Good morning, everyone. My name is Sarah, and I'll be the conference operator today. At this time, I'd like to welcome you all to the Lear Corporation Second Quarter Earnings Conference Call. [Operator Instructions] I'd now like to turn the call over to our host, Ed Lowenfeld, Vice President of Investor Relations. You may begin your conference.

Thank you, Sarah. Good morning, everyone, and thank you for joining us for our second quarter 2012 earnings call. Our earnings press release was filed this morning with the Securities and Exchange Commission, and materials for earnings call are posted on our website, lear.com, through the Investor Relations link. Today's presenters are Matt Simoncini, President and CEO; and Jeff Vanneste, Chief Financial Officer. Also participating on the call are several other members of Lear's leadership team. Before we begin, I'd like to remind you that during the call, we will be making forward-looking statements that are subject to risks and uncertainties. Some of the factors that could impact our future results are described in the slide titled Investor Information at the beginning of the investor presentation materials and also on our SEC filings. In addition, we will be referring to certain non-GAAP financial measures. Additional information regarding these measures can be found in the slides labeled Non-GAAP Financial Information, also at the end of the presentation materials. Slide #3 shows the agenda for today's review. First, Matt Simoncini will provide a company overview. Next, Jeff Vanneste will cover our second quarter financial results and 2012 outlook, then Matt Simoncini will have some wrap-up comments. Following the formal presentation, we will be happy to take your questions. Now please turn to Slide #4, and I'll hand it over to Matt.

Great. Thanks, Ed. Great job with the forward-looking statements. We had a solid quarter of operating performance despite challenging industry conditions in Europe. Sales in the second quarter were $3.7 billion, unchanged from a year ago, reflecting lower production in Europe and a weaker euro, offset by higher production in other major markets. Excluding impact of foreign exchange, sales would have increased by 5%. Core operating earnings were $197 million, down from a year ago, reflecting higher costs associated with the backlog and infrastructure costs in emerging markets. While business conditions in Europe are challenging, our European operations remain solidly profitable in the second quarter. Our Electrical business continues its rapid growth and achieved record quarterly sales of $872 million in the second quarter. Adjusted margins improved to 6.8% as the business continues to benefit from greater scale and previous restructuring actions. We continue to return cash to shareholders through dividends and share repurchases. Since the beginning of last year, we've returned almost $500 million to shareholders through these programs. At the same time, we continue to invest in strengthening our core businesses by expanding component capabilities in emerging markets. Since the beginning of 2010, we've added new component capacity in 11 low-cost countries or emerging markets. We estimate that we will invest approximately $300 million in these activities through the end of 2012. On May 31, we completed the acquisition of Guilford Mills. Guilford adds global fabric design and development resources, as well as technical expertise to our existing seat fabric and cover capabilities. We believe this will not only strengthen our current Seating business, but will provide additional growth opportunities. Slide #5 shows the continuing trend of sales growth and performance improvements in our EPMS segment. Several key drivers have enabled this business to increase sales, profits and…

Thanks, Matt. Slide 8 provides the financial highlights for the second quarter. Business conditions in Europe were challenging in the second quarter. European industry production was down 9%, and the euro weakened by 11%. In North America and Japan, production was up 27% and 68%, respectively, largely reflecting volume recovery by the Japanese manufacturers following last year's supply chain disruptions. On a global basis, industry production was up 11%, including a 16% increase in China. Lear sales were $3.7 billion, flat with a year ago. Excluding the impact of foreign exchange, Lear's sales in the quarter were up 5%. Core operating earnings were $197 million, down 13% from a year ago. The decrease in earnings primarily reflects increased product and facility launch costs, higher program development costs associated with the backlog and selling price reduction, partially offset by new business and operating performance improvements. Free cash flow was $49 million in the quarter. We ended the quarter with cash of $1.3 billion, reflecting the purchase of Guilford, which was funded with cash. Our reported EPS was $1.45 per share. On the next few slides, I'll cover our second quarter results in more detail. Slide 9 shows vehicle production on our key markets for the second quarter. In the quarter, global vehicle production was 19.9 million units, up 11% from 2011. As mentioned previously, the year-over-year production increase was largely driven by increases in Japan, North America and China, which were partially offset by production decreases in Europe. Slide 10 shows our financial results for the second quarter of 2012. As previously mentioned, sales were flat at $3.7 billion. In Europe, adjusting for foreign exchange, our sales were down 7% compared with a decline of 9% in industry production. Pretax income before equity income, interest and other was $190 million, down…

Thanks, Jeff. Great job. We continue to deliver solid financial results despite challenging market conditions in Europe. Looking at our 2 business segments, we continue to forecast margins in the 6.5% to 7% range. Electrical business will continue its trend of improving year-over-year sales and margins. In Seating, we expect margins in the second half of 2012 to be consistent with the first half, and we continue to win business in both segments. The expansion of our component capabilities will strengthen our core businesses and position Lear for profitable growth. The Guilford acquisition will complement these activities in Seating by strengthening our world-class seat cover business and providing additional capabilities in fabric design and manufacturing. Our strong balance sheet and solid operating performance provides us the ability to continue to invest in the business, return cash to shareholders and take advantage of any market opportunity. In closing, I want to welcome the Guilford employees to Lear. You're joining a great team and we're happy to welcome you to our family. I also want to thank all our employees for all their hard work and dedication. I recognize the personal demands of providing world-class product and outstanding customer service, while continuing to grow and expand our businesses. Keep up the good work. With that, I'd be happy take your questions.

[Operator Instructions] Your first question comes from Rod Lache, Deutsche Bank.

Just had -- first, a couple of housekeeping things. Just to confirm, is the updated FX guidance now $700 million headwind, up from $500 million? And can you give us a feel for what commodities and product development and launch headwinds were this quarter, what your update is for the full year?

The FX, based on the revised guidance, provides a headwind on FX on a full year basis of about $650 million.

From a commodity standpoint, Jeff, do you have the exact headwinds?

The headwinds on commodity on the copper side, copper has been lower on a year-over-year basis. And as such, our earnings reflect roughly $2 million to $3 million of benefit on the copper side. On the Seating side of the business, both steel and resin costs were higher in the quarter on a year-over-year basis. Cumulatively, those 2 were about $6 million to $7 million.

And what's your expectation for the year?

For the year, on copper, we continue to see some improvement and -- on a year-over-year basis. And on the steel and resin side, we continue to forecast some year-over-year decline in performance based on those prices.

And you made some comments in your prepared remarks about Seating returning its cost of capital at the 6.5% to 7% margin. I was just hoping you can talk a little bit about what your longer-term expectations are beyond this year for that business. I think, historically, you had a target of getting north of 7%. Is that something that you would anticipate happening anytime soon? Or is that something that, with the launch activities you've got next year and pricing environment, would be a little bit more challenging?

Rod, I don't want to get into giving margins out for next year, really, because of the uncertainty in the production environment. That being said, what we'd expect this business to do is provide returns in excess of its cost of capital. That's going to be dependent upon the type of business we're winning, the type of business that's launching and obviously, the production on our platforms to level Lear content and the investment to provide those programs. Just to round it out a little bit more, If it's a build-to-print program, that typically takes less upfront engineering and therefore, probably demands or commands a lower margin in the marketplace. On the other hand, structures business, mechanisms business, a little bit more capital intensive and usually requires more engineering that would require a higher margin in order to return. So really, it comes down to the programs you're on, the level of vertical integration and whether those are build to print and whether Lear is design responsible.

Your next question comes from John Murphy, Bank of America Merrill Lynch.

A question on the European business. I mean, we hear a lot of companies really ringing the alarm bell on potential risks in Europe, and I know you guys are highlighting the potential for volume risk there. But it seems like your business is performing well. You mentioned it's solidly profitable. I'm just curious how you are able to sort of sidestep some of the other risks that we're hearing from other companies or the pressures we're hearing from other companies. And when you talk about Europe being profitable, is it in the same ballpark as North America?

Well, it's -- it really depends. I'll start with the ending question, Murph. It really depends on the 2 segments. In Seating, we've historically performed a little bit less than the target margins and little bit more than North America. Really, it's more a function of the vertical, the level of vertical integration, which is higher in North America. In Electrical, we performed at or above target margins. And really, again, it's a more mature business in Electrical than in Europe and in North America and it has a higher level of vertical integration, so that drives the margins. Overall, Europe, for us, has been in the 4% or 5% operating margin range, and that's actually slightly down from last year but still slightly profitable. I can't really speak to others and why they're not profitable. Our business there is, I think, positioned well. We've invested quite a bit in improving the footprint and getting our components into lower-cost manufacturing locations.

That's very helpful. Second question, you've been highlighting launch costs as a pressure for a while. I'm just curious, as we look forward, there's a lot more product activity coming over in the next few years. Are we going to continue to hear about launch costs being a headwind? Or at some point, do we just get up to this steady state of high-level launches and on a year-over-year basis, it'll normalize. I was just trying to understand if that will ever happen.

Theoretically, if the backlog decreases, launch cost and launch activity would decrease as well, obviously. For now, the cadence of our backlog is pretty consistent over the next several years. I would expect the launch activity to continue. To us, the other driver of this is, as we expand our capabilities in emerging markets, there's infrastructure costs as you establish facilities that may not be completely utilized, management teams in those regions to support the sales growth. I think those factors, coupled with program development costs, are what you're seeing in the business. Now year-over-year, do we expect it to be incremental? I would say no, Murph, but you would still expect the level to be fairly consistent over the next several years.

Okay, that's helpful. And then on the Guilford acquisition. At this point, are you guys doing all of your own seat covers? And how much is Guilford doing of your current seat covers? And can you just really shut down all external sourcing now that you've gotten Guilford?

No, it's -- not quite. I'd like to do all our seat covers. I think we have a best-in-class cut and sew operations and the lowest possible footprint. I think it's a competitive advantage that we have. Adding fabric, I think, enhances some of the front-end design that we can do to create value and improve the quality of the seat covers. That component, however, is directed both the fabric and the seat cover, in many cases, independent of the seat award from our customers. Right now, I would say roughly, I don't know, 10% of Guilford sales are to Lear. We'd like to penetrate it more, and I think the way to do that is going to be a bit longer term, Murph, but it's going to require us winning the business independent.

Okay. And then lastly, I mean, you guys are performing fairly well in a tough environment here on an operating basis and generating cash. You're buying back shares, you're paying a dividend, you're making what appears to be some pretty good smaller bolt-on acquisitions that aren't too disruptive. Matt, what else do you think you can do sort of operationally and executionally to get more people interested in the investment in the company, or potentially move the company forward? Because it seems like you're almost firing on all cylinders right now.

Well, I appreciate the compliment. We've had a pretty active dialogue with the investment community, trying to articulate our strategy and explain our value equation. In the end, all we can do is keep our head down, work very, very hard at the fundamentals of the business, look for investment opportunities, which we're doing, try to create value by returning cash to shareholders, because we believe the long-term value of this corporation. And hopefully, we get recognized for that and the valuation takes care of itself.

Your next question comes from Itay Michaeli of Citigroup.

I was hoping you can comment on just the overall booking activity, if you're seeing any deferrals in the pipeline. And also, are you still launching the same amount of backlog that you last disclosed when you updated it? Or has that moved around at all, just given the macro environment?

No, it really hasn't. It's very unlike the last downturn in '09 when you had a lot of programs that were delayed. And if anything, the launch cadence in the programs are shortening and launching faster. There's been really no delay or program delays that I'm aware of. Everything is launching on schedule. The volumes may be a little bit lower, particularly in Europe. But no, there has not been any program delays and no change in the launch cadence.

And how about just the overall booking and quoting activity?

It's been great. Quoting activity has been very, very active. And our business wins have been consistent, if not a little bit higher, than our recent pace.

That's great. And then just on the full year guidance, the EBIT range is still about $50 million wide. You've got a very stable result from the first half of the year. Can you share kind of what put you at the high end versus the low end? Is there maybe a little bit of cushion at the low end for production? Just any thoughts on that.

Yes. Really, it comes down to the -- when there's literally thousands of inputs that go into setting guidance, but the biggest one is the volume on the car lines that we're on. And with the uncertainty in the market mainly in Europe right now, that's why we thought it'd be prudent to keep a relatively wide range even though we're 6 months into the year.

Great. Terrific. And then just lastly on Guilford. You mentioned some of the integration as a potential margin improvement initiative. Can you maybe quantify that a little bit? How much can that contribute to the seat margin? And is that more of a second half of 2012 or 2013 tailwind for you guys?

I really don't see it driving just because of the sheer size of it. Driving a margin expansion in Seating, the -- I think it contributes to Seating at the seat margins, right now 6.5% to 7%. There's always opportunities to create value with an acquisition. Our focus on Guilford really was more to drive growth and use it as a platform for growth and add -- get in the design stages of the seat covers and drive that type of performance. So it's really been more on a growth perspective than a cost reduction.

Your next question comes from Ryan Brinkman, JPMorgan. Ryan Brinkman - JP Morgan Chase & Co, Research Division: The sequential decremental margins that you had in the second quarter in Seating, I think I could calculate that at about 19%, not adjusting for FX. Is that pretty much what we should model going forward, if Europe tracks worse than expected? Or do you think there are things you can do to keep decremental smaller than that?

No. I think in the short term, you're going to look at, depending upon the platform, the region anywhere between, let's say, 15% to 20% on a short-term volume reduction. We're always looking for ways to offset it, but we have to balance that with the long-term profitability and making sure that our program development targets are met and our milestones are met and that the plants are ready to launch. The vast majority of our component facilities are running still towards the upper end of capacity in our low-cost countries. However, the just-in-time seat assembly business is typically located right next to a customer's manufacturing facility. It's a little bit harder there to reduce costs. Our engineering, I think we're pretty lean on our program development costs. There's not a whole lot of opportunity to improve that number in the short term. Longer term, if this looks like a sustained downturn, and by that, let's say, over several years, then we would take actions to restructure the business. Ryan Brinkman - JP Morgan Chase & Co, Research Division: Great, that's really helpful. And then I would just ask 2. I'm curious how you think about your -- the potential for your business, as GM rolls out it's new full-sized pickups next year. IHS Automotive is looking for just a very small 3% increase in the combined GMT900 and K2xx, maybe up 1% in 2014. Do you think that there's actually more opportunity for you there for volumes as it relates to your Seating business, given your history of involvement with this program? Just your understanding of the competitiveness of the upcoming product.

Well, if history's any indicator, normally, when a new program is launched and refreshed and redesigned, it usually gets a bounce in the marketplace as its new product. And we've seen that with the new Ford large truck platform. And I expect to see the same thing for the replacement large truck program at General Motors. It's a great-looking vehicle, great design, and I think it has the best seats in the world. Ryan Brinkman - JP Morgan Chase & Co, Research Division: I'm sure it does. Just very last question. On the backlog -- you got so much lot backlog coming on Electrical. How should we think about the cadence of that in 3Q and 4Q just sort of continue to ramp quarter after quarter? Or how should we think about that?

It actually steps up in quarters 3 and 4 from the activity that we had, so it almost doubles in the back half of the year from what we saw in the first half in Electrical.

Your next question comes from Joseph Spak of RBC.

The -- I just wanted to focus on the cash flow. Although you maintained the free cash flow guidance, it implies a much bigger step-up in the second half. Is that mostly working capital release? Or can you give some additional color there?

Well, I think that's the big part of it, in that working capital is estimated to be a source of cash in the second half of the year versus the first half of the year. There is obviously a bunch of components that go into it. Part of it is Guilford and both on the cash flow standpoint and the CapEx standpoint. But generally speaking, I think one of the big drivers is working capital.

And was there an impact on working capital in the quarter from the acquisition?

It's relatively minor.

Okay. Did -- and just following up on the backlog. Appreciate the color on EPMS. Is Seating still fairly evenly split? Or should it decelerate a little bit from what you guys saw in the first half?

It steps down a little bit in third quarter. But first half and second half, it's pretty even.

Okay. And then last one, is there any update on the tax valuation reversals? Should we still expect that to occur in 2013?

I have here our expert in tax, Mr. Bill McLaughlin, our VP of Tax.

Yes. We still expect the valuation allowance to be reversed this year in the second half.

In the second half. And then you'd start accruing closer to the 30%, right?

Yes. 2013, we would see approximately 30%.

Your next question comes from Chris Ceraso of Crédit Suisse. Christopher J. Ceraso - Crédit Suisse AG, Research Division: So you said that you expect seating margins in the back half to be pretty comparable to the first half. Are there some headwinds that go away? Because I would think that seasonally, Q3 would be a bit weaker and then Q4, I think GM is taking a fair amount of downtime on the full-sized SUVs, which I know are important for you. So help me bridge that. How do we get second half margins that are comparable to the first?

Well, really, it's the mix of the product. I think that seasonality plays into it, but also fourth quarter is normally a fairly strong quarter for us as we get a full year cost reduction then that offsets for some of the commercial activities that -- and assistance that we've given our customers. So if you look at the normal seasonality in that segment, you usually see a pretty strong fourth quarter. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Okay. And then you mentioned in your comments, Matt, that there were other opportunities for growth from Guilford. Can expand on that? What were you talking about there?

Well, I really think if we can get in on the front end of the design of the covers and it always starts -- seats covers always starts with the design of the fabric. And as we're in the design studios with the fabric, I think that is a natural progression into the cutting and sewing of the seat covers. So I think what it could do is provide additional opportunities on that segment. We have a well-established business with a great footprint on the cutting and sewing of the seat covers. And getting in on the front end of this, especially in Europe, I think would provide opportunities to grow that subsegment. Christopher J. Ceraso - Crédit Suisse AG, Research Division: So if you're involved at the front end with the fabric, you suspect that you'll be awarded more cut and sew business. Is that what you're saying?

Absolutely, because I also think, besides the design side of it, we can actually improve the quality and the cost of the fabric by milling both sizes to the most efficient manner of cutting. And so I think the combination really could provide a lot of value to our customers.

Your next question comes from Aditya Oberoi of Goldman Sachs.

So I have one housekeeping question on your CapEx. You guys increased the guidance by $10 million. Is it a pull forward of some of the CapEx? Or is it like new in opportunities that you've explored during the quarter?

No. It's really quite simple. It's the addition of the Guilford acquisition.

Okay, okay, great. And secondly, I know, Jeff, you mentioned some price reductions, that weighed on seating margins in the quarter. Was there something abnormal? Or is it just the standard to 1% to 2% price reduction that you give to your customers?

No. There was nothing abnormal that went on in the quarter. I think pretty standard to what we've seen historically.

Great. And on your backlog, typically, you guys update your 3-year backlog during the midyear earnings. Any specific reason why that slide was missing this time around?

No, not really. I mean, we've done it -- we did it last year, but normally, we only update it once a year and that was usually in the January auto show in Detroit. There's really -- I don't think a whole lot of thought that went into it, although we expect that we are continuing to win business in both segments. It's at a pace that actually is slightly ahead of what we've done the last several years, but I wouldn't read too much into it.

Okay, that's helpful. And finally, on your M&A, does the strategy still remains focused on $300 million to $500 million range in terms of acquisition size? Or are you guys are like looking at bigger deals as well?

Well, we always have our ears to the ground on all sizes of deals. We don't think there is a major one out there that really would provide value to Lear Corporation. Most of the, I think, the potential -- or the vast majority of the potential combinations that are out there, acquisitions that are out there are more in the niche category. And I -- quite frankly, I don't think we need a significant acquisition. I think the business is well placed. All segments are well placed.

Your next question comes from Emmanuel Rosner of CLSA. Emmanuel Rosner - Credit Agricole Securities (USA) Inc., Research Division: I have a follow-up question to your backlog on -- your comments on backlog. During the last quarter conference call, I think during the Q&A you had implied that the 2012 backlog for Electrical was now just $425 million and that would have been down from, I think, about $600 million that you had indicated back at the Detroit auto show. Is there any update on this? Did I understand that well?

A little bit off on the math. We see it more around $450 million. And the decrease at the time is -- really was driven mainly by the change in the FX assumption as we've seen the euro pull back.

Okay. So the way it stands right now is still around $450 million?

That's correct.

Okay. And then regarding the large reversal of valuation allowance in the equity income line, you mentioned that it has to do with a large non-core JV. So is that your IAC interiors joint venture? And if so, what does the reversal mean for the profitably there, if anything?

Well, I think it is IAC. And intuitively, that tells me that if it's the north, it's the U.S. side of the equation that took the valuation allowance adjustment and that tells me that there's some improvements in earnings, not only this year but historically, as you measure that. You guys should measure the ability to take the valuation allowance down. So there's some improvement in U.S. seemingly in that joint venture. Emmanuel Rosner - Credit Agricole Securities (USA) Inc., Research Division: All right. That's good news. My understanding is that there's also some element of forward-looking assumption in general for that move. Is that right? Like, do you basically expect better profitability to continue?

Yes. That's part of the rationale that needs to go into the decision to reverse the valuation allowance.

Your next question comes from Colin Langan of UBS.

I apologize if I missed this. Any color on the Guilford? What it's adding to your guidance for the full year in terms of sales and core operating earnings?

Yes. It's roughly $200 million in sales at margins consistent with the seat margins of 6.5% to 7%.

Okay. And just -- you just recently did a debt repurchase. What is the logic of that versus doing a share repurchase given where your stock is? I mean, why the -- why taking out the debt since you're net cash anyway?

Well, there's a lot of different alternatives for utilizing our cash. In the case of the bond repurchase, the return on investment is certain and we'll save about $5 million annually in interest expense. We don't think that action stops us from doing other actions that also create value.

Okay, that's fair. So just another question. On the other expense line item, I know it's a little bit small but a little bit higher this quarter, I guess it was around $14 million, what was driving that high? And is that an abnormally high run rate? Or should we be modeling in something similar going forward?

It's really attributable primarily to the FX changes, and it really relates to the various loans that are intercompany to Lear and the impact of that, that's on those loans.

Okay. So this will be a onetime revaluation so it wouldn't be ongoing?

Based on the current FX rate, yes.

Your next question comes from Brian Johnson of Barclays.

I want to talk a bit more strategically about the drivers of revenue margin improvement in EPMS. If you kind of think about the business and kind of 3 rough buckets in the year -- if you had better buckets that you think about, feel free to recast the answer of kind of core wiring harness then connectors and then other sort of more electrical inverters, converters into the box product line. Just a couple questions. How much of the backlog would be in each of those 3 categories? And is the margin improvement coming from more business at the end of the wires? Or is it coming from more scale and profitability in the core wiring harness component of it? And roughly kind of, because it's probably a bit of both, what would be the impact of each of those?

Right. We really don't look at the business in those subcomponents although, obviously, they're different and have different assemblies. The reality is, for us, when we look at that segment, Brian, we've drifted it down and rationalized the product line to be Electrical Distribution Power and Signal Management. When we look at the returns and how the returns are being driven, it's really scaled in all 3 of the subcomponents of Electrical Distribution. We're winning business in all 3, although from just a pure size stand, we're probably smallest in the connectors business. Each has its own kind of financial DNA. Wire harnesses are less capital intensive. But in order to design a neural network of a vehicle, you need to have a lot of upfront investment. So really, the improvement came from having a more competitive footprint, not only in wire harnesses, but also in a lot of the junction box and electronic modules that we do, which we now manufacture in Mexico and Northern Africa. Our wiring business has probably one of the best footprints in the industry and that's the result of all the restructuring that we've done. That, coupled with the business being under scale in 2009, when we had revenues of $2 billion, we had roughly 20% fixed cost. That came because of our continued investment in the footprint, as well as our continued investment in high power. Now that we're finally starting to get our critical mass up to $3.5 billion and closer to $4 billion, you're seeing the returns that we should have in that 7-plus percent margin. So in short, we really don't look at it by subcategory. We look at it as a complete kind of component, Electrical Distribution, because that's how we design our products.

And you seem -- a competitor recently bought a private equity owned connector business. Is that -- you had bought one, I think, several years ago in Europe.

Right.

Is that a business you're looking to get more scale in? Or are you sort of more focusing on the power management and other -- in wiring harness?

No, we looked hard at FCI. And we have made an acquisition back in, I think, 2004, of the old Grote & Hartmann business in Europe, which provided specialty connector systems and high-end electrical distribution with premium customers. And it's been very successful for us and gave us a nice kick in that segment. For us, in the end, the value equation didn't make sense on that acquisition. It is a product that I think has the value and -- but, from our standpoint, we think a better solution for us is organic investment, and we're actively expanding our capabilities in connectors from a manufacturing design standpoint, mainly in Asia at this point.

Our next question comes from Ravi Shanker of Morgan Stanley.

Matt, you said earlier that your seating margins going forward will depend on how much the business is full sourced from you guys versus how much is designed by the OEM and just contracted out to you guys. Do you see a huge shift in that mix going forward? Or do you think it remains pretty stable?

No, it's pretty stable. I mean -- first off, it's a combination of whether or not you're design responsibility -- responsible, but it's also the level of vertical integration that you have, Ravi. So if you're making the structures, the foam, the seat covers, obviously, there's additional capital that's required. That factors in as well on the margins of a program. Customer-direct sourcing of components is nothing new. It's been going on for a long time. It's more prevalent in Europe than it is in North America and in Asia. I think that the customer designing various aspects or having a company-wide solution or taking responsibility for the design is also not new. That's been probably in the industry for a while. And to us, when we look at the business and the margins and whether or not a program make sense for us, we really look at it on a return on investment basis as opposed to the margins.

Great. And a follow-up question on M&A and the connectors business. Do you see any potential targets out there that would be an attractive fit with you guys? Are you still, like you said, focused on just growing the business organically?

There are smaller connector businesses that are out there, none of which are formally for sale at this point, but we keep an active evaluation and dialogue with some of those companies. In the end, it really comes down to whether they have the technology and the catalog and whether the valuation makes sense from an investor perspective or if we're better off, just in many cases, expanding our organic capabilities. So there are ones that are out there, none with the size of FCI, however.

Okay. And finally, can you just update us with what your assumption for the GMT900 production is for the year?

Roughly 1 million units on a full year basis.

Your next question comes from Adam Brooks of Sidoti & Company. Adam Brooks - Sidoti & Company, LLC: Just a few quick questions here. If we look at the CapEx run rate over the next few years, is it fair to assume this is the new norm of around 3% of sales? And I guess, at what point would we get back to 2%, 2.5%? Or is that part of the past?

No. I think it is elevated and is part of the use of liquidity and strong capital structure that we have. In many cases, the organic investment is the best solution for providing returns. We stepped up our capital program to expand our footprint in emerging markets. And that, coupled with a strong backlog, is what's elevated the CapEx spending to higher percentage of sales. We think that will stay true for the next year or so and then move down to more normalized, which is 2% to 2.5% of sales. Adam Brooks - Sidoti & Company, LLC: Okay. And then, if we look at the pricing environment, maybe a little bit about electrical is in Europe.

Well, the pricing environment is tough because the car companies are obviously having price pressures on the end products as they look to gain share and scale. Part of what we're able to do by being a full-service electrical distribution provider with full engineering is to design a lot of the cost savings they need out of their product. The pricing environment's tough, but that's nothing new in this space and I think it plays to Lear's strength. On average, we're going to run at about 2%. And I don't really see Europe electrical being different than the overall business quite frankly.

Your next question comes from Brett Hoselton of KeyBanc.

Just a follow-up on the last question. How would you characterize pricing pressure versus 6 to 12 months ago? It sounds like it really hasn't changed that much. Is that indicative of...

No, it really hasn't -- obviously, everybody is looking to help their customers get cost out of the products so they can deliver the most value to the consumer and facilitate sales. From our standpoint, we try to do it in a collaborative effort with our customers on the design side. We also give, on average, about 2%. The pressures have been tough, it's very competitive, but I think, in many ways, it plays to our strength because of our full design and components capability.

And then on the Electrical business, the backlog implies growth of kind of double digits this year and dropping down to the high-single digits next year. And then 2014, you're kind of down in the mid-single digits. How should we think about revenue growth kind of in that 2014, '15, '16 time frame? I mean, is it going to start to drift down into that kind of mid-single-digit range and will remain in that range? Or do you think it actually can see some improvement in that year?

There's still a lot of open sourcing in '14 and '15 that's out there, but it's kind of hard to maintain double-digit growth which far exceeds the industry. So it's kind of hard to commit to that level of growth because it's been so great in that segment for Lear Corporation. Some of the other key drivers, however, are as the continued penetration and content gains, as cars become more complex and there's more electronics being driven, whether it's engine management, powertrain management or is the infotainment-type features that are in the vehicles, they all seem to be moving up. There's more circuits and more demands for electrical content that also drive sales growth in this segment.

And then the 78% electrical targets, is that achievable in the 2013 time frame? Or is that more on the 2014 time frame?

I really want to get away from giving margin targets for '13, really as a result more than anything of the production uncertainty. But I believe that if we can get our revenues in that $4 billion to $5 billion range, that's when you'll see that segment achieve their margin targets.

Okay. And then finally, in the past, as you kind of transition from the GMT800 to the 900, we saw some pretty significant margin pressure as the launch kind of went down and then back up again here. You've got the K2xx next year. What are your thoughts about margin pressure in that business next year as you go to the K2 program? Is that -- do you think that's going to -- you're going to see the kind -- same kind of margin pressure you have historically? Or do you think there's some reason to believe that it's not going to be as impactful this time around?

No, I think history is a good benchmark. Whenever you launch a major replacement program or a new program, margins typically get pressure as you work through engineering solution and cost reductions and your manufacturing facilities learn how to make a very new product with a complete redesign. So I would expect next year to be not a whole lot different as it relates to that factor.

Our final question comes from Matthew Stover of Guggenheim.

Many of the questions have been addressed. But I was wondering, Matt, if you can provide some more color as we're thinking out to the second half with regards to the Seating business. The production schedules in Europe first half to second half are going to get worse. And I imagine you have some internal control-ables that are probably getting better and North America is okay. But I wonder if you can kind of give a little more detail on some of the pluses and the minuses as we really think through the second half.

Well, I think you always get better with your value engineering cost solutions as you look for ways to offset some of the pricing that typically picks up in the second half of the year as you get a full year run rate of those savings that you built in quarters 1 and quarters 2. I think we'll see the cadence of launch improve as well in the second half. But I think just overall, the facilities run better as they get a full year of efficiency actions under their belt. Historically, the fourth quarter has always been a pretty good quarter for us because we've had the benefit of those type of actions. The other side of it is it really comes down to the mix. We talked a lot about overall volumes, and that's important. But as important -- more important is the platforms that you're on and each one has its own kind of financial DNA.

There are no further questions at this time. I'll turn the call back over to presenter for closing remarks.

Well, thank you very much. I'd like to thank the finance organization at Lear. Jeff and his team did an outstanding job once again. It's all the hard-working people at Lear Corporation. Thank you so much for a great quarter. Appreciate all the hard work. Thank you.

This concludes today's conference call. You may now disconnect.