Jeffrey L. Turner - Chief Executive Officer, President, Director and Member of Government Security Committee Philip Anderson - Chief Financial Officer and Senior Vice President Coleen Tabor -

Eric Hugel - Stephens Inc., Research Division Michael Callahan - Auriga USA LLC, Research Division George D. Shapiro - Access 3:42, LLC Gary S. Liebowitz - Wells Fargo Securities, LLC, Research Division Michael Sang - Morgan Stanley, Research Division Richard Tobie Safran - Buckingham Research Group, Inc. Howard A. Rubel - Jefferies & Company, Inc., Research Division Joseph Nadol - JP Morgan Chase & Co, Research Division Robert Spingarn - Crédit Suisse AG, Research Division Ronald J. Epstein - BofA Merrill Lynch, Research Division Troy J. Lahr - Stifel, Nicolaus & Co., Inc., Research Division Finbar T. Sheehy - Sanford C. Bernstein & Co., LLC., Research Division Cai Von Rumohr - Cowen and Company, LLC, Research Division David E. Strauss - UBS Investment Bank, Research Division

Good day, ladies and gentlemen, and welcome to the Spirit AeroSystems Holdings Inc. Third Quarter 2011 Earnings Conference Call. My name is Jennifer, and I'll be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Mrs. Coleen Tabor, Director of Investor Relations. Please proceed.

Good morning. Welcome to Spirit's Third Quarter 2011 Earnings Call. I'm Coleen Tabor, and with me today are Jeff Turner, Spirit's President and Chief Executive Officer; and Phil Anderson, Spirit's Senior Vice President and Chief Financial Officer. After brief comments by Jeff and Phil regarding our performance and outlook, we'll be glad to take your questions. In order to allow everyone to participate in the question-and-answer segment, we do ask that you limit yourself to one question. Before we begin, I need to remind you that any projections or goals we may include in our discussion today are likely to involve risks, which are detailed in our news release, in our SEC filings, and in the forward-looking statement at the end of this web presentation. As a reminder, you can follow today's broadcast and slide presentation on our website at spiritaero.com. With that, I'd like to turn the call over to our Chief Executive Officer, Jeff Turner. Jeffrey L. Turner: Thank you, Coleen, and good morning. Let me welcome you to Spirit's third quarter earnings call. I'll begin with a look at our business and related performance and then Phil will review the financial results. After that, we'll be glad to take your questions. Let's begin on Slide 2. Our core business continued to demonstrate solid operating performance in the third quarter, as we are successfully transitioning to higher rates and benefited from model mix. This quarter marked a number of important milestones, including the certification of the 787-8 and 747-8 Freighter, along with the initial delivery of the 787-8 to an airline customer. The certification and delivery of these programs are critical milestones that enable us to move on to the next phase of production, where we can begin to realize their long term value. The announcement of the 737 MAX is another important decision point that extends the life of this very successful program. High volume derivative programs are a core competency for Spirit and we have the expertise and capability to bring value to our shareholders as we play a significant role in the future of this airplane. In the quarter, we successfully transitioned to 35 per month on the 737 program and continued to deliver higher volumes with incremental margin improvement across our core programs. Throughout the quarter, we remained prepared to resume talks with our technical and professional workers in Wichita to negotiate a fair and competitive contract. Our objective with all of our union partners has been and continues to be to keep our company healthy and our team for the future intact. Our backlog is now over $30 billion, demonstrating the strong demand for our core products and our development programs transitioning to production. As the large commercial aircraft market continues to be positive, we remain watchful of global economic and political dynamics, while closely managing our capital spend to support increased demand for our products. Now let's talk about some of the specific accomplishments across the business during the quarter beginning on Slide 3. Fuselage Systems delivered solid operating margins of 14.7% on $542 million in revenue during the third quarter, as volumes across core programs increased. The Fuselage segment 737 high rate production line continues to perform well, as the team delivered its 3,800 ship set of the Next Generation Fuselage. The 787 team made progress by delivering 5 airplane fuselage sections in the quarter including the forward fuselage number 49. The Fuselage team also continued its progress on the 747-8 program this quarter by delivering 2 freighters and 2 intercontinentals bringing the total number of fuselages delivered to 34. Though early in our efforts to implement cost improvements on the 787, the joined Boeing and Spirit teams are tracking per plan to identify and implement cost improvements across the program on the current product structure, its producibility, efficiency and productivity. On Slide 4, you see the Propulsion team delivered strong operating performance with margins of 17.1% on $309 million in revenue during the third quarter, as volumes across the core programs increased and we saw additional aftermarket volume. We are seeing improvements across the Propulsion production programs with the exception of the BR725, where we continue to see cost pressure and are working closely with our customer to identify and implement cost improvements to reach our goals for this program. The segment's core business continued to perform very well, as we transition to higher rates for both the 737 Next Generation Engine Pylons and Thrust Reversers, surpassing line unit 3,800 in the quarter. The Propulsion team has been working closely with our customer in the early design phase of the 767 Tanker. I am pleased with the team's progress that will extend the life of this core program. On Slide 5, you see the Wing Systems segment, which primarily consists of our Europe, Malaysia and Oklahoma operations. The Wing team reported operating margins of 8.2% on $277 million in revenue during the third quarter, as volumes increased across core programs. Spirit Europe produced high volumes of hardware for our Airbus customer reaching line unit 5,000 for the A320 Wing components. The Oklahoma team continued producing on derivative programs as they delivered the 33rd 747-8 Fixed Leading Edge Wing section and the 51st set of 787 wing slats in the third quarter. We remained focused on meeting customer commitments, as early production efforts continued on the Gulfstream G650 and G280 wing programs and development efforts progressed on the A350. Now let me turn it over to Phil, who will provide more details on our financial results and outlook.

Thanks, Jeff, and good morning. I'll begin with the key financial highlights for the third quarter on Slide #7. Revenues for the third quarter were up approximately 13% as compared to the third quarter of 2010, on increased delivery of large commercial aircraft and stronger aftermarket sales. Operating margins for the quarter were a strong 10.7% compared to the 2010 third quarter margins of 8.2%. Third quarter 2011 operating margins reflect year-over-year improvement associated with the increased volumes, model mix and disciplined expense management. These results reflect contributions from the core business as the Fuselage and Propulsion segments realized favorable cumulative catch-up adjustments totaling approximately $6 million, partially offset by an unfavorable $2 million of cumulative catch-up adjustment due to modest cost growth in the Wing segment. The quarter also included an additional $10 million of foreign loss on the CH-53K program associated with the change in the make-buy strategy (sic) [make versus buy strategy]. Fully diluted earnings per share for the quarter was $0.47 per share reflecting margin expansion on higher volumes, a lower effective tax rate and higher interest expense. Excluding the net unfavorable impact of $0.03 per share associated with new program charges in the cumulative catch-up adjustments, EPS for the third quarter would have been at $0.50 per share. Cash from operations for the third quarter of 2011 was $66 million source cash, as working capital reflects increased inventory offset by favorable accounts receivable and timing of payables. During the quarter, we satisfied a repayment obligation in full associated with the 787 customer advance of $396 million. This is a significant milestone for Spirit, as the 787-8 airplane is now certified in service and our 787 ship set deliveries to Boeing Commercial Airplanes is now on a cash basis. Capital expenditures were $80 million for the quarter compared to $52 million for the third quarter of 2010, as investment in new programs and capacity expansion continues. On Slide 8, third quarter R&D and SG&A expenses reflect our continuing disciplined expense management and lower new program related R&D. Slide 9 summarizes cash and debt balances. Cash balances at the end of the third quarter were $138 million, as compared to the second quarter of 2011 of $154 million. At the end of the quarter, our total debt to capital ratio was 38%. The company's liquidity position and balance sheet remains strong, as we invest in new programs and capacity expansion for our core programs. Our U.S. defined benefit pension plan remains fully funded, while we continue to make modest cash contributions to our U.K. plan. Slide 10 summarizes net inventory balances, which increased by $132 million during the third quarter. This growth in inventory reflects increasing production volumes in our core programs along with inventory management improvement initiatives and investment in new programs. As you can see, Slide 10, business jet wing programs, the 787 and A350 were the primary contributors to inventory growth this quarter. 787 deferred production balances continue to increase as we expected. 787 deferred production growth per unit in the third quarter of 2011 was modestly higher than the year-to-date 2011 unit average. As programs' scheduled pause impacted the cost of current quarter deliveries. Inventory is expected to continue to grow modestly through the fourth quarter, as we prepare for increased production on our core and new programs. Slide #11 summarizes our updated 2011 full-year financial guidance. Based on current customer demand, our revenue guidance is updated for 2011 and is now expected to be approximately $4.7 billion. Fully diluted earnings per share is unchanged and expected to be between $1.40 and $1.50 per share. Cash flow from operations for 2011 is being updated to reflect the expected change and timing of development program milestones and additional resource requirements for business jet programs. Cash flow from operations is now expected to be between a negative $50 million and 0. Capital expenditures are being updated to reflect the change in investment timing. Capital expenditures for the full year of 2011 are now expected to be approximately $250 million. This change reflects a $50 million reduction in previous guidance as we continue to prudently managed cash investments associated with new programs and capacity expansion. Our updated 2011 tax rate is now expected to be approximately 31%. Combined R&D and SG&A is now expected to be between 4% and 4.25% of revenue for the full year of 2011. We continue to expect 2012 revenue to grow above the 2011 guidance, as demand increases for the core products and new products enter the production and delivery phases. We continue to expect cash flow from operations less capital expenditures to be positive in 2012, as cash advance repayments decline and working capital investment stabilizes. I'd now like to turn it back over to Jeff for some closing comments before we take your questions. Jeffrey L. Turner: Thank you, Phil, I'll wrap up on Slide 12 with a few brief comments. Our core business executed well in the third quarter and continues to be the operating engine for Spirit. Our transition to higher rates across our core programs is progressing in a systematic manner that further strengthens our operating base. As we make customer commitments and achieve critical milestones on our development program, our focus remains fixed on execution and managing cost for long term value. Looking ahead, we expect to continue to benefit from the expanding demand for commercial aircraft, while achieving productivity and efficiency improvements across our business. Our content on the best-selling commercial and business jet platforms in production, combined with our execution of our strong backlog positions will help us to deliver long term value. We will now be glad to take your questions.

[Operator Instructions] Your next question comes from the line of Troy Lahr from Stifel, Nicolaus. Troy J. Lahr - Stifel, Nicolaus & Co., Inc., Research Division: I'm wondering if you guys can talk a little bit about how much risk remains in the fourth quarter on some of these development programs? And do you think some of these charges that we've seen could potentially creep into the first half of next year? Do you think most of these are kind of lined up where you want them to be? Jeffrey L. Turner: A couple of ways to think about that, Troy, I mean, clearly, we've talked a lot about 2011 being a pivotal year and the continued risk that exists on some of our development programs. I mean, clearly, we have program plans established and forward-looking forecast. Some of these programs are still, as you know, in test mode. So there's still risk associated with finishing the engineering and making sure that those are production ready. There's also, of course, the forecasted cost curves that will be able to come down. Any disruption in the engineering end of it -- the definition end delays our ability to come down the curves. Again, we've taken a look at them. We know there's risk associated with them. We have tried to categorize that in all of our public statements. But at this point in time, we have program plans that we're executing and hope to continue to do that without major disruption. But having said that, there's risk that remains and we'll continue to work -- work off that risk register.

Your next question comes from the line of Howard Rubel from Jefferies. Howard A. Rubel - Jefferies & Company, Inc., Research Division: Well, I'll try another way to get what Troy was after. Jeff, the margins were okay at a little over 10.5% in the quarter. How do you think about trying to achieve that sort of level of operating performance going forward? I know you've got some mix issues that will hold it back, but 777 and 37 sort of help... Jeffrey L. Turner: Sure. I think you characterize it right, Howard. In a way we think about it is, we have the core programs that have quite a bit of uplift associated with them as we manage volume and efficiency and drive that side of the equation. And then we've got the obvious new programs early in their production, trying to manage the fact that we overspent the development side of it. And most of those programs look like they're going to be able to be in the envelope of what our production plan was originally. The real issue is to try to burn off some of that extra development costs that we had. So we have a split portfolio, if you will, we have some very, very good actors and some that were going to have to spend an awful lot of energy on making improvement. Overall, they look like they're going to come into the original production cost lines, if you will, and we think we've got some opportunity to improve some of those and eat off some of the extra money we spent in development. But like I said earlier to Troy, the risk remains on some of the programs. Howard A. Rubel - Jefferies & Company, Inc., Research Division: So I'm just -- put you -- push you a little bit. I mean, so what kind of margin number would you consider satisfactory? Jeffrey L. Turner: Well, I think clearly, our objective is to improve overall and use the base that we have. I'm not going to state a specific number. I mean, clearly, we're driving the business to achieve higher margins on our core programs and to improve the 0 margin programs where we can and get those on the positive side.

Your next question comes from the line of George Shapiro from Access 3:42. George D. Shapiro - Access 3:42, LLC: So I was wondering if you could actually provide how much the 87 deferred went up? And also try and quantify how much of the work stoppage in the quarter would have impacted that, so you can kind of get a real look at how much the deferred for the 787 might have changed.

Sure, George. The full year average for the deferred growth is about $7.1 million per unit for the full 9 months of this year. In the third quarter, you'll see it come in right around $7.5 million. So we have about $400,000, $500,000 growth per unit. Mainly associated with, as I said, the production pauses that have been implemented mostly into the third quarter. The longer these just sit around, the more cost they collect. So it's not really too scientific. That's kind of the scope of it. I think, the curves -- I think 787 more broadly, George, we feel very good about how it's going. It's great to see the airplane certified in service. It's good to see our payments of $396 million fully repaid, as we entered the production cycle, the delivery cycles and the service cycle for the airplane. So we're very optimistic about where it's at in the market. Our activity with our customer, focused on cost reduction, is right on plan. It's early, as I would categorize it, and I think Jeff would agree it's early in the process but it's going very well and on plan. So I think we like the 787 quite a lot and it looks like it's going to be a good program for us. George D. Shapiro - Access 3:42, LLC: Let me just ask you in a slightly in a different way. Was there in a deferred production in the quarter? Was there whip from units that were pretty much completed but not delivered, because I noticed your deliveries of 5 were a little less -- it's 1 or 2 less than I might have thought.

Yes, George, I think that's correct.

Your next question comes from the line of Robert Spingarn from Credit Suisse. Robert Spingarn - Crédit Suisse AG, Research Division: So going back to the margin question from a moment ago, I don't know, Jeff, if this for you or maybe for Phil. But forward basis -- should we be more like these 10% type margins that we saw in this quarter, 10.5%? Or is it more like the first half of this year, given the risks that are still out there?

Well, Rob, I'll take a shot at it, and then Jeff can add some color commentary. I think, where we sit giving the strong core business in the growing market and then our diversification programs which are in development. High single digits, low double digit margins over the next couple of years feel about right, as we move through this period of time. And that's in the face of 787, which we're continuing to book at 0 gross margins for the time being. So I think that's a decent way to think about it in terms of total company consolidated margins, taking into account kind of all the risk and opportunities of new programs in 787. Robert Spingarn - Crédit Suisse AG, Research Division: It sounds like you need to beat that low double-digit number in the fourth quarter in order to at least hit the higher end of your guidance, I would think. If you slip into the single digits, it's tough to get there, especially with the sequential downtick in revenues that's implied by the 4.7 number. By the way, is that just mix at Boeing?

Yes, it's a little bit of mix. More on new program milestones and deliveries. And then of course, the 787 is in that mix as well.

Your next question comes from the line of David Strauss from UBS. David E. Strauss - UBS Investment Bank, Research Division: I guess whoever wants to take this. On 2012 cash, you reiterated free cash flow positive again, but a lot of things moving around on in 2011. You also had the [indiscernible] to them. Can you maybe talk about -- do you feel better about that statement on 2012 cash being positive today? Does it look better relative to how it looked maybe 3 to 6 months ago? Jeffrey L. Turner: I would say, David, that we feel about the same. I mean, there's some moving parts. We've had some things that will move out of '11, into '12. We have some expenditures as the rates have continued to increase. So I think on balance, we feel about the same. We feel confident 2012 looks like a positive cash year. David E. Strauss - UBS Investment Bank, Research Division: Okay. And just a follow-up on blocks on the 37 -- 777 block, it looks like you'll be in the new threat, 777 block probably this month. Have you set the block. And if so, can you tell us the size?

Yes, David, you're exactly right. That was a wrap-up period this quarter and we basically have the next block set for 24 months worth of production. And 777 mainly concludes the first quarter of next year and it will be consistent with about 24 months of production as well.

Your next question comes from the line of Joe Nadol from JPMorgan. Joseph Nadol - JP Morgan Chase & Co, Research Division: My question is on the MAX. Where are you guys at this point in determining the implications for the 737 for your business? How much -- how similar is your Fuselage going to look on the MAX relative to where we are today? What's going to be the investments requirement? All those sorts of things. Any color, commentary you can give would be great. Jeffrey L. Turner: Okay, sure, Joe. I'll start by, I think, reiterating what we said last quarter, which is we view this development as -- of the choice to re-engine the 37 and the 737 MAX very, very positively. I mean, clearly, we're a key partner and supplier on the 737 airframe, wing components, pylons, thrust reversers, all those things. We anticipate that we will play substantially the same role on this derivative that we have on the NG to date and frankly, we did on the classic before the NG. We think there probably is some opportunity for us to grow that work statement, as we look at efficient flows, but we'll see as time goes on. Clearly, the objective is to build the airplane as a derivative, which means a great deal to us in terms of the use of tools and processes and plans and automated rivetting equipment, so we all -- we see that in a very positive light. We are highly engaged with our customer and in the early stages of full definition of the airplanes. So full definition for us in terms of the details that we need to execute are not yet clear and they will emerge as the program goes through its cycle. But for us, it's a derivative. We're -- our experience on derivatives, most recent one on the 37 was the P-8A, which went very well, and delights the customer. And I think we're -- I mean, clearly right in our wheelhouse and we're excited about it. We know how to analyze the designs. We know how to do it in a way that utilizes our invested base, so I feel good about where we are. The intimacy that we have on the program and as those details emerge, I'm sure that the customer -- and then we will be talking a lot more about that. Joseph Nadol - JP Morgan Chase & Co, Research Division: Jeff, when do you nail down pricing and the CapEx profile on that program? Is it sometime next year? Is it after that? Are they nailed down on different times? Jeffrey L. Turner: It will be -- clearly, it will be after firm configuration. But again, it's derivative. It's a derivative program, and we have very clear processes we use for derivative pricing and for derivative development.

Your next question comes from the line of Heidi Wood from Morgan Stanley. Michael Sang - Morgan Stanley, Research Division: It's actually Mike Sang in for Heidi. I want to drill down a bit more on the CapEx guidance this quarter. I'm a little surprised to see that come down again, especially ahead of the production rate increases? And I know you talked a little about the timing of investments. Can you talk about how much of that comes back in '12 and how we should think about capacity going to '12 given the deferral? Jeffrey L. Turner: I think there's 2 issues here and then I'll let Phil talk about it. The first is, CapEx plans, of course, are established based on anticipated efficiency and requirements for additional capital and on timing of development programs and rate buildups. Any deferral -- I mean, deferral out of 2011, some of which defers into 2012. But when it's based on an improvement and efficiency, which some of this is, then it's a deferral to even later in the cycle. So some of it is an efficiency and some of it is timing. And then of course, if you push it out of one year into the the next, there's often things that you push out of the next year and into the subsequent year. So that's a way to think about that. Phil, you have anything to add to that?

Yes, I think the only thing I would add to that is you should take a lot of comfort away from -- we're timing these investments very carefully. Whether it's core business, volume expansion, the efficiency aspect, which Jeff talked about, or the new programs. This is because some of the volatility of the schedules we've seen over the last several years. So we've been very, very prudent on how we deploy the capital. A lot of it does move from year-to-year, from '11 to '12 and even in some cases, probably from '12 into '13, from my vantage point. So I think the comfort you take is we're going to deploy the capital only as we need to and certainly when we need to.

Your next question comes from the line of Finbar Sheehy from Sanford Bernstein. Finbar T. Sheehy - Sanford C. Bernstein & Co., LLC., Research Division: I just want to go back to touch on the 787 for a minute. We were talking about the growth in deferred inventory. Do you have a visibility now to when you expect that will peak? And then also are you -- are you facilitized for 10 per month at this point? Are you sort of confident you can do that with your current facilities or will you need to spend more capital to get there? Jeffrey L. Turner: Let me answer the first question first, then I'll kick the first part of that question back to Phil. We have said consistently that we have footprint for 10 per month and equipment for 7 in our plans and we will bring on tools and equipment as required to make the rate build up. We do, as you know, on all of our programs a very comprehensive rate readiness planning and management. and our rate management plan for 10 a month is green across the board. That doesn't mean we have all the equipment and tools in place. But we, clearly, have the time and are lead time away in managing that closely.

Yes, Finbar, and on the first part of the question, on deferred production balances, yes, the curve we think looks much like a traditional program, where we're steeper towards the front of the program it's much steeper, and then it brakes over to a flatter curve as we move into a higher -- sustained and higher rates of production. 787 has those same characteristics, of course. Pauses, starts and stops do not help with the cause, from a cost standpoint, so we're dealing with that in the current timeframe. But as we go through time, historical program, we think, breaks across this curve and you really start relieving deferred production sometimes or roughly it's kind of a 100 to 150 unit range. And we still think 77 follows that pattern. Finbar T. Sheehy - Sanford C. Bernstein & Co., LLC., Research Division: Could I just clarify a little bit on the first answer, I guess, the second part of the question which was on whether you're facilitized to produce at, I guess strictly speaking, with equipment and tooling for 7 per month. Is the rate of throughput that you're seeing now consistent with that plan? Jeffrey L. Turner: Well, clearly, we are not at 7 per month, but it is consistent with the rate build-up plan. And our capability to produce faster is there and all the plans required to get to 10 a month are there.

Your next question comes from the line of Sam Pearlstein from Wells Fargo Securities. Gary S. Liebowitz - Wells Fargo Securities, LLC, Research Division: This is Gary Liebowitz for Sam. Can you just talk about your pension sensitivities for next year? What kind of headwinds you might face, given where rates are and asset returns are and how you're thinking of pension contributions?

Sure, Gary. We have a very enviable position when it comes to U.S. defined benefit plans, where we are fully funded right now. We've been fully funded since the company was formed. We don't proceed [ph] any cash contributions to that plan. We do make modest cash contributions to our plans in the U.K. And I think from an asset management standpoint, the assets are in a fixed cost type of investment where liability driven scheme, which helps us -- helps protect us from the cash contributions. But there's really -- we're well-funded and don't have any designs or don't see a need to contribute anything to those plans. Gary S. Liebowitz - Wells Fargo Securities, LLC, Research Division: And on a reported earnings basis, I mean, I would think the change in interest rates alone is a little bit of a headwind?

Yes, a little bit, but it's not too overwhelming for us.

Your next question comes from the line of Richard Safran from Buckingham Research. Richard Tobie Safran - Buckingham Research Group, Inc.: I just wanted to ask you a question about your -- a follow-up on your comments about aftermarket. Recognizing it's not a large piece of your business, can you just comment on how much your aftermarket business is contributing to volume and margins? And can you tell us about how much your aftermarket business has grown year-to-date and what your expectations were? Any kind of color that you could give on that would be great.

Sure, yes. The volumes, we're not -- it's not the biggest contributor. The volumes were up 30% to 40% this year from last year. Most of it, I would say 2/3 of that volume comes through our Propulsion segment, where the propulsion hardware has a higher tendency for aftermarket activity. And it tends to be, like most aftermarket businesses, the margins are fairly attractive, and we certainly would like to see more of that coming through. That said, it isn't -- it isn't a big, big swinger for our revenue line or our profit line, but it's improved very nicely this year and we're very pleased that. Jeffrey L. Turner: I would just say parenthetically, though, the improvement that we're seeing in the Propulsion business, though impacted by aftermarket, is driven by corporal improvement in margin on core programs.

Your next question comes from the line of Michael Callahan from Auriga. Michael Callahan - Auriga USA LLC, Research Division: I was hoping we could take dig a little deeper on the A350 program. I guess, specifically, where it stands. Whether or not you guys think we're still on target for the first delivery schedule, and then also, I guess, as you're talking about new program development risks than some of those may be winding down as these programs going to develop-- or are going to production, how much risk do you think still stand on that program? And specifically? Jeffrey L. Turner: So the A350, we have 4 contracts on the A350, 2 nonrecurring, 1 for the Fuselage, 1 for the Wing and then 2 recurring. We have talked in the past about the nonrecurring contract on the Wing and that's the area where we're most stressed financially. And that's due to some extra engineering activity that's underway. The other 3 look -- continue to look solid. We have delivered -- having said that, we have delivered our first hardware ship sets for the wing spar. And in fact, at an Airbus announcement several weeks ago, the Prime Minister stood in front of the Spirit hardware to make the announcement. But the -- so it's in the Airbus factory and being incorporated into the Wing as we speak. The fuselage, we have delivered our first fuselage panels into France, into our final assembly building in Saint-Nazaire and the plan is for that to be delivered yet this month to Airbus. So that program is producing hardware, finishing up designs and driving forward.

Your next question comes from the line of Cai Von Rumohr from Cowen and Company. Cai Von Rumohr - Cowen and Company, LLC, Research Division: So you've talked a bit about kind of the new programs, and I guess the impression we get is that the 787 and 47 are doing somewhat better. Could you give us a sense, maybe rank by degree of risk going forward where the risk is? I mean, it kind of sounds from what you guys are saying, it's the G280, G650 and A350. But maybe, give us a little more color and rank them by the degree of risk we have going forward. Jeffrey L. Turner: Sure, Cai, I'd be glad to do that. Let me start by -- if you rank it by most dollars at risk, you would rank 787 clearly, and then follow that with the A350. If you rank it by uncertainty in making the curves, if you will, then I would put this particular block that we're in for the 747-8, because we have a lot of delays and we're back up the curve on the 747-8, because of the major derivative and not that many airplanes left the build in that block. And followed by probably the BR725, which is finishing up, not certified yet, got some engineering change in it, and have got to drive it down a substantial cost curve. And then of course, the 280 would be next, I guess. But having said that, I like the momentum that I'm seeing. I'll speak a little bit about the 280 specifically, and the 650, which you guys know have been challenging programs for us. We've got -- I like the momentum that I see. I like the management team we have in place and I think we're going to see -- we've seen major improvements in flow on the 280, we've seen an increase in demand, which is both a challenge and an opportunity. And we will, I think we'll see continued improvement through time on those programs. The real issue is the amount of money that we've spent over in the development and trying to earn some of that back, whether we'll be able to do that or not.

Your next question comes from the line of Eric Hugel from Stephens. Eric Hugel - Stephens Inc., Research Division: Can you address the guidance cut in terms of the cash flow from operations? It looks like you cut about $50 million to $100 million out of cash flow from operations for this year. Can you sort of talk about -- sort of what you're driving at? Is that just a sort of a slip out into next year? And also can you talk about, on that CH-53K, I guess you sort of took some charges, rebaselined the program back in the first quarter. Can you sort of talk about what issues you were facing this quarter that you took this incremental charge?

Sure. The cash flow from operations change is really driven -- it is timing fundamentally. Timing on some of the new programs, developmental milestones mainly. So it's an extent. We've changed it. It's mostly moving into '12. The CH-53K, I think the perspective on these developmental programs too is that it's very dynamic from quarter-to-quarter. And so it's not a static. We're making decisions, changing things and the thing that really drove us in this quarter was the make-buy shift. We decided to bring parts in-house to produce. And they were very fairly significant pieces of the structure to make the schedule and support to customer requirements. So that wasn't really in full view back in the first quarter, and we needed to do that. We decided to do it and it drove more cost to us than the current EAC. Eric Hugel - Stephens Inc., Research Division: And just lastly, interest is that -- is the $19 million sort of a good run rate going forward?

Yes, I know that's a pretty standard run rate. That reflects the debt that we're servicing, sure.

Your next question comes from the line of Ron Epstein from Bank of America Merrill Lynch. Ronald J. Epstein - BofA Merrill Lynch, Research Division: And you talked a little bit about this. But can you give us an update where we are with the A350 program? And if you do happen to run into any overruns, how that structured? Does it fall on you guys? Do you share it with Airbus? How that works? And then -- and where do we stand with the facility in North Carolina? How's that doing? Jeffrey L. Turner: So the facility in North Carolina is up and running producing hardware, beautiful hardware. We need to have an investor conference there and let you guys see that. It's doing well. But the program is -- the program's progressing well. The hardware build, we got, as we often do on programs, we got behind on the engineering release. But when we got the parts, they went together really well. So I think, I mean, clearly, all development programs have risk associated with changed traffic. As you know, the profile on this program has partner investment, Spirit investment and customer investment. The profile on this is it's structure-only hardware, with no systems in it. So I mean, it's a pretty straightforward package, although it is composite structure and it's a brand-new design, so it's got that risk associated with it. But we're progressing through it with, I would say, the normal issues that you have with the developmental program and have begun to deliver hardware. So the risk now is that hardware design stays stable, or if there are issues that we discover in task, or the whole program discovers that would require change. That would then begin to drive change control mechanisms that we would have to work our way through. Ronald J. Epstein - BofA Merrill Lynch, Research Division: Okay, okay. And then maybe one more follow-up on 787. I think that Boeing is out reiterating today, that they'll get to 3.5 per month by spring. And when you think about your supply chain and what's going on, I mean, what worries you about the program? Are there any long tent poles in 787 right now that you're keeping your eye on that may or may not be in your control? Jeffrey L. Turner: Well, there are of course, a number of things that we pay a lot of attention to. Our labor, our supply chain and their readiness to make the rates. But I would say, the main issue for us on this program -- I think the main issue for the whole program is getting it to a predictable drumbeat. And I see that coming. It's been slow in coming. But I think as we got the certified airplane, we're delivering it, so the configuration is solid. And I think we've got -- we don't have any big major tent poles that we're worried about right now. There's all the normal things of supply and work in the improvement curves and labor and all those things. But it's pretty much straightforward now. As we go above 7, we've got some equipment and some tooling to bring in. But again, it's things we've done and do, I think pretty well. So my main issue is just to get the overall program to a steady drumbeat. I would just add, our condition of assembly is extremely good. It's right at 100% complete with the functional test and all the hardware it's suppose to have. So the key is to minimize the disruptions and to make the steps.

Your next question comes from the line of Michael Callahan from Auriga. Michael Callahan - Auriga USA LLC, Research Division: Just one follow-up I wanted to ask on the cash flow guidance for the balance of 2011. It looks like it takes a pretty dramatic swing positive into the fourth quarter. You said 787 is on a cash base and I assume that helps a lot. But can you just walk through a little bit of the mechanics of what changes in 4Q? And then, I guess, what will continue into the next year and what will kind of trail off to be maybe free cash flow neutral for -- neutral to positive in 2012?

Sure. Yes, the swing is really -- 787 is exactly one of them. The other revolves around the lumpiness of development programs and milestone payments, as we accomplish these joint effort. So those, if you go back a couple of years, you'd see we tend to have pretty robust fourth quarters driven mainly by non-production programs, and it's similar to how 2011 is unfolding.

There are no further questions at this time. And ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.