Welcome to the Q2 2013 Stanley Black & Decker, Inc. Earnings Conference Call. My name is Christine, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to the Vice President of Investor and Government Relations, Greg Waybright. You may begin.

Thank you, Christine. Good morning, everyone, and thank you for joining us for Stanley Black & Decker's Second Quarter 2013 Conference Call. On the call, in addition to myself, John Lundgren, Chairman and CEO; Jim Loree, President and COO; and Don Allan, Senior Vice President and CFO. Our earnings release, which was issued earlier this morning, and a supplemental presentation, which we will refer to during the call, are available on the IR portion of our website, as well as on our iPhone and iPad apps. A replay of this morning's call will also be available beginning at 2 p.m. today. This replay number and the access code are in our press release. This morning, John, Jim and Don will review Stanley's 2013 second quarter results and various other matters, followed by a Q&A session. [Operator Instructions] And obviously, please feel free to call me with any follow-up questions after today's call. And finally, as we normally do, we will be making some forward-looking statements during the call. Such statements are based on assumptions of future events that may not prove to be accurate, and as such, they involve risk and uncertainty. It's therefore possible that actual results may differ materially from any forward-looking statements that we might make today. We direct you to the cautionary statements in the 8-K that we filed with our press release and in our most recent '34 Act filing. With that, I will now turn the call over to our Chairman and CEO, John Lundgren.

Thanks, Greg, and good morning, everybody. Second quarter highlights certainly included 12% revenue growth due to a combination of 5% organic growth, with which we were very pleased, and the other 7%, the addition of Infastech. Diluted EPS of $1.21 a share were up 7%, and diluted GAAP EPS was actually $1.23. And the press release, if you've had a chance to look at it, explains, I would say, the counterintuitive nuance of GAAP earnings being higher than -- higher due to the reversal of an accrual. And if anyone needs more information, Don can get you that offline or during the Q&A. The organic growth initiatives, which we've talked about on the last 3 calls, are accelerating, particularly in the emerging markets. Our CDIY business and Industrial businesses both had compelling top line results, as well as margin growth. CDIY organic growth of 6% and an operating margin, x charges, of above 15%. And Engineered Fastening grew 9%. That's well ahead of its core market -- core automotive market around the globe. And in the discussion of the segments, Jim will talk a little bit about the penetration -- increased penetration and resulting share gains that we're experiencing in that business. Security, globally, organic revenue was down 1% due primarily to the Convergent Security Solutions volume declines in Europe, and that was partially offset by organic growth in both our Commercial Hardware and Access Technologies, our automatic doors business. The bright spot is orders increased significantly in both North America and Europe as the quarter wound down. In volume, Niscayah synergies and platform growth investments are expected to lead to margin recovery for Security in the second half. More about that at the end of our brief presentation from Don when he discusses the outlook. But as a consequence,…

Okay. Thank you, John. Once again, CDIY had a terrific quarter. Strong execution across the globe, coupled with improving U.S. residential Construction & DIY markets, produced excellent results: revenues of $1.446 billion, up $115 million or 9%; segment profit was $219 million, up $11 million or 5%; and organic growth was 6% in total, with Professional Power Tools up 13%; the Consumer Products Group up 3%; and Hand Tools and Storage up 5%. The operating margin rate was 15.1%, down slightly 50 basis points from a year ago, reflecting strong impact of the growth initiatives, as well as strong promotional activity in the U.S. Professional Power Tools benefited, from a growth perspective, from those promotions, as well as new product introductions and emerging market gains. The consumer group benefited from outdoor growth, which was a turnaround from the first quarter, when we had some weather issues, a global steam product introduction and strength in the emerging markets. And Hand Tools and Storage gain -- experienced gains from the Black & Decker revenue synergies specifically associated with DeWalt and the continued rollout of last year's program at Stafta [ph], as well as a major U.S. home center. In addition, this quarter, we began a rollout of DeWalt mechanics tools at a major U.S. retailer. They accounted for most of the growth in the Hand Tools and Storage. And in total, as we look at CDIY, we conclude this business is really in great shape as its U.S. market is shoring up nicely while Europe has stabilized and the growth initiatives continue to drive emerging market gains despite somewhat slower markets there. Turning to Industrial. They also had a solid quarter all around, with surging organic growth the new story. Revenues were up 28% or $178 million, aided by Infastech, which added…

Thank you, Jim. I'd like to spend a little bit of time and talk about working capital on Page 10. Our working capital turns improved from the prior year by approximately 0.3 turn and sequentially from the first quarter by over 1 turn, which allowed us to drive a significant cash flow benefit in the second quarter, which I'll touch on in a few minutes. We're very focused on how the Stanley Fulfillment System continues to evolve and get implemented throughout our company. We continue to see modest improvements in both accounts receivable and accounts payable as we focus on the back-office operations and have more efficiencies with our vendors and our customers to drive working capital benefits. But the more significant improvement continues to be the focus on inventory, as our inventory days went from 78 days in the second quarter of 2012 down to 72 days here in the second quarter of 2013. In that scenario that we've been focused on significantly for the last year or 2, and we'll continue to be focused on it as we believe there's more efficiency to be gained in inventory throughout our entire manufacturing and supply chain. The impacts of the Stanley Fulfillment System continue to be seen across our company, and our working capital continues to become more efficient. The expectation for year-end 2013 is that we believe we can achieve 8 working capital turns as we continue on our path towards 10 working capital turns by 2016 or 2017. So let's move to free cash flow on the next page. Free cash flow, as I mentioned, was very strong in the second quarter as we achieved a 117% conversion rate, i.e., free cash flow as a percentage of net income. This is obviously before special charges, but the result…

Great. Thanks, Don. Christine, we can now open the call to Q&A.

[Operator Instructions] And our first question is from Jason Feldman of UBS.

So nice to see, obviously, that the organic growth initiatives are gaining momentum more quickly, I guess, than expected. How do you think about that in relation to kind of the 3-year targets that you'd laid out, the $850 million contribution. Is this kind of a pull forward and then maybe the incremental pick up in the other years won't be quite as high, we're just getting it sooner? Or is it that the opportunity is really larger than you originally thought?

Jason, it's John. Per my comments early in the presentation, at this stage, it is the former of your 2 hypotheses, specifically, a pull forward. It's very early days, and as we quantify the entire basket of synergies, we're encouraged we're ahead, as opposed to behind schedule. That being said, we just don't have enough information to suggest that that's a larger pot of gold at the end of the rainbow. Do -- rest assured, a year from now, we think that's the case, as we did with Black & Decker synergies. When we realized it was more than just a pull forward on the cost synergies. We raised our estimate, raised the guidance. Far, far too early to do that because we've got nothing to tell if the totality of these programs is any greater than what we initially thought about.

And this is Jim. I would just add to that, that when we set forth this initiative, the idea was to change the culture of the company so it could be capable of generating 4% to 6% organic growth annually. And it was a 3-year commitment that we made, and it was a finite commitment. However, we also indicated that we were hopeful that we would be able to direct the company in a way that would yield a 4% to 6% minimum growth rate on an ongoing basis regardless of the economic environment, and this is where I think this progress that we've made is very encouraging because it seems like while -- even if this is just an acceleration, when we get to 3 years from now, there'll be more acceleration. So the point is that it's a very, very encouraging indication that this company is capable of driving growth while remaining financially disciplined and driving margins as well. So we're excited about the progress. Obviously, not going to commit anything more on a 3-year basis at this point, but it is a very, very positive start.

Our next question is from Rich Kwas of Wells Fargo Securities.

I had a question on Security with the European order growth in the quarter. That was a very strong number and just wanted to get some additional color on what you saw in the quarter. I imagine the construction markets over there are not great, so how much of this was just growth with existing customers, new products, market share gains? Any color along those lines would be helpful.

Yes, all of the above. Jim will give you as much detail as we're comfortable giving you, Rich, at this stage.

It's early days in Niscayah, and when we tackled this acquisition, we learned that Niscayah really didn't have a very robust sales-generation capability. And in fact, it was sort of a symbiotic relationship between Securitas and Niscayah in the sense that Securitas, being primarily more focused on guarding, often would have customers that it would then hand off to Niscayah as sort of a freebie or maybe for a commission or that type of thing. Well, as Securitas and we have gone our separate ways post the acquisition, we found out that we really needed to build -- not rebuild but build sales-generation capability. And I would say that's the single most important factor going on here, is that we've been hiring a lot of sales reps and they've begun to produce orders, which is now, hopefully, going to be translated into sales at some point, and that's encouraging. But it's really that dynamic that is going on. And so while, for the first year, 1.5 years or so, we were experiencing negative growth that I would attribute largely to the economy, it was also due to the fact that we no longer had the sales handoffs from Securitas, and now we have begun to rebuild our own sales force. I'd say that's the single biggest item there.

Our next question is from Nigel Coe of Morgan Stanley.

It's actually Mike Sang in for Nigel. I was hoping to dig more into pricing. I was wondering if you could comment briefly on the price environment overall. And then specifically on -- in the U.S., in CDIY, where -- I guess just in CDIY, where you, I guess, lost 2 points from pricing this quarter. And then, separately, on Security side, whether the increase in orders was due to -- based on given pricing.

Mike, it's Don. I'll give you a little bit more color on that topic in particular. On CDIY, in the second quarter, we did have a fair amount of promotional activity, which was planned and expected, and so that's driving a little bit of that price impact. It's probably unusually high compared to previous quarters and future quarters because of that factor. The other thing to keep in mind, and we all know this over the long term, is that that pricing number is more of an accounting number. It doesn't necessarily capture the true effect of pricing impacts across the board. As we roll out new products at different price points, that price increase versus a previous product that it's replacing does not get captured in that line. So we know that in that particular business it's not exactly a full encompassing view. So those 2 factors together really are driving that impact. So I don't view it as a significant trend or change in the business. I think it's more related to certain promotional activities that we did in the second quarter that were expected and planned. In the Security side of our company, Security is an area that pricing -- it is a price-sensitive business, but you really drive value through the differentiation of service, as well as the differentiation of bundling the different products that you have and trying to install and enhance the solution to our customers. And that's how you really drive positive price value. I think, over the long term, it's a business that you can drive positive price, and we have demonstrated this in this particular business over the past several years, that it is a business that allows that type of pricing situation. The current market in Security is there's nothing unusual happening around pricing specifically. I think it's pretty much in line with typical trends, and nothing has shifted or no dynamic that's happening that's unusual at this stage.

Well, in fact, a couple of quarters ago, we indicated that we thought that maybe we've been getting a little more aggressive on pricing, taking some business that we perhaps, in retrospect, would not have wanted to take in the CSS North America business. And so Don and I have both spent a fair amount of time with the Security team, going through their pricing, their price discipline, going through their backlog and looking at the profitability of the backlog. And I can tell you that it is improving, and the new business, largely being driven by the vertical market initiative and from the organic growth initiative, the vertical market initiative is where we have put together the bundles and the value propositions that Don is referring to. And in fact, what we're finding out in a lot of these orders in the order book in general from the vertical market initiative is that the gross margins are coming in at somewhat above line average. And that is where we want it to be because we think the value that we generate in these verticals is very high and therefore, we should get paid for it.

Our next question is from Sam Darkatsh of Raymond James. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Jim, the oil and gas strength, I understand it's off of a relatively small base. I know -- I think you have also had some organizational changes within your CRC business, but it just -- the growth seems to be a real outlier, particularly based on what, I guess, broad trends would be in the line pipe industry in the U.S. How sustainable are those growth rates? And how should we be looking at that going forward?

Yes, I mean, we've had some tough experience in onshore North America over the last few years, which have made the comps relatively easy. So I do think we have a couple of easy comps in front of us. However, I wouldn't be looking for plus 40% every quarter. That said, the pipeline construction activity in North America is really almost back at the level it was about 4 years ago when it peaked, and we can see that. We've been talking for a couple of quarters about the strengthening market. But it takes -- it took a couple of quarters for us to actually go from doing the proposals and so forth to actually doing the work, which is when we are able to recognize the revenue. So we see -- this is a long-cycle business. We have good visibility forward in North America onshore, and we see a continued strong market, not greater than 40% growth, but certainly very robust. And as far as the offshore business goes, which is the other half of the puzzle, that is extremely strong worldwide, and we expect that to continue as well. So this should be a good growth driver for us for several quarters, if not years to come.

Sam, let me just add to that because the format won't allow a follow-up. You'll recall, when we bought this business about 3 years ago, it's new in terms of the business model, relatively new to Stanley Black & Decker. And to Jim's point, these are generally very large orders. They're very lumpy, and it's a huge difference on a $300 million revenue base if something comes in in the second quarter versus the third quarter. So even at the beginning of our ownership of this company, it's a very lumpy business. It may be the best way to describe it. And I think for your purposes and objectives and ours as well, looking at rolling 12 months or rolling 8 quarters, looking at things that way, as opposed to just the much more classic EP-wise [ph] just because of seasonality and things of that nature, is a better way to look at this business. And that's how Don's team looks at it as we try to get a better grip on it and how best to forecast. At the end of the day, though, it's going to be lumpy. If you do $320 million in a year, it's not going to be $80 million a quarter. It's going to be $60 million 1 quarter and $100 million the next, and that's just something we've learned to live with with this business. And your question is very fair, but just recognize that's the dynamic, I would say, unique to the oil and gas business.

Our next question is from Mike Wood of Macquarie.

Impressive growth with your growth initiatives. I'm curious, at the early stages, what you're seeing in terms of the competitor responses from the market share gains that you're getting in these countries.

Well, we're not seeing much yet. Power tools in the emerging markets are very hotly contested by our biggest competitors anyway. So in some ways, I would argue that we're a little bit later to the game than some of them. However, we haven't really seen any major competitive response. I think it's really too early for that, and there were a lot people betting against whether these initiatives would even be successful, and I suspect that competitive reaction will come once the success has been institutionalized.

Yes, Mike. It would be naïve for us to think -- for we, Stanley Black & Decker, to think that as the share gains start to register -- remember, we're seeing them first in our shipments and in the POS. Competitors will see them 3 to 6 months later as they evaluate our performance versus theirs and others. It would be -- it would simply be naïve and irresponsible of us not to expect reaction because no one relinquishes share willingly. Hey, this is the power tools business. It's -- the tools business in general and the power tools business in particular. We've been in it for 100 years, and that would be our expectation.

Our next question is from Stephen Kim of Barclays.

It's actually John filling in for Steve today. Just wanted to get a bit more granularity on the FX headwind outlook. It seems like the currencies you cited are pretty contained for like 25% of sales. So I thought it was a little big 2% -- $0.20 just in the back half of the year. So what is your outlook for the back half in those currencies?

Yes, well, we basically have taken the rates that -- of about a week, 1.5 weeks ago or so and are using them as, really, our forecast for the back half of the year. We don't tend to try to forecast trending, whether they're going to go up or down. As far as the magnitude of the number, you have to remember that, in particular, Brazil and Canada and Australia are pretty sizable businesses for us and make up a significant amount of revenue. The other thing to factor in is it's not just translational FX, it's transactional FX, which means we're shipping products into those countries, in many cases, from the United States or European markets, and so the cross-currency exchange has a negative impact as a result.

Well, I think it's about 50-50.

It ends up being about 50-50, exactly, John. So those are really the main drivers. But the transactional piece is why it ends up being bigger than anticipated. Now part of that is hedge, but we don't hedge 100% of those types of activities because of the cost associated with hedging.

And the Latin American moves were very, very sudden and sharp. They're big moves.

Yes, John, you referenced 25%. That's roughly the percentage of our business in Western Europe. And obviously, the pound sterling and euro is all that matters to us there. 50% of our business is outside the U.S., and there are very few currencies in the back half of the year strengthening relative to the dollar. So I think Don gave you some pretty good granularity there. And hopefully, that will help understand and validate the magnitude of the headwind.

Our next question is from Michael Rehaut of JPMorgan. William Wong - JP Morgan Chase & Co, Research Division: It's actually Will Wong on for Mike. Can you talk about the trends in Latin America, especially in Brazil as it relates to the consumer? There were some challenges in 1Q. So just wondering what type of impact you would expect to your organic sales growth initiatives if consumer trends and sort of the political environments in some of these countries deteriorate from current levels.

Rank has its privileges so I'm going to delegate that to Jim because if he can predict what's going to happen in Brazil quarter-to-quarter, he's a better man than I. But we did have -- your point is very well taken, in that we really were stunned by the difficulty in Brazil in the first quarter. It was a lot more friendly market in the second quarter, but Jim's been close to that. Give it a whack, Jim.

Brazil consumer market, definitely a little slower than it has been. However, all these markets in Latin America are just exceptionally volatile, and they bounce around from the markets themselves and the demand bounces around from quarter-to-quarter and then the currencies bounce around from quarter-to-quarter, so your pricing positioning in the market changes dramatically over time. And in addition to that, there are some countries that have major political, structural processes that drive further inefficiencies in the demand profile and supply and demand. So it's hard to predict anything in Latin America other than just go there and execute as hard and as fast as you can. And that's where we're adding salespeople, bringing new products that are more appropriately designed for the mid price point segment and so forth, to enable us to achieve growth rates that are definitely above market growth rates. And that's what we're -- what we've been doing in Latin America for a long time because that's where we've -- really, this formula that we're now applying to all the emerging markets has been applied for the last 10 years by the management team that is now running the overall emerging markets initiative. And that's -- they're finding actually that some of these other markets around the world are more stable than Latin America and therefore, sometimes easier to penetrate than perhaps Latin America.

Just to follow up, Jim made a very important point. And I just -- and it's probably not news to most people, but unlike several North American-based or U.S. multinationals operating in foreign markets, particularly Latin America, I think it's really important to point out our entire emerging markets group in general and the Latin American group in particular is staffed by foreign nationals who have grown up in, lived in those markets that are well-tenured executives within our company. And this isn't about me. I spent half of my business career living and working abroad. And the value added by people who understand our company and our company's culture, values, codes of conduct, everything else, at the same time, understand the markets, the people, the culture, quite frankly, are quite accustomed to dealing with day-to-day, week-to-week, month-to-month volatility and frustrations that Jim, I think, very, very adequately described is a huge advantage. So that's just a point that I thought worth making on our emerging markets team, it's -- they are tenured professionals with local experience that we're leveraging across the world. And I actually -- I truly believe it's a competitive advantage, and I just wanted to make that point.

Our next question is from Peter Lisnic of Robert Baird. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: This is Josh Chan filling in for Pete. You talked about how the order growth accelerated in CSS Europe, but North America also accelerated quite a bit. So could you talk a little bit about what you saw there?

Yes. I was referring earlier to these vertical market initiatives and they're part of the corporate organic growth initiative that we funded especially and announced a while ago, last July. And we've been working on these growth initiatives in Security, in the vertical markets for about a year now. And what they involve is taking certain markets such as financial services, education, K-12 and secondary education separately, health care, retail and so forth and putting together solutions for the customers using some of the proprietary technology that we have acquired over time, such as our RTLS technology, real-time locating and sensing technology, that would be the AeroScout -- or excuse me, the iLock technology, which is iris identification, and putting together solutions that are specifically designed for applications within these vertical markets. So for example, in the K-12 environment, having the ability to lock down the school using this type of technology or to identify potential intruders, to integrate the mechanical locking systems with electromechanical locking systems and electronic systems, all these types of things are relevant to the end customers. And I could -- we have a demonstration center in Indianapolis, where we have all these different solutions kind of identified, and we bring customers in and so on. And the sales force has now been organized so that we have a segment of the sales force that's specialized to each one of these verticals, and that's what's gaining momentum right now. And in addition to, I'd say, just decent execution in the rest of the market, that's what's providing the extra oomph for the growth. And we expect -- we've seen, on a monthly basis, that order rate is increasing on a sequential basis and really beginning to grow like a wave of new business. And some of it is medium-cycle, long-cycle business, so it takes a while. But we will see that come to fruition in the second half in North America. And in Europe, we think, to some extent, not as much because the vertical market solutions that I'm talking about are primarily, I'd say, almost exclusively focused on the North American markets right now. We're still in the process of integrating Niscayah. When we get to the point that the Niscayah organization is ready in Europe, these solutions are exportable to Europe, and we will do that at that time. So they will provide future growth in Europe. None of that's really baked in to any of the long-term guidance that we've given. However, that's sort of the reason that you start to see North America order rates pick up in Security.

Our next question is from Eric Bosshard of Cleveland Research.

Question for you on CDIY, nice acceleration of growth in 2Q versus 1Q. Just wondering if you can dig in a little bit more to the 2Q growth. You talked about promotions and some new products, and I'm assuming some of the outdoor move from 1Q to 2Q. So wonder if you can break up the 6% and some of the components of that and then how you think about the core and the benefit from some of the efforts in the second half for the 5% or better growth you're talking about in the second half.

Sure, Eric. Everything you said, Eric, is correct in terms of outdoor moves, promotions. You'll recall Jim mentioned some major mechanics tools and hand tools moves, but Don can give you even a little more granularity to the extent we're comfortable.

Sure. As Jim touched on, in the second quarter, the growth was significant really in almost all the areas of the business, both geographically and across what we call the SBUs. And there was a promotional aspect in the second quarter, where, in the prior year, that occurred in the first quarter, so that was a factor. We did have the shift of the outdoor season into q -- from Q1 to Q2, and that'll continue to shift into Q3 as the season ends in a month -- roughly in a month or so. So those are all factors. But the reality is what you see within this business is that the new product introductions that they keep rolling out continue to drive organic growth and gain share. The emerging market growth, through the organic growth initiatives, are accelerating to a mid-teens growth or 15% in emerging markets in the second quarter that we expect to continue into the back half. And then we don't talk a lot about Europe, but frankly, the European performance was very strong for them, where they had a relatively flat performance in a very difficult market. And that's allowing us to demonstrate all the other growth that we're seeing and have it flow through across the entire global business of CDIY. And that European flat performance is really because of share gain, as well as some new product introductions that help facilitate that, primarily in the U.K. and in the Nordic regions. So all those factors together are the result of what happened in the second quarter, as Jim articulated. But the reality is as we see those trends continuing in the back half, and the growth that they experienced of roughly 6% is expected to continue in the back half of the year because of all the factors I just mentioned.

Our next question is from Liam Burke of Janney Capital Markets.

You had a very, very strong quarter on industrial, in particular IAR. Could you give us a little color on where in emerging markets you're gaining traction? That seems to be in addition to the strength of the Mac business, an area that's done pretty well.

Sure. We had 4% growth in IAR, and we had double-digit growth in the emerging markets. So that was a good -- one of the big forces behind the growth, as you point out. I think, well, first of all, the answer to your question is very simply that the emerging market growth initiative is what's driving that double-digit growth in the emerging markets. But more specifically, we're very fortunate because we are the only tool company that has both Construction & DIY strength in the emerging markets, as well as Industrial & Automotive Repair access to those markets, channel access. So the way we're going about this is, as opposed to coming at it from one perspective or the other, we're coming at it -- we've joined forces internally between our Construction & DIY business and our IAR business. And that has actually given us much better access to, I think, the emerging of the IAR channels than we otherwise would have because what happens in the -- many of these emerging markets is that the channels are very blurred in between Construction & DIY and Industrial. You don't have -- in many, many of these markets, you don't have the highly developed channels that distinguish between construction and then large retail -- I mean, construction, 2-step large retail, industrial channel, automotive repair channel. You don't have that in the emerging markets. You have much more chaotic channels, much less well-developed channels. And our ability to come at it from a joint perspective and cooperate internally between our Construction & DIY business and our IAR business, I think, gives us the ability to drive that growth the way I just described.

Our next question is from Dennis McGill of Zelman and Associates. Dennis McGill - Zelman & Associates, LLC: I think this question maybe is for Jim. But is there a way to take the backlog, both across electronic and mechanical, and just think about Security backlog overall and have one number as far as what you're entering third quarter with as far as the growth year-over-year? And then kind of within that, Jim, is there a way to separate out what you're seeing market-wise on the Security -- or nonresidential side from what your internal initiatives are? Are there signs, in your opinion, that you're starting to see the market actually pick up and get into a cyclical recovery?

Yes, Dennis, this is John. Jim will take it. But just one point, and we've made this many times, but I think it's important to make it again on backlog. Whether it's one number or 2, what's more important is when it's executable or convertible. As we've increased our sophistication with architectural specifiers and things of that nature, we could have an order in the system that can't be executed until 12 to 15 months from now because, if you think about new construction, we're at the very end of the process. I mean, as the building is being finished, it's when wires are being laid or our systems are being put in. So whether you have one number or 2, it's not possible for us, and as a consequence, I guarantee it's not possible for you, to take that and have it be of much value to you in terms of the next quarter or quarter after that. But I just think it's important to make that point, but Jim can give you just a little more detail.

I mean, I would only make 2 points, and that is definitely one of them, which is that the mechanical part of the business and frankly, the electronic are both at the tail end of the process. The second one is that, without question, there is an increase in the level of non-resi construction activity and increasing backlog related to that in the Security business. I mean, that is a piece of the puzzle. It's a much bigger piece of the puzzle in the mechanical business than it is in the electronic business. But it is, in fact, true that the non-resi construction market is picking up steam and therefore, affecting both these businesses.

Our next question is from Dan Oppenheim of Crédit Suisse. Daniel Oppenheim - Crédit Suisse AG, Research Division: I was wondering, John, I guess you talked in the past a lot about the goals of getting to 20% in terms of emerging market exposure. Now you're getting awfully close to that. Given the different growth rates in some of the markets, so this may be -- it's always a moving target. As you think about this, where do you now think of it in terms of what your goal would be for emerging market exposure?

I don't know if you -- it doesn't matter if you directed it to me or Don. Our goals are unchanged. And as we would have a tendency to do, when and if it looks like we're going to achieve it and it's adding value to our shareholders, we'll raise that bar. But your point is correct. The combination of divestiture of HHI, acquisition of Infastech and good growth, we've gone from 10% or 11% up to 16% or 17%, depending on the quarter on an annual basis. We closed the year at about 16%. So we're getting there quickly. As we start to approach it, that 20% could well become 25%, if those markets remain as profitable as they are now. It's incredibly important not just to grow but to grow profitably. And as Don and Jim have pointed out in various conversations, these markets are at or above line average in many cases, which is not the case for a lot of businesses. So 20% could well become 25%, but let's get 20% in the bank before we change that goal. So what we talked to you and the investment community about in May, those goals are all unchanged.

Our next question is from David MacGregor of Longbow Research.

Just on the Security business, encouraging to see the order book building. But wonder if you could just help us by elaborating on that 310-basis-point margin decline. And you'd parsed out 4 different drivers in your presentation, Jim, and I was just wondering if I could get you to elaborate on that and maybe quantify the contribution to that 310 basis points.

I mean, there's not much more I can elaborate other than to say that if you take those 4 items, they really do account for the vast majority of the 300 basis points. And they're all significant, so I could say they're roughly 25% a piece or whatever. That's directionally accurate but...

They're all within 20% to 30%.

Yes, they're all within 20% to 30%.

Or each one is within 10% to 30%, I should say.

Christine, I believe that's all the time we have for questions, and we'd like to thank everyone again for calling in this morning. I know certain of you weren't able to ask a question. Please give me a call after the call, and we'll be able to handle and accommodate any questions you have. And thank you, all, for your attendance and participation this morning. Thank you.

And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.