Good morning, and welcome to Whirlpool Corporation's Third Quarter 2011 Earnings Release Call. Today's conference is being recorded. [Operator Instructions] For opener remarks and introductions, I would like to turn the call over to Mr. Larry Venturelli, Senior Vice President of Finance.

Thank you, and good morning. Welcome to the Whirlpool Corporation Third Quarter Conference Call. Joining me today are Jeff Fettig, our Chairman and CEO; Mike Todman, President of Whirlpool International; Marc Bitzer, President of Whirlpool North America; and Roy Templin, our Chief Financial Officer. Before we begin, let me remind you that as we conduct this call, we will be making forward-looking statements to assist you in understanding Whirlpool Corporation's future expectations. Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K and 10-Q. Turning to Slide 2, we want to remind you that today's presentation includes non-GAAP measures. We believe that these measures are important indicators of our operations as they exclude items that may not be indicative of, or unrelated to, our core operating results. We also think that the adjusted measures will provide you with a better baseline for analyzing trends in our underlying business. Listeners are directed to the Appendix Section of our presentation beginning on Slide 36 for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. Our remarks today track with the presentation available on the investors Section of our website at www.whirlpoolcorp.com. With that, let me turn the call over to Jeff.

Thanks, Larry. Good morning, everyone, and thank you for joining us on our call today. As you saw in our press release this morning, we reported an increase in revenue and earnings in the third quarter compared to last year. However, these results were lower than we expected as our price increases and productivity improvements were more than offset by the impact of weakness which we saw in global demand and high material costs. As you see today, we have announced very aggressive plans to substantially reduce our structural costs in order to improve profitability. You may remember as we stated in our second quarter call that given this period's uncertain economic growth and consumer demand, we will be prepared to take the necessary actions to expand our operating margins and improve our earnings if conditions deteriorate. And as you all know, since July, consumer confidence in the U.S. has declined and is now at its lowest level since March of 2009. Demand is also falling off sharply in parts of Europe and slowed in emerging markets. So given this economic environment, we've taken significant actions to substantially reduce our cost and capacity, which will improve our operating margins and profitability. I would say these plans are the result of a comprehensive global review of our operations, products and manufacturing facilities and are expected to reduce our fixed cost structure by approximately $400 million by the end of 2013. Before I get into those details, let me first turn to our third quarter results, which you can see on Slide 5. For the quarter, sales reached $4.6 billion, which represents a 2% increase from last year. Our EPS was $2.27 versus $1.02 a year ago. Year-to-date, we have had $739 million of cash usage, which includes $589 million used upon…

Thanks, Jeff, and good morning, everyone. Let me start by giving you my perspective on North America's performance for the quarter. Shown on Slide 13, the price increases we announced in April and in August have been fully implemented, and we have announced an additional 6% to 7% price increase on all SKUs effective January 2012. These increases are necessary to mitigate higher material costs. As a result of these cost-based price increases, our product price/mix has improved both sequentially and year-over-year. At the same time, our margins saw continued pressure because of weaker-than-expected industry shipments, which were down 4% in the quarter. Significant raw material costs continued to be a headwind for us during the quarter. We saw material reach record levels in August, and we expect cost to remain at these elevated levels. On Slide 14, you see annual U.S. industry T7 units since 2005. Demand has dropped back to recessionary levels and in the U.S., we've seen replacement demand become the vast majority of the overall demand. Based on recent trends, we now expect industry shipments to be down 3% to 5% for the year compared to our previous forecast of down 1% to 2%. On Slide 15 you'll see North America's financial performance in the third quarter. Regarding our overall unit volume, we saw North America unit shipments down 3% in the third quarter. Within the U.S. industry, that was down nearly 4%. Net sales of $2.4 billion were down 2% from last year due to the weak industry demand. Turning to Slide 16, you can see just a few of our new products that we launched in the third quarter, including a Whirlpool brand side-by-side refrigerator with 6th Sense technology that monitors and adjusts temperatures to help food stay flavorful. The refrigerator combines counter depth…

Thanks, Marc. Let me to start with the third quarter 2011 review of our International business on Slide 18. Overall, compared to last year, our international businesses' balance of sale grew from 47% to 50%, driven primarily from sales in the emerging markets. Sales of $2.3 billion grew 7%, excluding currency sales were flat. Our Europe business was particularly affected by weak demand, high material costs and unfavorable price/mix during the quarter. In Latin America, high inflation contributed to a slowing of growth as we experienced a unit volume decline resulting in a slight sales growth after adjusting for currency. Operating earnings were impacted by higher inflation and significant raw material costs. in Asia, we saw unit volumes growth of 4% over 2010 levels. High inflation reduced consumer spending in India, resulting in a very weak demand environment. And this was partially offset by strong unit growth in China and continued productivity improvements across the region. Turning to Slide 19. In the third quarter, our Europe, Middle East and Africa sales increased 6% year-over-year to $874 million, with unit shipments flat compared to the prior periods. Excluding the favorable impact of currency, sales decreased approximately 3%. The region reported an operating loss of $12 million versus a $26 million profit last year. Results were unfavorably impacted by significantly higher material costs, lower product price/mix and production reductions to align inventory to its demand, which were partially offset by cost reductions and productivity initiatives. Slide 20 shows a summary of our Latin American third quarter results. The region reported sales of $1.2 billion, an 8% increase from the prior year period, with appliance unit shipments down 5%. Excluding the impact from currencies, sales increased approximately 1%. Operating profits totaled $147 million compared to $143 million in the prior year. Cost reduction…

Thanks, Mike, and good morning, everyone. Beginning on Slide 24, I would like to summarize the main drivers of our third quarter results. Our sales grew by more than 2% to $4.6 billion. We benefited from both price/mix and currency. Excluding the impact of currency, sales were down slightly on global unit volumes, which decreased 2.3% from the prior year. We continued to face elevated raw material and oil-related cost, which peaked in August. Additionally, weaker-than-expected industry demand resulted in further production reductions. We continue to tightly manage inventory levels given the challenging and volatile global demand environment, and we continue to expect year-end inventories to be in the $2.6 billion range. Based on volume and product mix, we monetized $62 million of BPX credits compared to $56 million in the prior year. Turning to the income statement on Slide 25. You will note that our gross margin contracted 190 basis points or 12.4%. The most significant unfavorable impact on our gross margin was higher material cost. This was partially offset by favorable product price/mix and positive productivity despite significant production declines. SG&A expense totaled $394 million compared with $391 million in the prior year. As a percentage of sales, SG&A was down slightly from the prior year as a result of lower infrastructure cost. Restructuring expenses totaled $36 million during the quarter and resulted from cost reduction actions in Europe and North America. In light of today's announcement, which Jeff discussed earlier, we now expect to record restructuring charges of approximately $160 million during 2011. Turning to Slide 26. I wanted to point out interest and sundry expense. While several individual line items roll into this caption on the income statement, the key year-over-year reduction was related to legal contingencies incurred during the prior year. We reported diluted earnings…

Thanks, Roy. As I mentioned previously, we are focused on aggressively expanding our operating margins and executing all of the actions which we described on Slide 22 that we've discussed on today's call. I'd like to turn to Slide 33. Many of you may remember, about last year at this time, we hosted an Investors' Day and shared our value creation targets, which used 2010 economic data as a basis. At the time, we certainly didn't foresee the extraordinary material cost inflation or the weakening of industry demand levels that we've seen this year. And of course, these macroeconomic assumptions were critical elements of setting our long-range financial goals and timeline. Certainly, these challenges have delayed our revenue growth and the rate of improvement, margin improvement for most of this year. And we do expect the volatility we've seen in the global, macroeconomy will have a continued impact on the industry demand in the near term. Having said that, we still remain confident in our ability to achieve our long-range financial goals, including achieving 8% operating margin. However, given current economic conditions, it may take us additional time to realize these targets. Turning to Slide 34, we show what we expect to be the main contributors to our margin expansion. The first are the announcements we're making today regarding fixed cost capacity reduction. We expect this result in 2 points of margin expansion in 2012 and '13. Secondly, we expect ongoing productivity initiatives to more than offset inflation going forward and positively contribute to our margins. Next, as you heard from many of our speakers today, we expect improved price/mix driven by innovation and already announced or implemented cost-based price increases, and we expect this to have substantial margin impact next year. We also continue to grow our adjacent businesses…

[Operator Instructions] And we'll take our first question from Eric Bosshard with Cleveland Research Company.

This is Tom Mahoney calling in for Eric today. You guys commented about price/mix and that it would add substantially to margin in 2012. How do you think about this being relative to an industry that's getting more competitive in the U.S. and in Brazil, plus the consumer that is more focused on value and lower prices rather than higher prices at this point?

Tom, this is Jeff Fettig. You know, first of all, we've -- we just had an important turning point in that third quarter where price/mix has turned positive for us. And this is after several quarters, 4 or 5 quarters of negative price/mix, more driven by what I would call very aggressive competitive actions in the marketplace and a lot of major markets. We're seeing a very strong acceptance to our new product innovation. Given the economics of this business, we've made the decision that we had to pass price increases through based on the high cost that we're seeing, and we're adjusting our business accordingly. I don't -- this is not a consumer issue. There are -- the price points that remained and -- the affordability factor and the price points that remain in the marketplace today will be there tomorrow. It's the value feature content for what you saw at the price. In the case of the U.S., yes, this is the biggest replacement market percentage wise we've ever seen. So people are buying -- or people who's products break and they're in the market for 2 or 3 days and they buy a new one. So I think the tough economic environment, we agree with. We do believe people, particularly if they've been in the market -- haven't bought a new washing machine or refrigerator for 8 or 10 years, recognize the new innovation value and are willing to pay for it. But we also know that there is a small percentage of very, very limited price-only shoppers that may buy the opening price point. And we're just -- that's just not a piece of the market that we're as heavily invested in.

Okay. And then a follow-up on Latin America. What do you guys see as the driver of the swing in unit demand there? 2Q, up 21%; and 3Q, down to 5%. Is it the market? Is there any moving pieces you can share there? And then also, does it temper your expectations as you look into 2012 for the region?

Tom, this is Mike Todman. What we've seen in Brazil, as we have seen in some other emerging markets, is inflation. And that's what's caused the kind of the consumer dampening for our types of products, if you will, durable goods. Having said that, what we saw -- if you take our core 3 products in Brazil, which is washers, refrigerators and ranges, we actually did see increases. Where we saw decreases was in some -- was in air conditioners and microwaves, and particularly at the low end. So what we're expecting is to have an environment that's less favorable, if you will. But we still expect to see some positive growth in the region.

And we'll go next to Ken Zener with KeyBanc Capital.

Marc, you had said you expected improvements. I believe you're referring to North America in the fourth quarter. Could you give us a sense -- I mean, if you were talking about the $2.6 million in the third quarter? Or was that the year-over-year versus the $1.7 million.

Ken, it's Marc, I was referring to the essentials and given the poor margins of Q4 relative [ph] also the year-over-year.

Okay. And then I know you guys said that the largest headwind to your gross margin was material. But could you kind of talk about, given the -- I mean, I think obviously people had seen the AHAM data that was out there, but you guys obviously took down the volume. Would you be willing to quantify how much the volume was impacting you guys in terms of underproduction?

Yes. Ken, this is Roy Templin. A couple of things. One, your first part of your question on materials. When you factor in the LIFO piece in the materials, it was actually about 310 basis points negative on our margins in the third quarter. That's the first part of your question. The second part of your question though, you're right. Conversion was a really big deal on the quarter. We took out roughly 6% of production units when you look at year-over-year production levels. And that cost us, Ken, about 130 basis points in gross margins. So typically, we're at 2-point plus of productivity and cost takeout every quarter. This quarter, we were about 0.6 points, and the reason is because we had 130 basis hit from production takedown.

Okay, and I guess that 6% is referring to North America?

That 6% is a global production number. So global pro is down 6% year-over-year. Yes.

Okay. And now, I guess, just to be clear, the 3% you reported in North America, I know last quarter you guys had outpaced the AHAM data. Would you say that 3% versus the 4% -- 3% North America decline versus the 4% AHAM data is more on a like-for-like basis versus last quarter?

Ken, it's Marc Bitzer. Again, let me also first verify what the typical T7 or T6 AHAM data is not exactly consistent with overall North American unit shipments because there are other products grouped in their segments. Having said that when you particularly refer to market share, markets share in a sequential base has been approximately flat or marginally up. And in a year-over-year basis, down.

And we'll take our next question from Sam Darkatsh with Raymond James. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: A couple of clarification questions and then one, I guess, meaty one. First off, the restructuring, Roy, that you had announced. Is that incremental to core restructuring? Or is that going to be overall restructuring for the next couple of years?

That's overall, Sam. So there's an incremental piece in 2011, but all these numbers are total restructuring that we expect. So you see the stub in 2011 of $105 million. That's about $80 million, Sam, for new initiatives and about $25 million for things that were already underway. And then you see in '12 and '13 the $280 million and $150 million, but those will be all-inclusive numbers. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: My second clarification question, Marc, what were specifically your North American unit expectations for Q4? Maybe I'm a little confused.

As I made in my script, we basically refer to 2 numbers. We refer to a full year number of down minus 3 to minus 5, and I was also referring to a Q4 numbers roughly in the range of minus 1 to minus 2 compared to last year. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: So then, if you take a look -- I mean, you just -- the industry just did a minus 4, and the comparison gets much more difficult in Q4. And you're saying the promotional environment may even ease. How does that put logically or rationally? I'm confused.

And Sam, again it's Marc. Of course, there's a lot of uncertainty going forward on market or expectations in demand. Having said that, we know that there is a certain base element, which is so strong and replacement-driven, which almost puts a certain floor to the overall unit demand. Of course, yes, it need to be seen but the overall demand level. But again, our model right now would indicate a minus 2, a minus 1 to minus 2. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: Okay, last question, then I'll defer to others. The U.S. energy tax credit program is set to expire at the end of this year. I guess there's some banding about in Congress as to potentially extending it. If the program is allowed to -- at least theoretically is allowed to continue in its current form, how much additional capacity do you have to -- in terms of incremental production of the applicable units since I believe the credits are based on incremental production on a year-on-year basis.

Sam, this is Jeff. There's a lot of pieces to that question. First of all, we don't have any insight to whether those will be extended or not. The way we're planning is they expire at the end of the year, and that's how we're playing the business, one. Two, there are and it's been reported there is some bills, bill proposals in Congress that potentially could include some type of continuation in these credits. The how and what are the rules, et cetera, et cetera -- I mean, first of all, will they get passed? And second of all, what will the content be? We don't know. And again, that's why we're not planning on anything. The third question is those requirements would then determine how you calculate incremental. But basically, we'd have to sell more than we did this year and because we basically do our production based on what we saw.

Yes, Sam. This is Roy. I mean, it's a deep question, you're right. I think ultimately, as you know, a couple of factors. One, it's units produce above a ruling baseline. And again, as Jeff said, the very important piece will be what will the new baseline be? Will there be a baseline? And secondarily, of course, there's always a total limit. Right now, it has to be on gross receipts. But again, what might that limit be? How might it be calculated? And once we -- if, in fact, they were extended, we would have to first understand the components of legislation and figure out what it would mean for Whirlpool. And we wouldn't dare be in a position to speculate on that at this point. Sam Darkatsh - Raymond James & Associates, Inc., Research Division: But the capacity takeout announced today does not necessarily impact your ability to produce over and above what the baseline has been, at least theoretically?

It does not, Sam. And that's why in my script, I was careful to talk about -- the focus that we have is on high-cost capacity but absolutely, with laser focus on the ability to continue to sync it up, if in fact and when in fact demand improves we have the availability to take capacity up.

And we'll take our next question from Robert Kelly with Sidoti. Robert J. Kelly - Sidoti & Company, LLC: I had a question last quarter, and you touched on it again during your earlier remarks. You have a goal of about 200 basis points from cost, productivity action that you try to get, assuming that everything breaks your way with material and whatnot. Do the actions that you announced today, would that be incremental to that 200 basis point margin goal? How should we think about the structural changes that you announced today?

Robert, the way -- you should think about them the way we think about them. You should look at the restructuring actions. We expect to take down our fixed cost structure by $400 million. That's why I said I expect that to be directly focused on expanding our margins. Beyond that, in a normal productivity year, and this was not one, in 2011, and if you go back to the last 4 or 5 years, our productivity has exceeded our inflation in the business. And so we have a global productivity program in place at all times, and we would expect -- yes. For example, last year, I think we achieved 3.5%. This year, with the high inflation, raw material, high inflation in the emerging markets, this is candidly the worst inflation year we've ever seen. But going forward, and as we get more visibility next year, we would expect that we're building our plans beyond the restructuring to have net positive productivity, which would enable us to improve our margins as well. Robert J. Kelly - Sidoti & Company, LLC: And then over and above the ratings [ph] announced.

That's correct. Robert J. Kelly - Sidoti & Company, LLC: One final one if I may. You talked about the raw material pain being behind you at this point. Have you seen, as far as the competitive landscape, the urgency to match price increases or continue the price increases staying there with raw materials leveling off?

Yes, Robert, let me -- first of all, let me be clear on raw materials. They've stabilized at a high level. So they've not really -- in fact, they haven't gone down. And we don't -- again, it's too early for us to talk about 2012, but we certainly don't expect to see the kind of increases that we saw throughout this year. So not going up is viewed as a positive. Regarding pricing, candidly, we can only comment on what we do. I can't really make any comments about what competitors are doing.

And we'll take our next question from David MacGregor with Longbow Research.

I guess, Jeff, just what -- on the most recent question there, you indicated that raw materials have stabilized at a high level. I mean, it's pretty clear that raw material markets are rolling over pretty hard here. Do you have hedges in place or contractual obligations that are going to keep you at these price levels and represent some divergence from what's happening at spot markets?

Yes, David. If you look at our cost structure for raw materials, steel, resin, base metals, copper, oil related, so on, those dynamics -- everyone of those markets has its own contract structures. And on base -- let's just take base metals, we've talked about this before, we have a very consistent forward hedging policy that we, within limits, adhere to at all times. When metals are going up, we usually enter the curve. When metals are going down, we may cross over for a while, be over the curve. But the point is, it's predictable for us. And even with the metals market, I mean, at which point in time do we talk about? Because the volatility, as you know, has been very extreme. So that's one. Two, resins have been one of the biggest increases this year. I think quarter-over-quarter, our spot rate for resins is 25% up. Those contracts are negotiated all the time. They're generally shorter term durations. And so they go up and down with the market. Steel is a little bit different, as we've talk about in the past. And in the emerging markets, steels everyday every week discussion. In both Europe and North America, we have multiple types of structural contracts with -- that do provide us within the limits and predictability for an annual period of time, but we don't have any steel contracts going on an annual period. So there's a lot of volatility, but I just -- to be clear, raw materials have not really gone down. In fact, as we said, based on the set of contracts and the way we, the mechanisms, we have, we actually think we peaked out, meaning increases in the third quarter, and now look forward to some stabilization without having increases month-over-month, quarter-over-quarter.

I guess the other question was just given the announcement yesterday on the trade cases, there's a lot of interest in that this morning. Can you just talk about the potential to pursuit other trade actions based on how this looks like it's playing out?

Yes, David. Let me first -- as I said, we're very pleased with the progress on the trade case that we had in the U.S. And just to be clear, there's 3 parts to the process. Last May, there was a 5 to 0 ruling by the Commission that there was grounds for this. This was the second step in the process, which was very important, where Department of Commerce had issued their preliminary ruling. And now we enter the last phase, which is -- every phase is important. The last phase is the auditing process where all materials will be verified with an expected final ruling in late April or early May. So we, in our statement, reiterated our confidence in our position, and we're very confident as were when we filed the case. We're not speculating on anything beyond that. We don't do that, and so we're really focused on this case.

Okay, good. Just last question, my understanding is that you elected to take Maytag out of Best Buy. And I'm just wondering if there's many major changes going on in terms of brand strategy with Maytag, and is there a market share delta there that we should be talking about?

David, it's Marc Bitzer. What I would prefer in this case -- and we usually don't comment on specific trade partner arrangements. There's always a lot of tactical SKU moves. In this specific case, you need to also keep in mind that the initial volume we meet are very, very, very small.

Have you changed your brand strategy there?

No.

Yes, our brand strategy is really built around consumers.

And we'll take our next question from Michael Rehaut with JPMorgan. Michael Rehaut - JP Morgan Chase & Co, Research Division: First question, I was hoping just to go back to raw materials for a moment. I don't believe you've quantified what the full year expected headwind is now at, and I was curious if you could do that. Because obviously, it's I think one of the key drivers to the reduced guidance. And as part of the raw material conversation, I understand that certainly, a big issue of this is just how it works through the system and again, some of the hedging. But as mentioned earlier -- I mean, at this point, you have cold rolled down 20% from year earlier peaks. You obviously have oil and other materials down as well. Why wouldn't that necessarily be a little bit of a tailwind in 2012?

Michael, this is Roy. Let me first of all answer I think the first couple parts of your question. First of all, our full year outlook continues to be $450 million to $500 million as it was last time we provided guidance. So there's been no change in terms of the full year outlook. And I think Jeff gave a thorough response to David's question, maybe a little more mathematics behind it for your perspective. If you look at local corporations sort of quarter in, quarter out; period in, period out, if you look at what we have in the way of fixed contract, what we've protected through cash, collars, hedges, et cetera, what you find, Michael, is about 60% is covered with some kind of derivative or fixed contract, and the other 40% is floating. So to build on all of the things that Jeff said from a mathematical perspective, those are the numbers behind how much is fixed and how much floats and is variable.

And Michael, your second question, I think that -- general discussion about weak demand levels and high inflation don't tend to go together, but that is the environment. And that's what it's been. And we're not prepared to talk about 2012 yet. As I said, we will in early February. And candidly, there's a lot of discussions and negotiations going on between now and then too. Michael Rehaut - JP Morgan Chase & Co, Research Division: Okay, I appreciate it. The second question, just to hit back on some of the anti-dumping, the preliminary ruling there, can you give us any sense of ultimately what that means on a practical basis in terms of the market? I understand that obviously, there's some tariffs that would have to be put in place if prices aren't raised by some of those parties. What does that mean on a practical level? I mean, do expect there just to be some further price increases then or price adjustments by the competitors? Would there be a reduction in the volume of those competitors if they don't necessarily act immediately? Or would this alternatively be just more tied up by more litigation in the near-term?

Michael, it's Marc Bitzer. Let me first try to answer question to -- first of all, what is factually happening. Okay? What's factually happened is as of next week, a number of importers, Samsung and LG being among them, will be liable to pay dumping duties if they fail to set U.S. wholesale prices to fair value. So they basically have to submit bond basically. That is what's going to happen factually. What will also happen in the course of March, April and the final announcement in 2012 is the final determination which is based on the formal in-depth order by the DOC, which will reveal a lot of -- full picture. So that's what's actually happening. What different players will do in the marketplace, from my perspective is pure speculation at this point. I can't say how they will deal with that, and that somewhat needs to be seen and that needs to be viewed in subsequent months.

Yes. And just to be clear also -- so the period that this begins is next week, is November 2. Michael Rehaut - JP Morgan Chase & Co, Research Division: Right. So that would effectively be addressed by the posting of a bond, and I guess we'll get the final determinations late 1Q?

No, we're in May. I mean, there's a public schedule by the agencies, which give you exactly the process and the dates. In fact, it should be on our press release yesterday. Michael Rehaut - JP Morgan Chase & Co, Research Division: No, no, it is. I appreciate that. One last one, if I could, the pension expense that was reiterated, any initial thoughts in terms of -- is that type of a level something that we can expect, the contribution level over the next few years? I know you didn't necessarily want to talk about guidance, but given all the changes in -- market assumptions and return assumptions, if you could have any comments on that front would be helpful.

Sure, Michael. I can't go fully into 2012, but I can give you perspective here. Our defined benefit pension expense this year will be roughly $28 million with the expense next year, what can we give you[ph] a finite number will not be significantly different than that number. So the first part of your question on expense, you should expect next year to be very similar to this year. From a funding perspective, we're going to end up funding just under $300 million this year. If you ask me to estimate, while it's not perfect, what we'll fund next year, I would guess it would be approximately $250 million. So down about $50 million from this year.

And we'll take our final question from Josh Pollard with Goldman Sachs.

My first question is for Mike Todman on Brazil. I want to understand everything that's really going on there. You're talking about production cuts in Latin America, which is not something that we were expecting. Electrolux, about an hour ago, said that the market was up 4%. You said that your volumes or your shipments were down 5%, and your margins are right around that 7% level x, BEFIEX. Should we be thinking about this as a 7% margin business until something changes on the demand function? And where do you feel like your share is headed?

Yes, let me comment -- first of all, address the first piece of that. What I said to an earlier question is actually, when you look at the core 3 products, we actually saw an increase in our sales of around 5%. Where we actually had some decreases, which we elected to, is in microwaves and air conditioners really at the low end. So Josh, that's where we made the adjustments that we needed to make. And I feel very good about kind of where and how we're positioned, if you will, in the marketplace on -- in terms of both our competitiveness and our ability to maintain our share. So I'm very comfortable that in the 4 categories, we've done that.

Yes. And in fact, Mike, if I can, just so Josh -- just so you're not confused, the 6% reduction takedown that I referenced earlier, and again, I've mentioned that's a global number. And so Mike is exactly right when you look at production in the Latin America region by itself, production is in fact up year-over-year. It is not down. Okay, just for clarity.

That's very helpful.

And I guess the other part of your question is our operating margins. And actually, what we saw, even if you strip out BEFIEX, our operating margins went up. They were around above 8%, okay? So not at 7%. And what we have done is we've executed some price increases in the marketplace already, and we're beginning to see the positive effect of those. So we expect that our margin will continue to improve throughout the business.

Josh, I'd just add -- the only other color I'd add to that is we're still very positive at our Latin America business. It had spectacular growth. We don't see easing of growth for shorter periods of time as a bad thing, given some of the inflation that's going on in those markets. But the general trend has been and I think continues to be up. There's a lot of talk about what's going on in the Brazil market. I guess there's a lot of clarification we can add to that, but the point is we feel very good about our position. We have implemented price increases in Brazil. That was a conscious decision given all the inflation there, and actually feel very good about our business there.

That's helpful. I'd love to discuss with you guys how you get to the 8% plus when -- maybe after the call if you guys have some time. My second question is around cash flow for 2012. I'm just going through a couple of line items between the Brazilian cash settlement, the pension contribution that you mentioned a few minutes ago, the cash restructuring that you guys outlined and then the makeup of your CapEx of roughly maybe being flat next year. I get cash, sort of cash obligations, just from those 4 buckets of about $1.4 billion next year. I'm wondering, am I off on that? I'm trying to understand how you guys get to cash flow positive next year when you add that and also consider the debt that you have due in '12.

Josh, it's Roy. Well, first of all, no, I don't think you're off in terms of assumptions you're making with respect to the payments for next year. Again, I mentioned to Michael what we think pension funding will be -- you're exactly right. We do have a softer payment, and we have some significant outflows next year. But what we haven't talked about yet, and unfortunately, what we can't talk about on this call because we're, quite frankly, just not prepared, is all the other components of operating cash flow. In particular, the delta and cash earnings when you look year-over-year to next year, et cetera, what we're going to do with working capital. And when you see that side, then I think the story will come together better for you. But in terms of have you identified some big cash outflows next year that we are in fact seeing as headwinds in cash flow, yes, we have.

Okay. And then the last -- if I could sneak one last one in, on the promotional environment. You guys made -- mentioned that it would be better. I'm just comparing and contrasting that with the comments that we heard from Electrolux about an hour ago that they expected to be equal, if not worse, and a pretty big player here in the market. I'm wondering just what gives you the confidence that the promotional environment would be better this year? I just really want to understand if there's something different about the sales environment or about the pricing or competitive environment that would suggest to you that the promotional environment could be better this holiday season.

Josh, It's Marc Bitzer. I was referring to our promotion plans for the holiday period. And the big difference on our plans versus last year, last year, most of promotions were in the ballpark of 10 to 20 days. Right now, we're talking more about 6 to 10 days maximum. So we roughly cut our promotional window, if you want to say so, in half. It also means, with our promotional price investments, which we've put in to the holiday period, is roughly half. We are a very significant part of the market, and that's what we can tell as far as actions. I can't comment on any competitors' actions for the holiday period.

Yes. And Josh, and in fact, we talked about this last quarter is that we, given the high material cost, given the fact that we were -- we had announced and now implemented price increases, given the fact that this is a highly replacement market, that's what drove the decision making we had around our own plans.

And Josh, it's Marc Bitzer, just to add also on this one. Maybe that explains our own reasoning. In hindsight, if you look at specifically promotions windows around Labor Day or July 4, the typical lift which we saw in the market from promotions in the market was a fraction of the past. That's why you just don't get where -- we don't expect any return from promotional investments, and that's our decision.

Okay. Can I sneak one last one in?

Yes. Last one, Josh.

All right, I promise this is the last one. From a strategy standpoint, it seems like between your production cuts, the focus on not being as promotional last year, that you guys are taking on a strategy to be more profit-focused over market share-focused. And I recognize that you don't always have to make the decision one versus the other. But given the industry dynamics, it seems like that's one of the decisions that has to be made. Are you guys leaning more -- if having to choose between those 2, are you guys leaning on the side of profit margins? And if you just want to talk about any initial plans for that $350 million?

Josh, let me wrap that up. I wouldn't call it strategy. I would say, if you look at the margins and the profitability that we -- yes, I tried to be very clear about that. Our #1 priority has been operating margin. With the material cost increases that we've seen, we're not overly interested in selling appliances for a loss. So that's not really strategy, that's just value creation. And so our strategy is to drive innovation, drive great brands and get appropriately paid for those products. And so even in our restructuring plans, that's why we focused on taking high-cost capacity of low-profit segments offline, because we didn't see a near-term path to create value from that. So listen everyone, I appreciate you joining us today. Thank you. We look forward to talking to you next time.

And that does conclude today's conference. Thank you for your participation.