I think on the corporate side, it'll be largely self-liquidating this year, that the benefits will offset the costs. And so I think that's about where to think about it for this year. Richard H. Fearon - Vice Chairman, Chief Financial & Planning Officer: Well, essentially, Ann, all of the net cost will end up in the segments given that the corporate is basically neutral after the savings.

Okay. I appreciate the color. Thank you. I'll get back in queue.

Yup.

Our next question comes from Eli Lustgarten with Longbow.

Good morning, everyone.

Morning, Eli.

Let me get some clarification. Sandy, during your presentation you gave us $130 million savings and restructuring $115 from Cooper. That was a net $0.45 for 2016. That excludes the ongoing $50 million to $60 million restructuring costs, is that how you're looking at that?

Yes. It does exclude it because in that calculation, I netted the restructuring of next year plus the $25 million against the restructuring this year. So that is a net-net number. Correct.

Yeah. And the reason you have restructuring that impacts the segment which is typically – we've always been Xing them out in some form – this is plant disruptions and plant closings and stuff that really affects operations that you can't exclude and that because it affects the business. Is that the reason why we have to include it in that business?

Well, our restructuring costs we've always included right in the segments. We don't break them out in our financials. It's only the acquisition integration charges that we break out separately. So this runs right through our operating costs.

Okay. Okay. And one other clarification. The $48 million in corporate costs is down, like, $15 million or something like that. Is that the new run rate for the rest of the year or does it go back up to $60 million plus, or... Richard H. Fearon - Vice Chairman, Chief Financial & Planning Officer: If you look at the guidance we've given, Eli, we think it'll go up a little bit and that's consistent with the – we gave you guidance on corporate pension interest and general corp going down $10 million to $30 million. But it will still be a run rate that is better than – it's certainly better than last year, and frankly, a little bit better than the first quarter.

Okay. Going back to the question that Ann had on electrical businesses, you gave us the breakdown. Is it basically the Electrical Products organic growth at probably 2% or 3% positive, and Electrical Systems & Services is like -3% organic growth or so? Is that the best way to look at those two businesses as you look out for the year?

Boy, we'd have to break that for you once more, because we try to really provide that guidance together because they're a little difficult, the markets going forward to bust them apart, but the products will be higher obviously than the segment, and we would think that the markets in electrical S&S will be negative, slightly negative this year, whereas Electrical Products will be slightly positive. I think that's not a bad way to think about it, Eli.

And then my final question, in hydraulics you kept the margin forecast the same, but with the lower volume and the uncertainties have you, is that actions you've already taken that give you confidence that the margins will stay – will actually improve in the second half of the year to get you into that range, or...

Yeah, we were pleased with our margins in the second quarter and I think it reflects the traction of the team really working very hard on that, and with the additional actions we'll be taking, that's what gives us our best shot is we think this is about where they'll settle for the year.

All right. Thank you very much.

Yep. Thanks, Eli.

Our next question comes from Julian Mitchell with Credit Suisse. Julian C. H. Mitchell - Credit Suisse Securities (USA) LLC (Broker): Thanks. I'll keep the questions brief. Firstly just on, you talked about the need for a corporation to react to an ongoing low growth environment and the restructuring is obviously part of that. I just wondered how you could talk about the portfolio in that same light around dealing with low growth. I think you talked about cutting some activities at the very beginning. Also obviously, the balance sheet is now available to use for M&A. So maybe talk about the portfolio in the context of low growth.

Yeah, I'd say that I think our thinking there is A, number one, it's about the cost control, operational excellence, and cash generation. So I think those are the three upfront pieces. I think we were fairly clear this morning that we see in terms of the discretionary use of cash, the first calls are the dividend and share re-buyback. And so in that context, I would then say, what are we then going to do in terms of continuing review of portfolio. And that is an ongoing activity we have within the company. Some of the things that we will discontinue in the company in terms of individual activities will be areas where we feel we're not creating value. So no portfolio transformation announcements to make, but I'd say we're working on that tuning as part of this as well. Julian C. H. Mitchell - Credit Suisse Securities (USA) LLC (Broker): Thanks. And then just circling back to Electrical Products, EBIT, if we just – I realize quarters, different things move around. But if we just look at the first half overall for the Electrical Products group, sales were down about $80 million, EBIT's down about $40 million. And I think that FX translation and transaction as well as Cooper synergies net off against each other, they're $20 million, $25 million each for the half. So maybe just try and explain exactly what is going on in Electrical Products. Is it something about pricing? I realize there's a slight mix hit from lighting, but that shouldn't be big enough to cause a 50% incremental margin.

It's two issues on the mix. You correctly note the lighting, but equally, or more powerful is the fact that the industrial MRO activity is very weak and those products carry significantly higher margins than the average, nor lighting, which lighting being below the average. Those are the big ones that really hit it. Julian C. H. Mitchell - Credit Suisse Securities (USA) LLC (Broker): Okay. Thank you.

Our next question comes from Robert McCarthy with Stifel. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Good morning everyone.

Morning. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Yeah I guess, Sandy, kind of dovetailing off some of the others' comments, and you might not be able to answer this question, but clearly you're battening the hatches in terms of the incremental restructuring, the cut, the 20% cut to CapEx. When did you kind of arrive at this? And did it change your overall conveyance of what capital your capital allocation plan was? Obviously not in terms of details because you can't share that, but just in terms of substance and philosophy, do you think it changed over the past 45 days?

I think a number of people, as we've listened to other calls too, have asked the question about momentum during the quarter and I think this sort of gets to that subject as well. And I'd say the big momentum change in the quarter was that I think some parties came out of the first quarter encouraged with the relative strength in March versus the strength in January and February. We cautioned not to get overly enthused about March because in many ways we thought March was a recovery for a very poor January and February. We saw April come out feeling very much in line with what our caution had been, that it didn't continue the very strong surge that we had seen in the month of March and May was a fairly weak month in terms of bookings. And we've seen that across the industries we participate in. I think with that view that the economy did not feel like it was accelerating, there's a fair amount of choppy economic data that's been coming in from around the world. That's what really – and then obviously watching our own bookings, led us to believe that we're not going to see a year in 2015 of significantly strengthening economic activity in the second half. And so that really, I think was our clue that it was time to think about the alternative plan for the year and that's very much what we had in hand in terms of a restructuring program. Having said that, that doesn't mean that we don't think there's potential, obviously, in these markets over time, but we do think that you can't go through a period where the economy is sort of stalling a bit, and I'm talking globally here, without taking cost out. And that's why we're committed to take prompt action to take cost out because we think it both protects margin, it guards against any further downside and it sets up, we think, a very attractive 2016. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Related to that point, I think in the past in terms of your public pronouncements and meetings with investors, you talked about just the strong core cash generation you particularly expect, particularly going into 2016. And I don't want to throw numbers out there but clearly, a pretty sizable number that can be used for ample capital redeployment. How does that view change given what you've seen now? And then two other related questions to that, really quickly, is just how do you think about M&A given the bid-ask in this environment versus your own stock price, and then how about succession just given the fact that we could be in a very volatile environment for the next 12 to 18 months?

We don't necessarily see great volatility because I think that is not what has typified the last couple years. In this lower growth environment, you tend to have less volatility. And so I would say I think our view is more that we're in a period of prolonged slow growth that does put pressure on cost. That's why we're taking the actions that we're in. We did obviously cut back our CapEx by $100 million because we wanted to ensure that our cash flow would decline only by about $200 million, and that's not enough to really move our plans one way or another. So we think we're well within that band of flexibility to put our plans in place. But once again, we think the prudent position in these kind of marketplaces is to be sure you've got a team that really can execute on cost, that can really execute on deliveries and getting all the key product introductions done on time, and that you can really deploy cash into ensuring that you've got strong returns for your shareholders. And in these kinds of markets, we think a 4% to 5% annual return to shareholders is very powerful and that's why we've put this plan in place. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: And then just succession, and just talk about your own stock price versus prevailing M&A deals because the problem is, you're dealing with an environment where the multiples have started to be fairly robust in what could be a pronounced cyclical rollover here.

Yeah, and I think our record has been one of being careful on pricing. And again, I tried to be pretty clear in my introductory comments that as we think about these three uses of cash, after we do R&D and after we do capital expenditures to grow and maintain the business and assure we have safe workplaces, we remain committed to a strong dividend. Second, repurchasing shares, and that starts, as I said, in the second half of this year. And then the third priority is the M&A, and that is very much the way we think about it and I think it's pronounced when you see our share price in the low $60s. It's pretty clear which one's our priority in that regard. Robert Paul McCarthy - Stifel, Nicolaus & Co., Inc.: Thanks for your time.

The next question comes from Jeff Hammond with KeyBanc.

Hey. Good morning, guys.

Morning, Jeff.

Sandy, I just want to drill down on the distributor orders and hydraulics and all the commentary about industrial MRO, and can you just speak to maybe the level of destocking you're hearing about, how long you're hearing that lasts, and maybe just more broadly, why all that – why we're seeing such weakness there?

Yeah, I think whether we talk in the Electrical business or we talk in the industrial business, and I'll speak to the – or the Hydraulics business. I don't think it's as much a huge destock as that people just have not really rebuilt deep inventories and they're not going to at this point. I think they see it, as well, as a slow growth marketplace. I think the piece that has probably surprised people more than anything else, and you really started to hear about it the end of the first quarter, is this lack of industrial MRO spending. And we hear it from partner after partner after partner, from – whether it be in Hydraulics or whether it be in Electrical, I'd say that's the piece of the market. And people have different theories as to why, whether this is related to machine builders not exporting as much because of the currency differential, whether it's just concern at this point, whether it's the fact the economy's not growing hard enough, really, to be pushing equipment for renewal and utilization. But that's the side of the business that is much slower than we would've anticipated it would be.

Okay. Helpful. Thanks.

Our next question comes from John Inch with Deutsche Bank.

Good morning, everyone.

How you doing John?

Morning. So we did – I guess we had originally planned to do $40 million of restructuring in Hydraulics and we did $15 million. And so I'm just trying to understand here. The incremental restructuring, did you guys – was the idea that Hydraulics restructuring was not structural so have you replaced that program with the new restructuring numbers? I don't know if I'm being clear, but the $120 million is obviously inclusive of the extra $25 million we were including. Is that not correct? And then is there a mix sort of in terms of how you're restructuring within the Hydraulics segment?

Yeah. Let me address Hydraulics first, is that no significant change in what we were and are doing in Hydraulics. And we've been working obviously on trying to get the business properly sized for what we think has been a weaker market conditions that weren't going to go away. So I'd say no change there, John, in terms of what we're trying to get done. And the reason we broke the $15 million out for everyone's benefit today is that we wanted you to be able to get a feel for what the full year restructuring in the company was for 2015 so you'd be able to compare it to the prospective run rate in 2016. But no, I'd say the Hydraulics what we plan to do in Hydraulics is within that $120 million. We've never said exactly what it was going to be but we tried to provide some ranges for people.

And so, Sandy, is the extra $80 million, is that proportionately spread? I apologize if you said this before. Or did you sort of take Hydraulics as a template and spread it into the other businesses then?

No. Each business has got its own priorities and areas where we thought we needed to address structural cost, and that's true at the corporate level. So I'd say what is common and what we're trying to do in all the businesses and the corporate areas is really get at structural costs, because we're not as interested in a variable cost reduction. We're really looking to take a layer of cost out that doesn't creep back into the business as volumes come back.

Yep. And then just to go back to the organic growth comments for the year, so we were pretty flat in the first half. You're thinking the year is now flat to up a little bit, but do you think the third quarter – I realize your comment's sequential versus year-over-year, but you have said the third quarter's up 2% to 3%. So does that imply the fourth quarter is flat to possibly down? And I realize there's a very slightly tougher compare, or is there anything beyond seasonality to read into the fourth quarter trend?

No, and we think that the fourth quarter's likely to look a lot like the third quarter on a sequential basis, not a year-to-year basis, so that you step up this kind of 2% to 3% in the third and then generally the fourth quarter is close or just a little bit less than the third quarter.

Just lastly then, the capital allocation for M&A, Sandy. All of this is sort of a free cash flow capital allocation. What are your thoughts toward possibly raising that debt if opportunistically some acquisition opportunities were to come along? We're starting to see that a little bit with a couple of your peers, so would you rule that out until you're paying off this Cooper debt or possibly would you think about possibly raising some debt to do a larger deal in the second half?

Yeah, we've got a $600 million debt payment in November of this year and we're committed to make that payment. Frankly, if we were going to be working on some deal, the likelihood that it would close in the near-term is fairly low. So I think it really gets to be more of an issue of in early 2016 would we prospectively look at some other financing alternatives. And I'd say honestly, that would depend upon the quality of the opportunity. We obviously have got the ability to do that but, again, our top priorities here, again, are maintaining a strong dividend and having this 4% to 5% annual return to shareholders and then once we can do all of that, it's looking at the M&A alternatives.

Got it. Okay. Thanks, guys. Appreciate it.

I recognize this morning we have a number of earnings releases. So we're going to have time on the call for one more question and at that point in time we'll be available afterward to answer any follow-up questions. Our next question is from Shannon O'Callaghan with UBS.

Morning, guys.

Morning.

Hey. One just quick follow-up kind of on Julian's question a little bit. I mean we're going to have, I guess, Electrical profit down this year even with the $115 million of Cooper synergies and I understand the points around FX and mix. I'm just wondering if – I just want to make sure we're actually getting the FX hit right. I mean, do you have what that impact is to this year? That's one part of it. And then also in terms of this mix dynamic, I mean, do you see anything changing that? It seems like lighting probably is going to continue outgrow industrial MRO for a while. So just maybe some thoughts on anything that could change that mix. Richard H. Fearon - Vice Chairman, Chief Financial & Planning Officer: As I think Sandy commented, Shannon, other than the normal sequential uptick the mix is not likely to change dramatically and we don't have a detailed forecast on FX by segment for the whole year. I mean it's pretty darn hard to forecast it for the quarter coming up just given all of the volatility. But I would expect that you're going to see, as we've said, overall a decline of about 5% due to FX so you can roughly back into that based upon the first half.

Yeah. I just didn't know if you were getting an extra high level of margin hit or something like that, but that's fine. In terms of Vehicle going from sort of 4% first half, flat second half, maybe just a little more commentary on the dynamics there. Thanks.

Well the big – as we mentioned at the end of last quarter is there are some years in which the North American heavy-duty truck market is either accelerating or decelerating quarter-to-quarter. We had thought this year would be relatively flat. It looks like a little bit more volume got pulled into the second quarter and so the third and fourth quarter will actually be lower activity levels there than it was in the second quarter. On the North American light vehicle marketplace, fairly flattish as you look through this year, obviously at very attractive levels. And then I guess the market many people have been keeping their eye on right now is the Chinese market in terms of having seen the month-to-month volume crack here in the last month in terms of light vehicle so when we put it all together and of course we've talked about South America probably enough that we see the volumes being relatively flattish as we go through the back half of this year.

Okay. Great. Thanks.

I want to thank you all for joining us on the call this morning. As always, we will be available to take follow-up questions after the call. Thank you very much.