Good day, ladies and gentlemen, and welcome to Mattel's Third Quarter 2012 Earnings Conference Call. [Operator Instructions] Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Drew Vollero, Senior Vice President of Corporate Strategy and Investor Relations. Sir, you may begin.

Thanks, Latoya. As you know, this morning, we reported Mattel's third quarter financial results. We provided you with a slide presentation to help guide our discussion today. The slide presentation and the information required by Regulation G regarding non-GAAP financial measures is available on the Investors and Media section of our corporate website, corporate.mattel.com. In a few minutes, Bryan Stockton, Mattel's CEO; and Kevin Farr, Mattel's CFO, will provide comments on the results, and the call will be opened for your questions. Certain statements made during the call may include forward-looking statements relating to the future performance of our overall business, brands and product lines. These statements are based on currently available information, and they're subject to a number of significant risks and uncertainties, which could cause our actual results to differ materially from those projected in the forward-looking statements. We describe some of these uncertainties in the Risk Factors section of our 2011 annual report on Form 10-K, our quarterly reports on Form 10-Q and in other filings we make with the SEC from time to time, as well as in other public statements. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so. Now I'd like to turn the call over to Bryan.

Thank you, Drew, and good day, everyone. When I ended last quarter's call, I said the second half of the year was all about executing, as we transition from preseason to the season. And we are now officially in the season. The global economy is still challenged. It's driving volatility in both input cost and currencies, and is contributing to a continuation of the cautious global retail environment. That said, I am very pleased with the third quarter results. The quarterly results reflect our success in building momentum in the marketplace through share gains and solid sales across our portfolio of brands and countries. Worldwide revenues were up 4% including a 4% unfavorable impact from currency, while operating income grew 23%. Let me touch briefly on a couple of the key drivers. We experienced continuing global momentum in most of our core brands, and I want to give a special callout to American Girl Brands which grew 16% for the quarter due to strong execution of McKenna, the new Girl of the Year, as well as solid performance at retail and in our online Direct-to-Consumer business. Our Monster High brand also performed particularly well in the quarter. The franchise continues to resonate strongly with our consumers, and as a result, the dolls are now featured on many must-have toy lists. We also experienced growth across all of our regions, including solid growth in North America. Although currency fluctuation continues to be a major challenge in 2012, when you exclude the impact of currency, our 3 major regions, Europe, Latin America and Asia, each grew revenues in the quarter. Our global POS was consistent with our shipments. In addition, we gained share in both the U.S. and Euro 5 toy markets through August versus last year, according to NPD, as our…

Thank you, Bryan, and good day, everyone. As you know, execution is critical in this toy business. And as you can see from our third quarter performance, Mattel continues to execute well. While there are many ways to measure our performance to-date, the most encompassing measure may be to look at the bottom line. Year-to-date, our net income is 18% higher than last year. Moreover, our operating profit is up 19%, and our operating margins have expanded 230 basis points, which was driven by revenue gains and expansion of gross margins. As we shared with you, our goal has been to move up higher in our targeted range of 15% to 20% operating profit, and we are well positioned to do that in 2012. Now let me touch briefly on a few of the key drivers for the quarter. Even with significant currency headwinds, we were able to grow our revenues 4% in the quarter. Global execution at retail has been very strong, with each region of the world growing sales in the quarter substantially in local currencies. And all but one grew after considering the negative impact of foreign currency exchange. Execution across our brand and product portfolios was strong as well. We continue to see outstanding performances with our new Monster High franchise. And we're happy with the results of Fisher-Price where we saw improvement at core business, especially internationally, and excellent results in our Friends business, which includes our newly acquired brand, Thomas & Friends. Finally, American Girl continues to grow across its product portfolio and range of distribution channels. Although our gross margin expanded nicely in the quarter, about 1/3 of the improvement was related to foreign exchange. We benefit from the positive comparison to last year's rapid appreciation of the U.S. dollar in late September…

[Operator Instructions] The first question comes from Jaime Katz of Morningstar.

Can you guys talk a little bit about the data points that was in your press release on accounts receivable days outstanding? It looks like it went a little bit higher, and I was just curious if there were any terms from the retailers that have changed and if that would be a more permanent thing going forward?

No, I don't think there's any change. I think the account receivable increased primarily due to the timing of sales volumes that have happened later in the quarter.

Okay. And then, any thoughts on price increases in the future? I know you guys don't want to gouge anybody. But anything for the upcoming 2013 year? And maybe if there are any pricing increases that you guys are thinking of passing through?

Yes. I think, yes, we continue to operate in an inflationary environment with a lot of volatility as the economy slowly recovers and input costs continue to rise. There are goals to offset as much of the increase in input costs that we can through a continued focus on cost efficiency programs. And as you know, our last leverage to take pricing actions to sustain gross margins of about 50%. And our customers are in right now to see our 2013 products so it's too early to really talk about 2013 pricing actions.

The next question is from Michael Kelter of Goldman Sachs.

I wanted to ask just broadly about the toy industry, which is off 5% to 10% year-to-date. You guys are outperforming by a mile. But as a leader in the industry, I just really look to get your take on why the industry weakness is as pronounced as it is and whether you think it will persist?

We're still very positive about the toy industry. As we look at data sources, for example, like Euromonitor, they continue to forecast the toy category growth globally of, I think, it's around 6%. The numbers in the U.S. had been a little weaker than probably anyone would like this year. But as you recall, the U.S. is only about 1/3 of the global toy business. And when you peel the layers of the onion back on the U.S. business, the softness is really in categories where you can argue there has not been as much innovation as there had been in others. For example, the categories in which we compete primarily are outperforming the industry on average. So we're still positive that when there's innovation, this industry can grow, particularly here in the U.S. As you look at Europe, frankly, we're quite pleased with the toy business in Europe. It's down only about 1%, and Europe, as you know, has a very challenging economic environment. Outside of Europe, as we look at the information that we get with our boots on the ground all over the world, we see growth in Eastern Europe, Latin America and Asia. And then I guess, finally, this is more of a short-term comment than a longer term strategic comment that we've had customers here last week and this week to talk about what's happening this year and start planning for next Christmas, believe it or not. And our customers continue to have we think a positive outlook not only for this year but for the future as well.

And, you mentioned that some of the international regions, maybe you could talk about not just sort of the absolute numbers of toy demand but maybe the derivative, the direction of toy demand going around the world, Europe versus Latin America versus Asia, given the recent macro slowdown? It's -- something that’s obviously not showed up in your results to date but might it in the Christmas quarter? Or do you expect continued strength…

As we look out for this year based on the promotional plans and merchandising plans that we have with our customers and, I would say, the positive outlook our customers have, we, as we say, there will be a Christmas this year. As you look out and sort of take the tour around the globe, our customers in Eastern Europe still look forward to continued category growth. In Latin America, that's a basket of countries, and every year, some countries are slowing down, some are speeding up. Our businesses continue to be robust in Latin America. Same thing in Asia. And I think one of the things as it relates to Mattel is when we look at the -- either the development of the category or the development of our market share, our market shares for example in Western Europe are still quite low. There are only about 10%, and that's about half of what we are here in the U.S. So we look to both the trajectory of the category and our ability to try to grow our market share as -- category share as measured by NPD or other sources. So that's why we're still bullish on toys.

And then, one last one. The gross margin numbers were fantastic, and you mentioned that ForEx was a part of that. But even if you adjust for the ForEx, it seems like the underlying run rate post the HIT deal and O.E. savings is above the 50%, which is your long-term guidance. So I guess, now that you're solidly above that 50% line, what's holding you back from raising that prior guidance?

Yes, I think as we look at the future, I think over the long term, we believe that targeting gross margin of 50% is the right approach to managing our business. But when we look at our P&L on an annual basis, we focus on 2 key goals: growing operating income by 6% to 8%, which is consistent with delivering top third to top quartile performance, and sequentially improving our operating margins consistent with our targeted range of 15% to 20%. As we develop our annual financial plan, we balance several levers: sales growth, gross margins, advertising, SG&A and investments. Our goal is to deliver improved operating margins while achieving 6% to 8% growth in operating profits. And gross margin is an important element in that equation. This approach aligns with our goal of consistently delivering top third to top quartile total shareholder returns.

So what would make you reevaluate the gross margin guidance?

Well, again, I think we look at it on an annual basis. Over the long-term, we look at the fact that we think 50% is the right approach to managing our business. But we have opportunities to grow our margins. We've got a lot of moving pieces with respect to it. I see opportunities to grow margins through our HIT licensing business and our overall Licensing business for core brands, as well as continued growth in Barbie, Monster High and American Girl. All of which should have a positive impact on our gross margins. But we also have a great opportunity to grow Fisher-Price on a global basis since it's underdeveloped outside the U.S. And this will put pressure on our margins. So Michael, looking forward, it's always a challenge to predict margins since there's a lot of moving pieces like forecasting sales mix, as well as market-based items like foreign exchange and input costs which have been volatile over the last several years. So again, I would focus in on we manage our P&L on an annual basis with a key focus on 2 goals: As I said, growing operating income by 6% to 8%, which is consistent with delivering top third to top quartile performance; and sequentially, improving our operating margins consistent with our targeted range of 15% to 20%. And we look at all the levers in the P&L really to deliver that with a goal of delivering 6% to 8% in operating profits. And this aligns with our overall goal of really delivering top third to top quartile TSR.

The next question is from Jason -- I'm sorry, James Hardiman of Longbow Research.

Yes, this is Phil Anderson for James. Just looking at the Barbie results, I know things were up excluding the currency drag there. But it looks like it was a difficult comp. Just wondering if you can kind of refresh our memories on why things were up so much in the third quarter last year? And then, maybe talk about what your expectations for that business are in the holiday season here?

We're feeling actually quite positive about Barbie. As I mentioned in my comments, and I think Kevin did in his as well, there is a lot of activity in the fashion doll aisle, and we manage our portfolio like we do, for example, in the vehicle aisle. So we're constantly trying to optimize properties like Disney Princess and Monster High and Barbie. So as we look at the Barbie business exiting the third quarter, the reason we feel still pretty confident about Barbie is POS continued to build a positive momentum in the third quarter despite all of this heavy competition, if you will, from our own brands. So we like how Barbie exited the third quarter. As we look at the third quarter -- I'm sorry, the fourth quarter, we think Barbie is pretty well-positioned. If you look at from a product standpoint, we have Photo Fashion Barbie, which should be a big hit. We have the Barbie Holiday Doll, which is off to a very good start. We've got this new fall entertainment called Princess and the Popstar, and we always love movies that have 2 feature dolls in them. And that's off to good start, both from the toy sales standpoint and also the DVD standpoint. And as always, we worked extraordinarily hard this year because of all the complexity in the portfolio and our desire to succeed across the portfolio with our retail partners to make sure we have the right merchandising and we have the right promotional programs in place. It was a tough comp in the third quarter. As you recall, international I think was up around 20% for Barbie and domestic was up about 13%. But again, we like where Barbie is. The POS is building in the third quarter, exited with positive POS momentum, and we think Barbie is well-positioned to succeed in the fourth quarter.

Okay. And then, second question, I’ve seen a lot of the ads recently here for Fisher-Price. I know you guys are kind of in the process of rebranding and launching a new ad campaign around that. Just wondering if you could kind of give us an update on where that stands? And then, just the sort of the sustainability of this quarter's growth going forward for Fisher-Price?

Sure. Thank you. The objective we have for Fisher-Price is to make sure that we really reach the full potential of Fisher-Price. As you'll recall, Fisher-Price revenue is less than half from our International business. It's one of the few brands that is less than half. And we've always believed that there's great growth potential for Fisher-Price not just here in the U.S. but particularly in our International business. And as we've gone through this transition process over the past few years, we've really worked hard to come up with a message that resonates not just with the U.S. mother but with mothers around the world. Because as we told you before, they're different than the baby boomer moms, they have different way of thinking about things. The commercials have been successful. We're expanding their airing to more countries this fall. Fisher-Price, from a POS standpoint, was exiting the third quarter with positive momentum. So we feel very, very good about that. We think there's some more opportunities to continue to build this business, whether it's through the new packaging in the 2013, continued promotional support with our retailers. So we know there's more work to be done in Fisher-Price, but we're feeling that we're beginning to build some solid momentum on the core. The other thing that I mentioned in my remarks is we're also very pleased with the Fisher-Price Friends business. That portfolio used to be exclusively licensed property with intellectual property owned by others. About 1/2 of that portfolio now is from our IP with the acquisition of HIT. So we think we've done a very good job of balancing out that portfolio not only for growth but also for the ebbs and flows of licenses. So when we look at Fisher-Price either from the Friends standpoint or from a core standpoint, we think we're making solid progress.

The next question is from Linda Bolton-Weiser of Caris. Linda Bolton-Weiser - Caris & Company, Inc., Research Division: I was wondering if you could talk about your dividend policy because you've raised your dividend quite a bit higher than earnings growth in the last couple of years. Are you where you want to be in terms of payout ratio, and any other metrics that you're looking at? That's my first question. My second question has to do with, can you just remind us some of the key entertainment kind of driven things coming up in 2013, 2014 even though your core brands are becoming more and more important it seems. But I seem to recall that we have Pixar's Planes movie next year, and there's been other movies mentioned in the past. Can you just update us on that? Not to steal your thunder away from the Analyst Meeting but a little color would be helpful.

I'll start and then turn it over to Kevin to talk about our dividend policy. We have we think a pretty a solid lineup next year both in terms of movies and evergreen properties. Next year, for 2013, we'll be supporting Superman from Warner Bros., DreamWorks’ new movie, Turbo, and Disney Pixar's Planes movie. Those are probably the 3 big things for next year. From an evergreen standpoint, we're going to be continuing to support both Dora, Jake and Disney Clubhouse. And Disney's also coming up with a new show called Sophia the First: Once Upon a Princess, which will be on Disney Junior TV. And we think that's got some interesting potential as well. So both from an evergreen standpoint and a movie standpoint, we think we have a solid lineup for next year. Kevin, do you want to comment on the dividends?

Yes. Linda, dividends are a board-level decision. And over the last few years, profit growth is equal to dividend growth, and we caught up when we announced our dividend in 2012, January this year of $1.24. In this year, we expect our dividend would increase consistent with our growth in earnings and within our targeted payout ratio of 50% to 60%, resulting in a dividend yield that's consistent with top quartile yields of best-in-class customer goods peers. The company intends to maintain a strong balance sheet, with targeted year-end cash of $800 million to $1 billion. And we'll continue to work with credit ratings to maintain our A ratings.

The next question is from Gerrick Johnson of BMO Capital Markets.

I'd like to qualify -- go over gross margin real fast and strip out the FX impact. If we add 180 basis points to last year's 47.8 and subtract 200 from this year's 57.3 (sic) [53.7], is that the right way to look at it, 200 basis points of true gross margin improvement excluding FX?

No, I don't think so, Gerrick. I think that it's up 590 basis points. And I think when you look at stripping out the 180 basis points related to ForEx, it's more of like a 400 million -- or 400 basis points improvement. And that 2/3 improvement in gross margins reflects improved mix, better-than-expected savings from our manufacturing efficiency and O.E. 2.0 savings programs, our pricing actions, partly offset by increased input costs, which were less volatile than prior years.

Okay. And Monster High, is that now launched in every international geography that it's supposed to go into?

Yes. There may be one lurking out there someplace, but the Monster High is essentially global now and continuing to succeed, even in the early markets like the U.S.

Okay. And one last question. 2013, when will your wooden Thomas hit the market? Does Tommy have a sell-off period for the first half or anything like that?

Well, our products will be available for sale on or about January 1. So you should expect to see our products out in the marketplace in January, February as it goes through the distribution channels.

The next question is from Felicia Hendrix of Barclays.

Bryan, I just wanted to talk about the point-of-sales trends in the quarter. I just have some questions around that. At the beginning of your prepared remarks, you said that point-of-sales was in line with shipments. So if your sales are up about 4%, should we assume that your point-of-sales was about there?

We look at our point-of-sales and shipments both globally, and where we can, by region. If you look at our global shipments in POS, they're roughly in line. I'm not going to give you the knits and knots but they're roughly in line. As we look at the U.S. business, particularly in the third quarter, our POS was positive. And momentum was building in the U.S. with our POS as we exited the third quarter, which we think positions us well for the fourth quarter. So you're in the ballpark.

Okay. And internationally, was POS positive as well?

I'm sorry, can you repeat that?

Internationally, was POS positive as well?

Yes, it was.

And then, just digging down a little bit further, you said for Barbie and Fisher-Price that POS was showing positive momentum. So can we infer that those numbers are not positive yet?

No, you can infer that they are positive.

Okay, great. And then, just -- I will take another stab at gross margins. If we -- excluding HIT, would your gross margins still be over 50%?

Yes, yes. HIT had a small impact on gross margins for the quarter.

The next question is from Sean McGowan of Needham & Company. Sean P. McGowan - Needham & Company, LLC, Research Division: 3 housekeeping questions, and then, a question on Batman. On the housekeeping, how much of the American Girl growth is new stores versus increased sales of the product?

We're not going to quantify that, Sean. But let's just say that most of the growth came from McKenna and existing stores. Sean P. McGowan - Needham & Company, LLC, Research Division: Okay, that's what I figured. Second question. The next one is for you, Kevin. If FX stays where it is now, can you quantify what you expect the impact would be in the fourth quarter?

Well, it's impossible to predict ForEx. So I usually give you a rule of thumb, and that rule of thumb relates to looking at the U.S. dollar index, and for every 1% movement in U.S. dollar index should impact annual EPS by $0.01 to $0.02 and impact revenues by about 0.5 percentage point. That said, I think if you look at our fourth quarter last year, we had an 80-basis-point reversal in the fourth quarter of last year that was positive. So when we look at gross margins for the fourth quarter this year, we've got a comp that will be positive that we will be lapping. Sean P. McGowan - Needham & Company, LLC, Research Division: Great. And also, housekeeping, your tax rate forecast, any reason to expect the fourth quarter to be different from kind of year-to-date number?

Yes, I think when we look at full year, we expect the tax rate to be about 21% to 22%. Year-to-date, the tax rate is about 20.1%, and that benefited from some discrete period items, which is a timing issue from the perspective of a full year tax rate. So at year end, the tax rate will be again, I think, around 21% to 22%. Sean P. McGowan - Needham & Company, LLC, Research Division: And Bryan, on your comments on some product performance during the quarter, I think I hear you say that you're pleased with evergreen performance of products like Batman. Would you put Batman in the year when there’s a movie in the evergreen category? Did it not get a big boost from movie?

No, we would say that the movie properties for us performed very solidly. Sean P. McGowan - Needham & Company, LLC, Research Division: Okay. But did Batman -- I mean in the past, you kind of talked about Batman being one of those big hit products. Did it live up to your expectations?

Yes, yes. I would say that our toy sales on Batman met our expectations.

The next question is from Margaret Whitfield of Sterne Agee. Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division: I wondered if you could comment, Bryan, or elaborate on your comment about the early layaway leading to earlier sales benefiting high-ticket items. I'm wondering what you're seeing at Mattel? What toy brands are resonating and might this lead to some early reorders compared to prior years? And also, I wonder if you could provide us with some information on what categories grew share in quarters -- or through August? And any comments on retail response to that new Barbie construction line through MEGA Bloks?

Let me start first with the Barbie construction line. As you know, MEGA Brands is going to be selling that in, and we expect that there will be some distribution to that product probably in late December based on what we hear from MEGA Brands. And the response from retailers is, our understanding, has been pretty positive. So we'll wait and see what happens with that. As it regards to the earlier promotions and specifically layaway, as I said, we think it's a positive thing for the industry. When you think about the structures of the programs this year, there are a number of months of layaway is available, has been extended by a month. The cost of the programs has been reduced to consumers. And so when you look at higher ticket items, for example, for us, things like the Barbie DREAMHOUSE, you would expect that an item like that is probably something that would be a popular layaway item. It was last year. We would expect that this year, it should be similar. So I guess, the way I would view this is it's quite early. Layaway has been in place for just a few weeks. We've got last year's layaway to comp here in the next few weeks. And as you know quite well, every year at Christmas, consumers change their buying patterns. There's always a delay for one reason or another, I believe, for example, this year Hanukkah is 11 days earlier than it was last year. So there's always sort of shifting momentum with consumers, but in the end, is why we say there's Christmas on December 25. To your question on categories responding to innovation, for us in particular, dolls and infant/preschool are performing better than the category average. There's a lot of activity there. Fisher-Price has been growing its share of total toys there. The vehicle category is going up against a very strong Cars 2 comp from last year, so you will expect that category is behind last year. But when we look at the core of our business, particularly the basic car business with this new promotion that we started, it looks quite strong. So again, when we look at the core categories that we tend to compete in around the world globally, those are the ones tend to be outperforming the total. Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division: One follow-up, how is Cinderella being received at retail?

Well, we think, pretty well. We think it's going to be a good solid initiative by Disney and by us. And again, we are very good, we think, at managing a portfolio of brands. And so we think that this is going to be another strong initiative for us in the fall.

And the next question is from Eric Handler of MKM Partners.

It looks like HIT Entertainment seems to be probably outperforming a little less than the Street expectations. Can you talk a little bit about what degree your Mattel-specific initiatives for HIT or items that they didn't have last year in terms of distribution or products have helped out this year? And then secondly, when you look at their full portfolio, what are some of your thoughts behind maybe some of the other brands in terms of whether you -- that's a focus for next year or maybe sell off some of those brands like the Barney or Bob the Builder?

We are pleased with our performance on HIT. As you'll recall, we said this year, we had really a couple of objectives. The first was to work hard on getting that business integrated into Mattel, and I think we're well on plan to have that accomplished by the end of the year. And we feel quite good about that. We also said our second overall objective was to improve the execution of the business. And I think there's a couple of examples of where we tried to do that. I mentioned this new DVD called Blue Mountain Mystery. We're very excited to have that out, that's a big thing for us. As we look at how to execute the DVD business, we have found from our experience on Barbie that selling Barbie DVDs by the toys in the toy department is a much better execution than selling it exclusively where retailers sell DVDs. So we're improving the execution of not only having a great DVD but executing it better in store. The other example I would give you would be TV placement for Thomas, particularly in Latin America. I think we've given you the example in Mexico, for example, where historically, Thomas has been on there on TV Azteca, which is a smaller network with much narrower reach than Televisa. And we've been successful in transitioning Thomas from TV Azteca to Televisa. And that's an important execution element. So those are 2 examples of what we try to do to strengthen execution. I'd also say that retailer response to the new wooden line has been very positive. The toy line looks great. The sets look great. Retailers' response, as I said, has been positive. So that's something we'll see next year. As it relates to the HIT global brands, the non-Thomas brands, Mike the Knight, we always talked about it as our gift with purchase. That continues to do well on Nick here in the U.S. and on the BBC. We've got it placed in a number of countries now and are excited about the opportunity for that next year. So HIT is, I think to your point, at least on plan, and we feel very positive about it.

Yes, and I think for 2013, we expect it to be increasingly accretive beyond 2013 by owning the Thomas brand. As we look at it next year, we won't have the acquisition cost and we'll have substantially lower integration costs. We've got the addition of the Thomas wood business in 2013. We're launching a toy business for Mike the Knight in the fall of next year. We'll have cost synergies. So those things will drive accretion and EPS from the acquisition in 2013 and beyond.

The next question is from Tim Conder of Wells Fargo Securities.

A couple of items here. Back on the gross margin side. Kevin, you touched on and you pointed out on the slide deck the 80 basis points comp. I think that's a, correct me if I’m wrong, that's the reversal of what we saw with the inter-companies from third quarter of '11 to fourth quarter '11. So there'll be a little bit of a headwind, correct, as you're pointing out for the fourth quarter. But my real question in gross margin is, this year, you're tracking 52% has to deal with that FX headwind in the fourth quarter, but it appears this year, you will track above that approximate of 50% guidance. Are you saying based on a prior comment that next year, given Fisher-Price should start to accelerate on a relative basis here, that, that will keep you closer back towards that 50%, all else equal?

Tim, we really don't give line item guidance. And I think there's a lot of moving pieces in gross margins. So when we look at near term, we really manage our P&L in an annual basis, as I said, with 2 key goals: to grow operating profit by 6% to 8%; and sequentially improve our operating margins, up the range of 15% to 20%. And as we develop our plan for next year, we're going to look at delivering improved operating margins while achieving 6% to 8% growth in operating profits by really looking at all of our levers: sales growth, gross margins, advertising, SG&A and investments. And gross margin is an important element in that equation. But overall, what we're trying to do is consistently deliver top third to top quartile total shareholder returns.

Okay. And the track record is good. So thank you on that. The licensing, can you remind us where that stands as a percent of revenue? And now, with the addition of HIT going forward and a couple of other things that you're doing with Monster High and soon to be new IP, any goals or anything on licensing as a percent of revenue on a go-forward basis here?

We haven't specifically called out the percentage of sales that it is and the growth rate. But again, it's an important part of our business. We are focused on growing our Licensing business. As Bryan said, HIT gives us more capabilities with Licensing business. And I think with regard to HIT, that there is an opportunity since it's underdeveloped on a global basis, an opportunity to continue it to grow. So overall, we like new business. I think it is a tailwind to our gross margins as we look to the future, and it is a focus for the company.

Okay. And then 1 last clarification here, more housekeeping. The -- I think you've thrown out before about $75 million to $80 million ballpark-ish on incentive comp. Is that incentive and equity or just one of those 2 buckets?

It's one of 2 buckets. So if you look at the target level of incentive for our short-term incentive program, it's about $75 million to $80 million. And when you look at our equity compensation, the target is $50 million to $55 million.

And the last question comes from Mike Swartz of SunTrust.

Just wanted to touch real briefly on some of the comments or the comment you made around O.E. 2.0, maybe the savings from that program coming in above $175 million. I mean, could that be north of $200 million when all’s said and done by the end of the year? And then, I mean, how do we think about where the incremental savings go? Is that going to be reinvested in the business or would that fall at the bottom line?

Through the end of 2012, we've -- or through the third quarter of 2012, we delivered cumulative gross savings of about $173 million against our target of $175 million. At this point, we expect to exceed our goal by 2012 by about $5 million to $10 million. And that will likely drop to the bottom line.

Thank you. There will be a replay of this call available beginning at 11:30 a.m. today. The number to call for the replay is area code (404) 537-3406, and the passcode is 31536853. Thank you for your participation in today's call.

Ladies and gentlemen, this concludes today's program. You may now disconnect. Good day.