Good morning. My name is Michael, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2011 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn today's conference over to Mr. Mike Mullin.

[Audio Gap] 2011 Earnings Conference Call. Today's call is being webcast with our earnings presentation via our website at flowserve.com. Simply click on the Investor Relations tab to access the webcast and the accompanying presentation. For those of you that are listening to today's call through our dial-in phone number and also wish to follow along with the earnings presentation slides via our website, please click on the Click Here to Listen Via Phone icon at the bottom of the Events Detail page. The webcast will be posted at flowserve.com for replay approximately 2 hours following the end of the call. The replay will stay on the site for on-demand review over the next few months. Joining us today are Mark Blinn, President and CEO of Flowserve; Tom Ferguson, President of the Flow Solutions Group; Tom Pajonas, President of the Flow Control Division; and Dick Guiltinan, Senior Vice President of Finance and Chief Accounting Officer. Following our commentary, we will begin the Q&A session. Regarding any forward-looking statements, I refer you to yesterday's earnings release and the 10-Q filing and today's earnings presentation slide deck for Flowserve's Safe Harbor statement on this topic. All of this information can be found on Flowserve's website under the Investor Relations section. I encourage you to read these statements carefully with respect to the conference call this morning. The information in this conference call, including all statements by management, plus our answers to questions related in any way to projections or any other forward-looking statements, are subject to Flowserve's Safe Harbor. Now I would like to turn it over to Mark to begin the formal presentation. Mark?

Thank you, Mike, and good morning, everyone. I am pleased with our solid third quarter performance, despite continuing challenging macroeconomic conditions. We had high revenues across each of our 3 business segments, improved our operating income and reported higher earnings per share over last year. We also posted double-digit growth in our bookings versus prior year as demand improved in several key markets. I thank our employees whose hard work played a significant role in our solid performance this quarter. Our short cycle business remains strong, with increased volume in the chemical, general industries and oil and gas markets and stable opportunities in our power markets. In our long cycle business, we saw a steady improvement with smaller projects, but the very large projects remain competitive. Although our long cycle business is stabilized, we continue to see some customers delay the release of certain large infrastructure projects, which we expect will ultimately go forward. Selective bidding on the large infrastructure projects, which have been released, has helped us firm up our pricing. We delivered record quarterly aftermarket bookings, underscoring the success of our end-user strategies, which are focused on supporting our customers' repair, service and upgrade needs. These strategies, which include our global QRC footprint, allow us to offer our customers' repair and upgrade services when and where those services are needed. Bottom line is that our focus on expanding our global QRC footprint and growing our service capabilities is paying off. Operating margins and overall profitability were up in the quarter as a result, in part, to our continued discipline in driving SG&A efficiency and controlling costs. One real success in this area has been the reduction of our corporate SG&A expenses. We were also pleased by the improvement we saw on our IPD operations where our recovery plan…

Thank you, Mark. Good morning, everyone. Our third quarter EPS of $1.92 per share included about $0.08 of negative currency effects, primarily related to cash flow hedges. Also included in the third quarter EPS is $0.02 from realignment costs. Offsetting these headwinds was a more favorable tax rate of 22.9% for the quarter. Our third quarter bookings grew 15.9% on a year-over-year basis. Looking at this growth more closely, original equipment bookings were up 12.9%. The original equipment increase reflects continued improvement in the short cycle OE markets, driven primarily by strength in the chemical, general and oil and gas industries. Bookings in the long cycle OE markets remain stable, reflective of both steady to improving smaller project activity and our increased selectivity and competitive large project activity. Aftermarket bookings of $488 million were up 20.3% year-over-year, representing a quarterly record for aftermarket bookings. These results, which were driven by continuing investment in our global QRC network, our growing due to greater Technical Services business and continuing successful execution of our end-user strategy, show how we continue to leverage our local presence to capture a larger share of this valuable business. Third quarter consolidated operating margin was 13.8%, representing an increase, both year-over-year and sequentially. These increases were driven by increased sales volumes from strength in our short cycle and aftermarket businesses, improvement in SG&A leverage and cost controls. These benefits more than offset revenues from a small number of large projects with very low margins, as well as negative currency effects on certain U.S. dollar denominated sales generated in our non-U.S. facilities. We have seen pricing trends firm in our short cycle businesses due to volume improvements and in our long cycle business due to increasingly selective bidding, which should provide additional margin support going forward. The book-to-bill ratio…

Thank you, Dick, and good morning. Flow Solutions Group grew bookings nicely in the third quarter by focusing on our end-user aftermarket strategies and strategic growth initiatives. The market opportunities continue to be mixed, with strong activity in most power markets, the chemical market and upstream oil and gas. The aftermarket opportunities remain strong, and we continue to redeploy resources to pursue these. Overall, the project business remains competitive and we continue to approach opportunities strategically in terms of balancing pricing discipline, project win rates and market share targets with factory loading considerations and long-term business considerations. And while large project pricing remains very competitive, we have seen stabilization in the pricing environment. We were pleased to announce the agreement to purchase Lawrence Pumps, which is a premium brand name in the oil and gas sector. Their products are well known for their reliability in harsh critical service applications. This is consistent with our strategy to grow and deliver value through bolt-on acquisitions. Lawrence Pumps will become part of the EPD portfolio. In our Industrial Product Division, we continue to gain momentum on bookings and sales and began to see improvement in operating margins. For the Engineered Products Division, Q3 bookings grew by about $70 million or 14%, with 19% growth in the aftermarket and 5% growth in original equipment, even with continued selectivity. Activity levels in our core market sectors were mixed as the chemical and general industry markets grew, as did the power market other than nuclear, which continues to experience weakness in new projects. We were pleased once again with our aftermarket business which continued to strengthen. Service and solutions opportunities continue to grow as our Integrated Solutions offerings have gained interest from customers focused on energy efficiency and operating cost reduction. Sales were up 12%, primarily…

Thanks, Tom, and good morning, everyone. This is Tom Pajonas, and I'm pleased to report another quarter of solid performance in the Flow Control Division. Very briefly on the financials, Q3 2011 bookings of $410 million were up over 22% versus prior period, with strong growth in chemical, oil and gas and general industries. Regional booking growth came from North America, Europe, in the Middle East and Asia Pacific. Q3 revenues were up almost 18% versus prior period, with strong growth in North America, in particular, Canada; Europe, specifically Russia; the Middle East; and India. Q3 operating income was up almost 40% versus prior period, with operating margins of over 17%. Gross margins were also up 130 basis points in this period. Backlog was $779 million at the end of Q3 2011, an increase of $84 million versus prior period 2010. The book-to-bill ratio in the third quarter was 1.11 following a strong book-to-bill ratio of 1.14 in Q2 and 1.12 in Q1. We remain committed to on-time delivery to our customers and achieved over 90% on this important metric for the third consecutive quarter. With the exception of the OEM customer channel, the EPC, end-user and distributer channels all grew in bookings and sales in Q3 2011 versus Q3 2010. All channels, including OEM, grew on a Q3 year-to-date basis versus prior year. Aftermarket bookings increased over 50% versus prior year to $66 million, while aftermarket sales for the division increased 25% over the same period. Overall, the Flow Control Division demonstrated its ability to be flexible in the current macro environment. In our industrial markets, the chemicals industry continued to see strong order growth in North America. Chemical distribution business was also up in North America. Much of the chemical growth again came from MRO, smaller selected capacity…

Thanks, Tom. Before we begin the Q&A, I would like to turn it back to Mark for a quick comment.

I wanted to update you on our search for a new CFO. As you know, last June, Dick Guiltinan announced his intention to retire in 2012. A few months ago, we began an external search for a new CFO. Our search is progressing well, and as we previously stated, we expect to conclude our search process by the end of 2011. I would like to publicly recognize Dick Guiltinan with deep appreciation for his continued service as our CFO in the interim. He is doing a very nice job of handling the CFO duties this year, with our strong financial organization and internal control group supporting him.

[Operator Instructions] Your first question comes from the line of Charlie Brady with BMO Capital Markets.

If you could just look at EPD business for a minute, and the gross margin there, the impact from large projects, those few projects flowing through, can you give us some idea of what the impact on the gross margin was, when those get kind of flushed through the backlog?

Charlie, let me -- you just hit a high level, just to be clear, and Dick can give you some more context. These are projects and we talked about in the choppy environment, we've seen really over the last 2 years, one of these was in '09, frankly, where we wanted to make sure we got this installed base for future aftermarket opportunities. So we have a couple of these that are coming through for ultimately delivery. And when they get delayed, it tends to push margins down. So as we talked about, we're expecting to get these things out, a lot of them at the end of the year and some into the first quarter of next year.

By the end of first quarter then, it sounds like the real low, low margin back -- project ought to be out of the backlog?

Well, as we talked about, you've seen on earlier releases, we haven't taken a lot of large ones in the last couple of quarters. Actually, the last big one we really talked about was the Yanbu refinery and that was -- it was competitively bid, but certainly a sole-source deal where it has great installed base from aftermarket and we were able to get our seals in on that project as well. So when we talk about what we're seeing in the environment around the selective bidding and just getting these projects through, I mean think about it, as you look over the last couple of years, our industry has cycled down. We were fairly disciplined, and these are the kind of things you see as you kind of work your way through the cycle. But to your point, some of these things that have been in our backlog for a while, we're getting out the door and moving on.

Okay. And, I guess, a similar question on IPD with the gross margin kind of down 20 bps, but you had a pretty substantial 400-basis point move towards the aftermarket in the quarter, and I guess I'm just trying to square that up. Generally, that ought to be pretty favorable to the margin. What's the disconnect there?

Charlie, the offset there is we did see an increase in material costs in IPD and that tended to offset the impact of the favorable mix.

And we didn't make a big deal out of this. We have one fairly large facility in IPD that does have dollar-denominated contracts with euro revenues. But for the most part, it's what Dick talked about.

And are you able to put through any pricing as we go into 2012 to offset those input costs?

Yes. You're seeing companies are ultimately able to match the price to the input cost as well. I think the most important thing as you look at their overall trends, Charlie, is as what Tom talked about, is getting the efficiency in the plants, getting the global supply chain processes intact and just keeping control of their cost. So our view is more of what you can see in the improvement of that is within our control than overall market driven.

All right. One more, I'll hop back in the queue here. On the EPD and IPD discussion, I didn't hear Latin America mentioned a whole lot. Can you give us an update on what's going on in Latin America with those 2 businesses? And then maybe an update on the Brazil factory that's in process.

I'll just tell you briefly and Tom can chime in. I mean there is a lot to talk about. Latin America has been certainly a great arena for us this year. We just want to try to keep our comments to the 30 minutes, frankly, but we've certainly seen good growth there. As you probably know, we've been there for a long time. So when you talk about emerging markets, Latin America is a frontier we've been at for many, many years. It's actually a lot of our -- we have some facilities that have been there over 50 years. India and China tend to be more new frontiers for us. So we have a very well-established management team and a lot of experienced folks down there. And we're certainly seeing -- we're really harvesting the opportunities. And a lot of that is being driven by the fact that we've taken that -- the aftermarket model we've talked about that was successful, particularly in the Gulf Coast region, and driving it down there and then expanding their product offering. And then that goes right to the Brazil plant. That's what our customer wanted down there. And as we've been building it, we expect to complete it, what, Tom, over the next couple of quarters?

Yes, next couple of quarters be fully open. And Mark covered it pretty well, but we are making investments in our facilities in Argentina and Mexico and Colombia, in both on the EPD and IPD side. And I think we're also expanding and continuing to expand our aftermarket capability in the region and focus on building out, as Mark said, the end-user focused model that we've had on for some time in North America and other parts of our business. We're really pushing that hard in Latin America.

And Charlie, I would add on the FCD side, with oil and gas business in Latin America increased versus prior quarter as well as the chemical. And then the pulp and paper business was also a good increase versus prior period for FCD.

Charlie, one other thing I'll add. It's important to note about Latin America and as we look at China and India and these emerging parts, we also not only design these to support the local markets, but we have a strategy where we also take -- have them support our other facilities around the world with more high-volume manufacturing, and what that does is allows those facilities to focus more on engineering assembly and test in some of the base manufacturing moves to some of these facilities. So when you look at that Rio facility, it's designed to offer a broad array of products to the local market where a local content is required, but it will also along with, as Tom talked about, our facility in Argentina and Mexico they will also be supporting our operations around the world to basically drive cost efficiency overall in our manufacturing throughput process.

Your next question comes from the line of Robert Barry with UBS.

You talked on the working capital slide about some specific action plans to ship projects by the end of the year. And just given you've called out many of these as kind of customer-driven delays, I was curious kind of how much control you feel you really have over getting them out the door.

Robert, there's clearly some customer-driven delays, but I think what we also tried to say is that we have some past due projects in backlog that we need to clear out and that there are also some issues around documentation within our control that we need to work through to satisfy final customer requirements. Those are the bulk of what we're dealing with and that is clearly within our control and program as we said earlier to work through during the fourth quarter.

Okay. And just sticking with the working capital, I mean, whenever you think about, say, call it year-to-date the degree to which it's gone up. It sounds like from your commentary that the vast majority of the growth in the working capital was related to growth in the business. Is that a fair statement or could you kind of bucket, kind of roughly speaking, the relative impact of the drivers, the business growth, the vendor delays, the customer delays?

I think it's fair to start by saying that, clearly, the strength of the growth in the short cycle and aftermarket businesses over the last several quarters is the primary driver. You can see that in our raw materials. You can see that because of the short cycle and our work in progress. Having said that, there is an element of past due backlog we need to clear. That's the other piece of kind of our inventory build, again all within our control. I think as we think about building in our accounts receivable, again that short cycle business really started to ramp up in the fourth quarter and we saw the bulk of the build in accounts receivable kind of first, second quarter as those orders started to flow through. So sales growth, I think, is a big piece of that. And as I said, the past due backlog is clearly the majority of that is going to go out the door.

And then just finally on FCD, that very significant growth in the aftermarket bookings, I think in the Q you might have also cited a large pulp and paper project. How much of that growth related to that one project, was there anything kind of unique driving that?

I would say the large pulp and paper project was a project in Latin America, driven by the cycle in that whole industry, which is increasing both in terms of Latin America as well as Southeast Asia and China, so that came across pretty good. We did see a growth, good growth in the MRO business overall for the division. A lot of that MRO business does go into the aftermarket business, and also MRO business increases in the nuclear side as they look at electric expansions and upgrades, as well as chemical MRO business was strong in North America in particular.

Robert, it's kind of worthwhile to take a step back and just look over our history, if you followed our company for years. We saw traction years ago in what was our seal business at that time in terms of aftermarket processes, built the infrastructure, more important built the capabilities around that. And then you saw the pump business, which was a separate segment a couple of years ago, get the traction as well. Both of those are now, in a sense, FSG and they're going. And now FCD is also able to leverage some of those process as well. So what you're seeing in general is that it's spreading across our business, a lot of these disciplines and capabilities, and we're able to leverage our overall platform.

Your next question comes from the line of Hamzah Mazari with Crédit Suisse. Hamzah Mazari - Crédit Suisse AG, Research Division: The first question is just a question on the aftermarket. Could you maybe talk about how much share you're gaining in that business and how much running room there is for you to service your own installed base that you're not doing right now, given what you've done in integration on the Flow Solutions side and the Quick Response Center buildout? Is there a way to tell how much are you gaining relative to how much is due to just the underlying demand or economy, if you will?

Well, as we've talked about the economy, demand has been relatively flat certainly in the mature markets. So the conclusion, a lot of that is penetration, really penetration and share gain. When we talk about that, our opportunity to capture more of our original equipment is being driven by our presence and our capabilities, and also where you're seeing the complexity of equipment migrate to. Clearly, and Tom talked about this on the last call, integrating pumps and seals, right, basically got a more unified face to the customer that can offer a broader set of solutions, and that's what customers are going to want. So that integration is really paying off in terms of the aftermarket penetration. So what you're seeing here in the growth is, I'd say, better penetration in the market, better presence in terms of our capabilities, leveraging our QRC network that we've talked about, and a lot of the strategies to capture more share of the customers' wallet around the aftermarket. When you talk about share, as we talked about before in many instances, the customer will service or repair the equipment themselves. There tend to be local machine shops and everything. And those tend to be our biggest competitors in terms of aftermarket opportunities. In the way we work with them, with the customers, is to make sure they know we're as responsive as their own shops can be and not only just look at repair but look at upgrade and efficiency opportunities as well. Also with, what I'd say the local competitors, they've been out there for a while. But as the equipment gets more complex and more critical in terms of the process, we do see increasingly that customers, if they don't service it themselves, would prefer that we service the equipment. So a long story to say there's an element of share from really the customer and to a certain degree the local machine shops. I think there's really around execution of strategy, leveraging the FSG platform overall, and it's just a big focus of ours. It's a focus around the way we approach these big projects as we've talked about before to get the installed base, work on getting sole-sourced, work on standardization with our customers. So there are a whole list of initiatives that we are doing and we are going to do that are designed to drive this aftermarket growth, and we've been really pleased with the results. Hamzah Mazari - Crédit Suisse AG, Research Division: That's very helpful. And the second question, if you could talk about how investors should be thinking about excess capacity right now in the marketplace, you've seen larger projects, margins got compressed. How do you think excess capacity gets absorbed over the next couple of years? What's your view there?

Well, my comments on the call when I talked about medium and long term, there's going to be more demand. And our view is that, that will -- that demand is going to consume capacity because, frankly, when we look at how we've laid out our capacity and we understand our competitors are very capable competitors, they're looking at that demand as well. So what they've done is plan the demand for those capacity -- for those project opportunities that are out there, so we estimate. And again, I made the comment earlier, this is what you see in the cycles in our business. And remember, this started to cycle down during the end of 2008 and a lot of that capacity, while there was some rationalized, there was some additional, I'd say, emerging market capacity that came on in 2009 and 2010. Now those emerging market areas had seen good growth, which have tapped some of that capacity. So I think as we look forward from here in terms of capacity is once the markets -- we keep an eye on what's going on in the eurozone and everything. I think the world sometimes is concerned that we might be in a situation back from 2008. But as that starts to clear, we're confident these projects will come online and take up capacity. Hamzah Mazari - Crédit Suisse AG, Research Division: Got you. And just the last question on capital allocation, you talked about not doing any large deals, if I heard correctly. Are there any further product gaps? I know you bought Lawrence and Valbart. Is there anything missing in your portfolio right now?

Well, there is -- certainly, there's product opportunities. It's a matter of whether we can get -- whether we want to develop them. I mean a good example is the ISO standard chemical pump which we developed. So when we evaluate product gaps, we're going to sit back and look at our portfolio, and we have a very broad portfolio in terms of the products that we offer, but always look for ways to enhance that product portfolio. And what that does is that gives us the ability to leverage our sales force as we talked about, our manufacturing. But more important, the more products we have on a project, especially like the Lawrence equipment is severe service, critical application equipment, where that, again to my comment earlier to you, the customer is going to look to us and say, we want you to take care of this because if it doesn't work efficiently or doesn't work at all, the facility has a problem. So as we talked about, these bolt-on opportunities, we'll continue to evaluate, but we'll evaluate them versus do we want to build them and what's the time to market. That was the example on Valbart, and we've seen good success on that acquisition, not only on what that product has been able to do. But keep in mind also, that pulled through quite a bit of control valves as well. And we expect Lawrence will be able to do that similarly. So that's the way we're going to evaluate the opportunities, traditional buy versus build, look for the growth opportunities. And really the goal at the end of the day is drive value through our entire company for the benefit of the shareholder.

Your next question comes from the line of Jamie Sullivan with RBC Capital Markets.

Last quarter, you talked about -- it seemed that there was some increasing confidence and visibility on projects being decisioned for new bookings. So just wondering given the macro over the last few months, if you've seen any change in customer behavior about decisions and their willingness to move forward.

What Tom talked about on the call is the nuclear. I think that's less macro and more around everybody is going to reevaluate the safety standards. The sense we're getting from talking not only to customers and externally is there may be some countries like Germany that we talked about that may move away from it. But in general, nuclear represents plus or minus 20% of the power supply. And they're not going to be able to diversify away from that over the short or medium term. So we do get the sense that they're going to go forward. But as you can imagine, everybody is going back and evaluating the safety standards, safety requirements, and we think, ultimately, that will benefit us in terms of being a top-tier supplier to the nuclear industry. In general, I don't think I mentioned on the call what's going on in the EU and other parts of the world. It's not that the projects that we see out there are immune from that, but it can cause folks to wait and see a short period of time. But frankly, when we take a step back and look at it, we know these projects need to come online. I mean, they are being driven ultimately, if you look through them completely, by population growth, aging infrastructure, energy independence, it's certainly what you're seeing in Brazil and the Middle East as well. You even heard the Middle East despite what you saw in the Arab Spring in Saudi, they've announced both upstream and downstream projects. So they will move forward. But people do keep an eye short term to see if, for example, what's going on in the EU can create any kind of short-term dislocation in the markets. That's why we certainly keep an eye on it. But I think it's very important that we continue to deploy our resources, be ready to respond in case something does occur, but be ready to deploy our resources as the projects come out.

Okay. And then just one more on Lawrence, I think when you closed the deal, you mentioned roughly $0.05 dilutive in the fourth quarter to the initial purchase accounting and step ups and whatnot. Is that still a good number to think about?

We said less than $0.05 is I think what we said. But we haven't -- we're going to close on it shortly. We got to close on it and do the purchase accounting.

Your next question comes from the line of Kevin Maczka with BB&T Capital Markets. Kevin R. Maczka - BB&T Capital Markets, Research Division: Mark, you mentioned the selective bidding a couple times on the call. I'm wondering if you can say a little bit more about that and how significant of a pricing and margin driver that might be. And I'm just wondering is that selectivity on your part in terms of choosing which projects you bid or is it selectivity on your customers' part in terms of who they allow to bid?

Well, our customers, and this serves us well, are always selective as to who they let bid, especially in a critical project and we think that's certainly an advantage. But the comment was more towards our selectivity. If you remember on the last call what I talked about, and if you think about, there is a cyclical nature of our business, is when you get into the environment that you saw in 2009 and 2010, there was a lot of competition for projects. And a lot of the primary focus is going to make sure you have your factories loaded and also to make sure you keep your eye on strategic projects that will ultimately bear some of the aftermarket and repair work that you ultimately want. Well, as things -- as you move through the cycle in our industry, what you can see is especially as the short cycle starts to build in the support of our aftermarket business, we've been able to take a step back. Also we have a more efficient platform as well. It's given us the ability to manage capacity -- certainly, our capacity with a long-term view and be more selective. And again, we have to watch these macroeconomic events, but typically you will see the trend -- these type of trends in the industry as they start to recover from cycles. Kevin R. Maczka - BB&T Capital Markets, Research Division: Got it. And a separate question on raw material costs. There were some commentary in the release and on the call about that. Can you give an update on that? I would imagine that's reversing for you now or will be shortly. And can you just update us on your supply-chain initiatives? I know that's a big part of your continuous improvement.

Well, let me start with the raw material costs. We did see some increases, but overall trends you would think would start to reverse over the next couple of quarters. And I think in our -- we particularly commented in IPD that those material costs over time should cycle through on the pricing side. On the supply chain...

I'll add some things. I mean, there's -- supply chains go through cycles as well and what you're seeing is a lot of our supply-chain effort and it's benefited us, has been around making sure we expedite because if you look at some of our supply base, they took capacity out as well, particularly when you look at castings and some of the large drivers in the industry and they're adjusting to the new environment. So a lot of our focus certainly this year has been around making sure we work on expediting so we can meet the lead time requirements that we have. And we talked about earlier that focus also is around making sure that we can manage this past due backlog. But in addition to that, we've also been focusing on improving the overall supply chain, and we're kind of reinvigorating our focus on that now as we do see some of the suppliers start to recover from their efforts in terms of making a more efficient platform. I think the other thing more important to note is if you look at the IPD business, one of the things we talked about last year around breaking it out was to bring -- take it from more of an, I would say, a custom-engineered model because this is engineered equipment in EPD, and start to leverage global processes. And one of those is the supply chain component themselves. And Tom mentioned he's got the leadership team in place, so that's one of the areas of focus. Again, these are things that are within our control, that we've had the heightened focus on is to start to drive the IPD improvements, give it those supply chain resources as well. And it's no small matter that in FSG they have a new supply chain leader in the organization. Real capable individual. As a matter of fact, he came over from the valve division. Talented guy.

And Kevin, I would add to what Mark says. A lot of effort going into supply or development, particularly in India and China. Southeast Asia also is an area that we're continuing to drive and certainly a lot of low-cost sourcing initiatives overall. And then, I would say successfully, we're going into some more value-added lean areas with the suppliers, as well as a lot of cycle time initiatives as that cycle time becomes more and more important to us in the future. Kevin R. Maczka - BB&T Capital Markets, Research Division: Okay. And then just finally for me, I guess yesterday, everybody got excited about again about global growth and IPD, that's your shortest cycle business. It's CapEx-driven. They had a strong quarter. Was there anything you saw there over the summer months or elsewhere that indicated any kind of slowing at all?

This is Tom Ferguson. Not really. We've seen good activity in the chemical sector and mining particularly. And those projects continue to move forward in the pipeline. So those are what are creating opportunities for us in IPD and a lot of our focus. The only thing that we haven't seen a lot of new spend on is in the water segment. That's been fairly quiet in terms of overall infrastructure spend. And we haven't seen a whole lot of new things going on there. But in terms of desalination, that's starting to -- or has been more active. Chemical has been more active, mining has been more active, and we haven't seen any signs over the summer that, that's changing.

Your next question comes from the line of Scott Graham with Jefferies. R. Scott Graham - Jefferies & Company, Inc., Research Division: I wanted to ask you about cash flow. It looked like you had an improvement this quarter versus the year ago quarter. But I also know you're far from satisfied there. There are 2 things seemingly affecting cash flow. One is sort of the management of some of these receivables. But certainly, I think the larger issue is more internal process with inventory and what have you. I was just wondering if you could kind of unbundle for us some of the things that you're doing on the inventory side, and I know that you guys are very big on productivity as well. And does it require more implementation of CIP before we get that inventory turn to improve or can the inventory turn improve more quickly?

Well, one of the things, I think Dick made the comment earlier that one of the biggest drivers on our working capital and cash flow has been the growth in our business, especially you know there's kind of a annual cycle to our business that we intend to build a lot of work and process and historically a lot got shipped towards the end of the year. I mean, having said that, and I think the other element that we talked about contributed has been some of the past due backlog which we're working to ship as well. So those are, I would say, the more current event-driven things around our business. Underneath that, absolutely, we're focused on the working capital side, which really is the big contributor to cash flow. Some of the things that Tom talked about around supply chain, and that is making sure that we have our suppliers well developed, so we know when to expect the casting or the motor. And that helps you manage your inventory levels more carefully as well. So in general, and we've talked about this before, when you have a book-to-bill greater than 1 overall in your business, that will tend to start burning your working capital as we've talked about. We have some projects -- a handful of projects that we've taken in over the last couple of years that are not only weighing on margins, but also we have inventory and work in process around them. And underneath that, as we mentioned, yes, we are definitely focused. And it's part of our operational excellence. I mean, it all fits together, making sure that we're focused on how we can get more efficiency overall in our cash flow as well. Just anecdotally, some of the other things, Scott, is back in the '07, '08 environment, you were able to command a lot of upfront cash on these projects. And we're actually able to still do that to a certain degree, but not to the level you could do back then. We talked about at that point sometimes they put 50% down to lock in a manufacturing slot. And that environment doesn't exist. R. Scott Graham - Jefferies & Company, Inc., Research Division: Fair enough. Let me ask this question maybe even more broadly. You guys are, I wouldn't say -- tuning may be too strong of a word, but it looks like the large project sort of penchant for the company has maybe given way a little bit to focus on smaller projects which are more profitable and what have you. I guess my question is, if we look back at that same period that you're referring to, Mark, we had a cash conversion of net income kind of in the 70% to 80% range typically. And I'm wondering if this change in the way we're booking or I should say the projects that we're booking, does that help that number or hurt that number?

On the cash conversion? R. Scott Graham - Jefferies & Company, Inc., Research Division: That's right.

Yes, I mean, all other things being equal, a shorter cycle, you should have more relative cash conversion. And it depends on what period you look over. I mean, we're sitting here at the third quarter and you got to look it over, over a rolling 4-quarter period. But typically shorter cycle, unless there's a big book to bill, a big build on it in which you've seen that, will tend to -- it converts to revenue and it's shorter cycle. It turns -- it returns the revenue and ultimately cash quicker. R. Scott Graham - Jefferies & Company, Inc., Research Division: Right. Would that mean then that maybe sometime in 2012 we can get sort of into the 80% to 100% conversion range, do you guys have an internal goal on that?

Well, we have a goal. It's an important part of our operating metrics and compensation program. So we absolutely do have a goal. I think a lot of that as we take a step back is going to be what the large project environment is at any given time. I mean, if you think about it, we have seen growth in aftermarket, we have seen growth in our shorter cycle. These large projects are still important because that's the installed base for the aftermarket. That also pulls through a lot of the short cycle business. There is certainly a link between EPD and IPD when we go and approach a project. So I do think they're all linked. But generally, what I can tell you is we talked about our focus. Building the backlog to support the business as our bookings grow and everything is good. It's good for our customers, but we need to focus on making sure we do that efficiently. One is to focus on our past due backlog. Second thing is also to focus on our operating metrics and supply-chain capability. So our goal is to increase the cash flow generation overall in our business. And just keep in mind that sometimes our cash flow is strongest related to net income when our book-to-bill is less than 1. And you saw that back 2009 and to a certain degree in 2010. If you kind of look through it when the book-to-bill goes below 1, it tends when you cycle down, your balance sheet starts to liquidate.

Your next question comes from the line of William Bremer with Maxim Group.

My question deals with your sequential improvement that I'm seeing on your operating margins, very, very nicely there. Given the fact that you've called out the fourth, first and second quarter coming on some of these larger projects coming to fruition, how should we look at the operating margins in the FSG segment going forward as these projects become realized?

Well, I mean, let me just give you some high-level views on Q4. Typically, historically, Q4 has been a large shipment quarter because we do -- there is this annual nature overall to our business cycle, and so you do see a lot of more original equipment go out at that point in time, but you also get fixed cost leverage. So those are kind of the balances is in our business. Also historically, you've seen the first quarter because Q4 historically has been a strong shipment month, tends to be lower shipment. So you get less fixed cost absorption, but you may get better mix profile overall in the business. I think, frankly, as you look overall in our business, we're focused on cost controls related to margins as well. We're focused on growing the aftermarket. One of the things that we've talked about is weight on margins is getting these projects we took. They were a handful of projects, strategic projects. They are going to bear aftermarket fruit. Getting them out of our backlog and then starting to realize the benefit of some of the pricing discipline that Tom talked about. And equally important, the growth in the short cycle business and very important in our aftermarket business. But we're really focused on making sure that we look across our SG&A and particularly our corporate cost to maintain efficiency as you've seen us do this year as our business has grown.

Mark, would you say you'll have more of an impact in the fourth quarter or still as you mentioned, you still have maybe in the first half see some of the realization there, the majority of which we're saying will be realized in the fourth quarter coming?

Majority of what? Dick?

I think you're referring to what we said about some of the large, the delayed -- large delayed projects that we said the majority of which will ship. And by majority which we do mean we expect the bulk of what's in that past due backlog to move through at the end of the quarter.

That's correct. And then one for Dick here. A little surprised with the tax rate here. I haven't seen the tax rate that low since the third quarter of '08. What should we be looking for, let's say, the balance of fiscal '11? And can you just give us a little more color on what regions impacted that tax rate so low in this quarter?

Yes, Bill, a couple of things. Normally, our foreign operations provide us with a benefit. In this quarter, we particularly, due to the mix of the jurisdictions, had a more favorable benefit than we normally have seen. That was part of it. Also part of that is related to some tax planning strategies that flowed through. And then the third piece of that is what we normally see from time to time is favorable resolution to tax matters or lapses of statutes a little bit heavier than maybe we've seen in the first couple of quarters, but that's because of the more favorable benefit on the foreign operations.

So Bill, just to highlight. 75% of our business is outside the United States and these -- particularly in the emerging areas, and they tend to have a much better tax profile than we do here. So as we generate more income in those areas, that tends to drive our reported tax rate down.

Your next question comes from the line of Jeff Beach with Stifel, Nicolaus. Jeffrey L. Beach - Stifel, Nicolaus & Co., Inc., Research Division: In the project pipeline that you're tracking right now, are you seeing any end markets that are showing increased activity so that as we look out into '12 there'll be another new 1 or 2 end markets that began to pick up in bookings and help this momentum forward?

Well, you'll get a couple of comments, but generally actually this year and I think you've heard other folks say it, Brazil actually dialed back a little bit on their spend mainly because of concerns over inflation, and also there's a lot of activity going on around the World Cup and the Olympics there. But we expect that to go forward, I mean, they -- if you remember last year, Petrobras issued a substantial amount of equity to buy reserves, and they need to realize the economics of those reserves. So we see that certainly as an opportunity in that region. And also, you're seeing with Russia start to invest as well overall. So as we look macro in our business, what we still think there's good repair and upgrade in United States and Europe, and we'll see how they move through. I mean, the news yesterday from the United States was somewhat encouraging, and you saw the markets how they responded overall. But as we look around the world, you see China with their increasing demand, demand for infrastructure and India as well, I think those markets are still supportive. Tom, do you have any...

I think Mark's covered the geographies pretty well, but I would also highlight that we like what's going on in the greener energy generation sectors like solar and biofuels and also geothermal. And then there's a lot of combined cycle activity on the power side as well, and we think that has to continue to grow. So that looks good. Desalination, there was kind of a lull in some of the spend there, but we see a lot of opportunities in that market. And then mining has continued to be active and looks like it will remain so. So when I look at some of the markets that aren't quite as core to us but that present opportunities, those are areas we've had a lot of development, product development for, and it's because we see long term, well, and even short- to intermediate-term opportunities. And then on the upstream oil and gas, there's a lot of spend. I would also highlight that on the downstream oil and gas side, China and India have been kind of quiet on the new activity. And that probably has to break loose at some point. So we continue to be very vigilant on those opportunities.

And just adding just a couple more broad categories. In the natural gas area, anything to do with gas to liquids is an area that a lot of people are looking at. Pipelines would be another area. And then certainly, the chemical business as it looks at that gas as a feedstock, both in the Middle East and China and elsewhere could be areas to look at.

We have now reached the allotted time for questions. I'd like to turn the call back to Mike Mullin for any closing remarks.

Thank you, Michael, and thank you, all, for joining us today.

Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.