Coleen Tabor Larry A. Lawson - Chief Executive Officer, President, Director, Member of US Government Security Committee, Chief Executive Officer of Spirit Aerosystems Inc and President of Spirit Aerosystems Inc Philip D. Anderson - Chief Financial Officer and Senior Vice President

Robert Spingarn - Crédit Suisse AG, Research Division David E. Strauss - UBS Investment Bank, Research Division Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division Myles A. Walton - Deutsche Bank AG, Research Division Samuel J. Pearlstein - Wells Fargo Securities, LLC, Research Division Cai Von Rumohr - Cowen and Company, LLC, Research Division Joseph B. Nadol - JP Morgan Chase & Co, Research Division Kenneth Herbert - Imperial Capital, LLC, Research Division George Shapiro Greg Konrad - Jefferies & Company, Inc., Research Division Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division Michael Callahan - Topeka Capital Markets Inc., Research Division Peter J. Arment - Sterne Agee & Leach Inc., Research Division

Good day, ladies and gentlemen, and welcome to the Spirit AeroSystems Holdings, Inc. Company's First Quarter 2013 Earnings Conference Call. My name is Larissa and I'll be your coordinator today. [Operator Instructions] I'd like to turn the presentation over to Mrs. Coleen Tabor, Director of Investor Relations. Please proceed.

Thank you, and good morning. Welcome to Spirit's first quarter 2013 earnings call. I'm Coleen Tabor, and with me today are Spirit's new President and Chief Executive Officer, Larry Lawson; and Spirit's Senior Vice President and Chief Financial Officer, Phil Anderson. After brief comments by Larry and Phil regarding our performance and outlook, we will 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. And 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, Larry Lawson. Larry A. Lawson: Thank you, Coleen. And let me say good morning to all of you on the call. Let me welcome you to Spirit's first earning -- first quarter's earnings call. I'll begin with a brief introduction and then Phil will review our performance and the financial results. And of course, I think, as said earlier, we'll take your questions after that. Well, let me begin by saying that I appreciate the confidence of the Spirit board to select me to lead Spirit AeroSystems. I want to especially thank Jeff Turner and the board for the great work they've done in building the foundation here. I was, in particular, attracted to this opportunity. I thought that it was a great place to enter the commercial market space with a company that has a long history of building valued products with great people. I believe my experience aligns well with Spirit and, along those lines, I'll just give you a little background about me for you. I hold engineering degrees from the University of Missouri and Lawrence Technological University and, along the way, I've managed to become an MIT fellow and had the opportunity to attend the Harvard Advanced Management Program. I know many of you and, as you may know, I began my career as a flight controls engineer working for McDonnell Douglas on programs like the F-15 and the F-18. And during my career, I've had the opportunity to hold a broad range of leadership positions in engineering development, business development, program management, as well as a business leader. I have the privilege of working some very challenging programs as a leader on programs like the JASSM cruise missile, the F-22 and the F-35 as the program leader. I come to Spirit from Lockheed Martin, where I led the Aeronautics business segment with revenues of $15 billion and, in addition to the programs that I mentioned above, I was very fortunate to be responsible for great programs, like the F-16, the C-130J, the C5, a logistics business, as well as the Skunk Works. My wife and I are quite happy to be relocated to Wichita. And I've been 3 weeks on the job, in those 3 weeks, I've focused on meeting with all of our customers. I've actually had more than one meeting with each. I've had an opportunity to engage with our team and I've had some initial introductions to our operations and our programs. I'll make a few observations about our business. We are in a growth market, I think as most of you know, and our partners -- or customers, maybe I should say, are the best in the business in both commercial and business jet aviation. With regard to our operating results, the first quarter reflects the performance of our core programs, with 14% revenue growth over the same quarter 1 year ago and 10% operating margins. And the growing market place that we're in provides us an opportunity to take our $36 billion backlog and grow it further. Spirit has -- our high-volume commercial aircraft structural production is unique for our industry. And of course, we will -- we are and will continue to work both on our product performance, as well as the cost of our operations. The focus really will be on being the best value supplier to our industry partners, customers, and we'll do that through outstanding program execution. We're going to continue our culture of sustained operational excellence. And of course, we're going to be looking for supply partners with a similar commitment. We believe that delivering on our core business and core derivatives, as well as working through this -- the new product development cycles, will result in continual long-term profitable growth for us. As the global demand for commercial aircraft continues to be robust and as our customers drive innovation into the next generation of derivative airplanes, like the 737 MAX, the 777X and the 320neo, Spirit's opportunities are real and substantial. So in closing, let me just say, as you saw in our press release, in the near term, we will conduct a comprehensive, strategic and financial review of our development programs in Wichita, Tulsa, Kinston and St. Nazaire. I think you all know development programs are challenging and these programs have not been the exception. I plan to be personally involved with these evaluations and I hope that I can add some value based on my experience. We will certainly work with our teams on the path forward. So given that I'm 3 weeks on the job, I thought I would, at this point, hand over the presentation to Phil, who will provide you more details for the business during first quarter with a review of our financial results beginning with Slide 3. Thank you. Philip D. Anderson: Thanks, Larry, and good morning. On Slide 4, the Fuselage segment has strong top line growth and operating performance with margins of 70% on $718 million in revenue during the first quarter, as volumes across the core programs increased. The Fuselage segment's 737 production line is now performing well, at a rate of 38 airplanes per month, having delivered more than 4,400 ship sets of next-generation fuselage. During the quarter, the Fuselage team continued to make progress on the A350, XWB program, delivering the fifth production composite center fuselage to our Airbus customer. The 787 Fuselage team surpassed the 100-unit mark by delivering the 116th forward fuselage section. Additionally, in the quarter, the Fuselage team delivered the seventh CH-53K helicopter fuselage to our Sikorsky customer, thus completing the hardware delivery for this system design and development contract and positioning Spirit for the next phase of bidding for the production work on this important program for the United States Marine Corps. On Slide 5, the Propulsion segment reported strong operating margins of 17% on $375 million in revenue, as volumes across core programs increased. Propulsion's core business, 737 Next Generation Engine Pylon and Thrust Reverser production lines are also performing well, at 38 airplanes per month, as the team have now delivered more than 4,400 units of hardware. The 777 nacelle and pylon lines delivered the 1,100th package in the quarter. Additionally, the 787 propulsion team also surpassed the 100-unit mark, as they shipped pylon line unit number 117 in the quarter. The Propulsion segment includes several development programs for Spirit: 737 MAX, 767 Tanker, the Bombardier C30s and the Mitsubishi regional jet. And in the quarter, each of these programs successfully met major milestone development. On Slide 6, the Wing segment reported operating margins of 5% on $343 million in revenue during the first quarter as volumes across core programs increased. The Spirit Europe operations continue to produce significant volumes of hardware for our Airbus customer, surpassing line unit 5,600 for the A320 Wing components. Spirit Tulsa's Next Generation 737 slats and flaps production lines are now performing well, at a rate of 38 ship sets per month, having delivered more than 4,400 ship sets. The Tulsa team surpassed the 100-unit mark as they delivered the 114th set of 78 slats. And the Spirit Malaysia facility delivered its first 787 fixed leading edge in the quarter. As we continue to support our customer's requirements and incorporate change in the 787, we saw some continued cost growth that is reflected in the additional forward-loss related to the Wing in the quarter. And as Larry mentioned, improving execution on this and other development programs will be our near-term focus as we conduct strategic and cost reviews across our development programs. Turning to the financials on Slide 7. Revenues for the first quarter of 2013 were up approximately 14% as compared to the first quarter of 2012 on higher production volumes and product mix. Operating margins for the quarter were 10%. Excluding $9 million of severe weather-related charges in the quarter, operating margins were 10.6%, reflecting year-over-year improvements associated with increased production and productivity and efficiency improvements on core programs. The quarterly results reflect positive contributions from the core business as Spirit realized net favorable acute catch-up adjustments totaling approximately $20 million, driven by productivity and efficiency on core programs. In the quarter, we also experienced manufacturing cost growth on the 787, previously mentioned, resulting in a $15 million additional forward-loss. As we enter the production phase of the A350 XWB program, we have set the production contract accounting blocks for both Fuselage and the Wing to breakeven margins. We believe this level of conservatism is appropriate and consistent with our practice over the 3 years during the certification and initial production phase of development programs. This program will be included in the review announced earlier today. Fully diluted earnings per share for the quarter was $0.57, reflecting margin expansion on higher volumes. Adding back the expenses associated with severe weather in the quarter, earnings per share would have been $0.61 per share, reflecting the continued strength of the core business. Cash from operations for the first quarter 2013 was a $45 million use of cash. In comparison, the first quarter of 2012 included a $150 million customer advance related to the A350 XWB fuselage program. Excluding the $150 million customer advance, cash from operations in the first quarter of 2013 is a $93 million improvement due to the timing of accounts receivable, accounts payable in the first quarter of 2013. Capital expenditures were $80 million for the quarter, including $6 million for severe weather rebuilding capital, compared to $54 million during the first quarter of 2012, as investments in new programs and capacity expansion continues. On Slide 8, first quarter R&D and SG&A expenses reflect our continuing disciplined expense management. Slide 9 summarizes cash and debt balances. Cash balances at the end of the first quarter were $313 million, as compared to the fourth quarter of 2012 cash balances of $441 million. At the end of the quarter, our total debt-to-capital ratio was 36%, as we continue to proactively manage capital structure of the company. 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 at the end of the first quarter of 2013. Physical inventory balances remained stable in the quarter as we proactively managed inventory growth in a rate increasing environment. Nonrecurring inventory balances decreased as we met milestones, primarily on the A350 XWB-900 program. Deferred inventory balances increased by $122 million, driven by 2 A350 Section 15 deliveries, which contributed $48 million in growth, and 17 787-A deliveries, which contributed $11 million in growth, or approximately $650,000 per unit. In summary, our core business continues to perform well and deliver the results we expect. The team is doing a great job. As noted in our press release issued earlier today, we will not be issuing further financial guidance at this time, pending the completion of the comprehensive strategic and financial review of the company's development programs at our various sites. This is a prudent approach given these programs are now in the early stages of full-rate production and our development-phase execution challenges over the past several years. I'd now like to turn it back to Larry for some closing comments before we take your questions. Larry A. Lawson: Thank you, Phil. I'll wrap up on Slide 11 with a few very brief comments and then we'll go to your questions. If Spirit's core fundamentals are manifest in our $36 billion backlog, the growth in the industry offers real opportunities for us and we're positioned well. We are part both these derivative programs that are part of our core and we're also participants on the next generation of aircraft going forward. This offers us, frankly, long-term -- near and long-term growth opportunities and some near-term challenges as it relates to the development of these products. So in summary, obviously, we won't take our eye off the ball as it relates to the core business growth and core product innovation. We'll innovate -- we'll continue to innovate and invest in our core products and the derivatives. We will be driving down our enterprise costs, working -- challenging ourselves on operating costs across the board. And as we've said before, there will be a particular focus on the development programs and the path to completion. The fundamentals of all our decisions going forward will be driven by value creation for Spirit and for our customers. So at this point, we'd be happy to take your questions.

[Operator Instructions] Your first question comes from Robert Spingarn from Credit Suisse. Robert Spingarn - Crédit Suisse AG, Research Division: Larry, welcome. Larry A. Lawson: Thank you. Robert Spingarn - Crédit Suisse AG, Research Division: I'd like to start with a high-level question focused on your coming to the company. If you could, talk a little bit about the challenges and opportunities you see coming from a military background to a business that's largely oriented toward the commercial aerospace markets. Larry A. Lawson: That's a great question. It's not the first time I've gotten that question and so I have actually thought about it a bit. What I would say is this is that in both cases, we produce airplanes. And the fundamentals of producing airplanes are constant. It's really the business models that are a bit different. In the defense marketplace -- obviously, there is some product differentiation, as well, and I came from a business that -- we developed -- we were the prime and developed the entire craft. And so we were, frankly, doing business with companies like Spirit, they were part of our supply base. But the terms of those contracts that we had in the defense business were typically, with both the government and our supply base, firm fixed-price commercial agreements, at least going to the supply base. So it's not something that I'm unfamiliar with. I think from a business model, the primary differentiation is that in the commercial market space, you're making longer-term commitment earlier in the cycle. In the defense business, the government would fund the development of a product, which you would then build at some low rate and then make your firm fixed-price commitment. Whereas in the commercial market space, at least as of late, those commitments are made pretty early in the cycle and create some of the, I'll say, turbulence that Spirit's experienced, as well as Boeing and our other customers and partners. So those are the fundamental differences between the 2. But the -- as far as firm fixed price contracting or commercial contracting or developing airplanes, I think those experiences are common and, hopefully, given the number of airplane developments that I've had a good fortune of either participating in or leading, I should hopefully be able to bring a little bit to the party here. Robert Spingarn - Crédit Suisse AG, Research Division: And that leads perfectly into the follow-up question, which is, the way it was described in the release -- and Larry, I don't know if this is your wording or Phil's. But you're now conducting both a financial review, which we've seen in the past, but also a strategic review. And I'd like to ask if you could focus on that last part a little bit. Does this mean any of the following: you're considering how you proceed forward on certain development programs, meaning that you potentially could exit some? Or you might sell some, or a facility? And then also, how are you going to change the approach to writing contracts, where the risk mitigation seems to have been part of the issue here? Larry A. Lawson: Well let me start with the last part of that question. I think that, obviously, there's a conversation that we're having with our customers about what's the right balance, going forward, in terms of these risk-sharing partnerships. And in that dialogue, the -- there's been shifts in these business models over the years. There was a significant shift toward a, I'll say, more supply-base driven model in the commercial market space a number of years ago, probably -- and again, I'm not an expert on the subject, but maybe beginning with the 787, maybe prior to that. And so that conversation is occurring right now with our customers in terms of how we go forward. So I don't have an answer for you. As it relates to what will we consider in both our assessments of how we're doing our development programs, as well as the strategic element of that, I would just say, I don't know the answer. What I would say is that we're telling you is that we're looking at all aspects of the business and we're not leaving any element of it untouched. We're going to focus on creating value to Spirit and an overall, I'll say, balance of where our growth profile is and a best value to both our customers and our shareholders. And that's why we're telling you that it's going to be both a program assessment, as well as a site assessment, so that we can really take the bigger view as well as the tactical view.

The next question comes from David Strauss from UBS. David E. Strauss - UBS Investment Bank, Research Division: On 787 -- might be a question for Phil. Phil, can you talk about what deferred production did on 787 in the quarter? And when you guys crossed over 100 aircraft, or 100 ship sets, did you actually have a pricing -- did you see the lower price go through to Boeing? And where do you -- where would you see price from here step down as well? Philip D. Anderson: Yes. Good morning, David. We did see deferred decline on a per unit basis in the first quarter. You might notice there, it's just above 600,000 per ship set. So it's now below 1 million per ship set of contribution, which is additional improvement as we've gone through time. To your question on step downs. Yes, I think we've tried to be clear as we've gone through time, that the 787 contract, the original contract had step-down pricing in it and there are certain line units where that cuts in as we go through time. And so I think that set the expectation. And of course, in the challenge therein lies as we continue to bring the cost down as the prices step down, which we've been doing reasonably well over the first 100 but I think that's going to be something we certainly want to bring Larry up to speed on us we go with this review and so we can really understand the cost profile, as well as the step downs in conjunction with each other. David E. Strauss - UBS Investment Bank, Research Division: Phil, did you actually step down at 100? Was that the first point that you actually stepped down on the pricing? Philip D. Anderson: No. No, David. This program actually has been stepping down through the first 100. Again, I think this is something we talked about probably somewhat a bit of a long time ago, back in 2007, at some point. But the learning curves are steeper at the front end than they are as you go through time. So the step down at the front end of the program were more pronounced and then, as you get into the recurring sequential production phase, that learning curve flattens out as do the price step downs. So as we go through time, there are step downs, they're just not as big as they were the first 100 aircraft. David E. Strauss - UBS Investment Bank, Research Division: Got it. Larry, you talked about having met with some of your customers. I understand you've already met with Boeing. Could you characterize that meeting and how you see the process of negotiating a new contract with them playing out? Larry A. Lawson: So David, I think you're referring to the 2013 agreements. And we actually have had several conversations, several meetings and, as a matter fact, more in the near term. I think -- the way I would characterize it, it's been a very productive and good set of dialogue. Boeing is incredibly important to us and, I think, obviously, they expressed their similar feelings, that we're very important to them. And we're both anxious to wrap this up. And so all I would say is that all the parties are communicating. The board is actively involved in this discussion, as well as our teammates and the Boeing team. And I would just characterize it as a good conversation and hopefully something that we can get wrapped up in the near term.

The next question comes from Doug Harned from Sanford Bernstein. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: I just wanted to follow on that. Because when you look at Boeing and presumably, one of the things that comes up is that Boeing probably wants costs to come down. And when you look at what Boeing can offer you and you think about that relationship, what are the sorts of things that you see as an opportunity from a Spirit standpoint that Boeing could really help you out on, whether it's more content, whether it's access to resources? Are there some of those types of things that you've gotten into? Larry A. Lawson: I'd say that the answer is all of the above. There's -- in our discussions with them, we'll -- we're going to talk about all the products that we currently either are manufacturing for them or developing. And we'll -- there's really -- we'll take a comprehensive view of the trade as it relates to coming up with what would be, I'll say, a fair and equitable agreement with both parties. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: And then, I just also was interested, when you look at the results from this quarter, I know in the release, there was a statement that results on the core programs were consistent with existing guidance. But in both Propulsion and Fuselage Systems, the results were very, very strong on margin, and that's even after you did the cume adjustments. And so I'm curious, are these really consistent with where you've been looking at things? Or are you now proceeding even better from an operating standpoint than you had planned? Larry A. Lawson: Yes, I'm going to let Phil answer the particular question. But I what would say to you is that, for us, in our relationship -- back to the earlier question as it relates to kind of the balance between the development aspect of the business as well as the production end of the business, you have to take it in its whole when you look at it in terms of your net operating margin. So that's kind of the view we take when we look at both the work that is at maturity, as well as the work that's kind of in the cycle. Phil, I'll let you answer that. Philip D. Anderson: Sure. Doug, a bit more of -- you're seeing good results coming through the -- through -- for Fuselage and Propulsion, really as a result of some volume improvements and productivity and efficiency in the shop. We have -- the biggest part of this business in the revenue line these days is the core business and there's a lot of people doing a lot of good work in the company on the core business. And I think you're seeing come through the results. And a bit more amplification onto the Boeing relationship, it is symbiotic and it's not always about cost or price. It's about capability, reliability, dependability, which we think we do pretty good on in the core business most every day. So we're going to work will real hard to get to the development program to that state, as well.

The next question comes from Myles Walton from Deutsche Bank. Myles A. Walton - Deutsche Bank AG, Research Division: Phil, maybe just a cleanup one. On the receivables growth in the quarter, can you comment on where the retainages are to Gulfstream and when you think that, that would get results? Philip D. Anderson: Yes, they're just north of 100 million miles. We're working on resolving that. The bulk of the receivable was really just timing issues, nothing more than that. But we are focused on the Gulfstream retainage. And again, that's something we're certainly going to be putting some effort into it as we move to the future here. Myles A. Walton - Deutsche Bank AG, Research Division: And resolving that, though, is built into the guidance this year? Philip D. Anderson: Well we aren't giving guidance today, I think, as you know. So I think we're just really going to focus on getting things resolved with Gulfstream as we move through this year.

The next question comes from Sam Pearlstein from Wells Fargo. Samuel J. Pearlstein - Wells Fargo Securities, LLC, Research Division: Can you talk a little bit about the aftermarket in the quarter, just the trends, especially in the Propulsion side? Because I guess, while the absolute margins looked good, when I look at it on an incremental margin it would seem like it didn't translate into very strong incremental margins in that segment. Larry A. Lawson: Yes, I think in general, Sam, the aftermarket is really dependent on the model mix and what kind of parts we're selling into the customers. So it's really nothing more than a model mix issue typically on aftermarket. Samuel J. Pearlstein - Wells Fargo Securities, LLC, Research Division: Was it up or down in the quarter, if I look at it? Philip D. Anderson: The results in Propulsion, I believe, were a little bit better.

The next question comes from Cai Von Rumohr from Cowen and Company. Cai Von Rumohr - Cowen and Company, LLC, Research Division: So where are we on the Boeing master contract? Philip D. Anderson: Cai, well, as Larry described, we are working it together. It's an active process. Larry's just come on board here in the last 3 weeks and we're certainly having discussions with our customer on the matter. We also -- Boeing is obviously very important to us and I think Larry said that, as well. And I think we both would like to get it wrapped up sooner rather than later and we're making progress towards that, I think. Cai Von Rumohr - Cowen and Company, LLC, Research Division: Okay. And then if we look at the quarter, you had $28 million of positive cume catches. Could you give us a little bit more granularity, like what program was 737 it occurred on? And how much of any of that was block crossover impact or closeout -- favorable closeout adjustments? Philip D. Anderson: Sure. There were no block close outs in the quarter, Cai. And so the performance is really coming through on the higher volume programs, which is 737 and 777, at this point. So again, it speaks to, really, the hard work of the teams in the factories, after delivering 4,400 aircraft on the 737NG, that we're still working hard and finding improvements. And so it's pretty impressive from my vantage point.

The next question comes from Joe Nadol from JPMorgan. Joseph B. Nadol - JP Morgan Chase & Co, Research Division: Welcome, Larry. On the Gulfstream, just honing in on that a little bit, it seems in the dispute you're having with them, that deliveries were down sequentially. And I'm just wondering if that's timing or, since they haven't been paying you, if you guys are slowing deliveries down? And then, just I noticed -- and this maybe just a semantics thing but, in the press release, you talked about successful executing 87 and 350 but didn't mention Gulfstream, which has been a problem. And just wondering if you can expand on really how you're thinking about this relationship and anything else you can give us? Philip D. Anderson: Yes, so Joe, on the deliveries. Nothing unique. I think there were just some timing in the quarter that is really all it amounts to. On the relationship front, I think, we're working. I think, again, I can assure you Larry's priorities are meeting with the customers in the first 3 weeks and getting a sense of how things are going. And nonetheless, we are focused on delivering quality product to our customers every time on time. And that's the goal we have. And I think, certainly with Larry on board, we're going to be more intensely focused on that. Joseph B. Nadol - JP Morgan Chase & Co, Research Division: But Phil, just on that point, if they're not paying you, or maybe I'm misinterpreting that, just the language in the 10-K, are you continuing to just make these wings and ship them? Or what exactly is -- this is going on for a few more months now. What exactly are you doing in your factories? Philip D. Anderson: So Joe, they are paying. It's not a full payment. That's where the retainage comes from. Though it's a receivable that, actually, we will collect at some point, we believe. And it really speaks to the development program over the last several years we've been managing through. So there is -- it is -- we do deliver, we do get paid. It's not a full payment at this point, which is one of the challenges.

The next question comes from Ken Herbert from Imperial Capital. Kenneth Herbert - Imperial Capital, LLC, Research Division: I just wanted to further see if you could provide any more detail on the A350. Specifically, I know there's been a significant amount of effort that you've been putting into that program, both here and over in France, in the last quarter. And what kind of improvements have you seen in the last quarter, specifically on the wing there? Philip D. Anderson: The -- yes, we have seen improvements in the Fuselage deliveries. I think we're still not a 100% complete on our deliveries to Airbus but the condition of what we would call a condition assembly is improving, which is a good thing. There's still change on the program we're incorporating as we deliver. So I think, operationally, we're seeing improvements on the fuselage, which you know is built in North Carolina, then we assemble the components over in St. Nazaire, France. So we've got work in France we're having to clean up. And we got some -- I think some work in the Airbus factories we're working with our customer on cleaning up. And the Wing components, I think, seem to be going reasonably well at this point. There's always some challenges at the front end of a development program regardless of what section of the airplane it is but I think it's reasonably under control. Kenneth Herbert - Imperial Capital, LLC, Research Division: Okay. As you look out, Phil, over the next few quarters, specifically on the A350. I mean, do you get a sense that you can see the light at the end of the tunnel there? I mean, I know development contracts go for a while here. But specifically on the additional work that you've been doing in the Airbus facilities, how does that step down? And is that going according to a plan that you're happy with? Philip D. Anderson: Well we certainly have a plan. And we are improving as we go. We've made some improvements here in the first quarter. And we're very -- operationally, very attentive to hitting that plan with our customer. We understand very well the importance of the program to Airbus. And so we're in good shape on that. We do want to continue to improve. I think the shift of the focus is really 2 things, from the -900 development, which we're delivering now, which I've been talking about, but we're also entering the stages of developing the -1000. That is in process. And so our defined effort is turning to the -1000, as well as cleaning up and incorporating the rest of the changes in the 900. And then, of course, the 900 moves into production, which we're intensely focused on, as well. And I think we've moved this program, from an accounting standpoint, to a breakeven margin. So as we move into the recurring or the production contracts, we don't anticipate booking any profit here in the near term just because of the state of the challenges on the initial stages of production now. We have some supply chain work to do on this airplane, both the wing and the fuselage. And I think that's something we want to study very closely as we move through this year.

The next question comes from George Shapiro from Shapiro Research.

Larry, I had one for you. And certainly, welcome. Larry A. Lawson: Thank you, George.

And that is, there's been speculation about Airbus wanting to buy back the A350 program and a little bit with Gulfstream doing the same with their program. So just wondering kind of what's your thought process on that, kind of what's your attitude toward it? Larry A. Lawson: Well, George, I think -- first of all, I think to the point Phil made earlier, we're 5 ship sets into the deliveries. And we have a contract that -- and a commitment to Airbus, which we just have to focus on delivering to. And so as we kind of work our way through this thing, our focus is really on our own performance. If Airbus has some ambitions, then, certainly we'll sit down and talk to them about any interest they may have. But right now, we're just -- I mean, to be quite candid, we're pleased with the improving performance. I don't -- normally, I would say, I think people who know me, it's not good enough and, in my conversations with Airbus, all the discussions have been about performance. But we're having very good exchanges with them, the PMRs are going quite well. And I just say, right now, their hands are down to get to their first flight.

Okay. And then one for Phil. So with the improving performance on the 87, why wouldn't cash breakeven be in the second or the third quarter? Philip D. Anderson: George. Well, we're going to continue to improve, we think. So we've consistently said we think the cash break over is 1 25 [ph] to 1 50 [ph]. And it seems like we're on track as we move through that. Now there's another variable, as we talk about the 787, which is the -9 introduction, which we are right in the middle of. And then there's derivatives after that but the -9 is in the mix right now. And rate, rate 10 is also something we're focused on this year. So yes, I think, it's continuing good performance in the program. Now -- so there's good things and then we got to think about these price step downs and matching the cost of these price step downs, which were in the original contract, which I think we're going to be intensely focused on.

The next question comes from Greg Konrad from Jefferies. Greg Konrad - Jefferies & Company, Inc., Research Division: I was hoping to just go back to biz jets and I guess the business overall. Just last quarter, you mentioned that the management reserve had increased on the 280, and that the biggest focus was on supplier negotiations. Have you made any progress over the past quarter in terms of the supply base? Philip D. Anderson: Yes, Greg. So we have -- you're exactly right, supply chain has been an area we've been -- the primary focus on the business Jets, which includes the 280, the 650 and the BR725 package. We're very intensely focused on the supply chain. We've made some progress in the first quarter as far as getting procurement out. But I would describe it as we still have a long way to go as we move through the year. Our plan is to really execute that supply chain, plan to the balance of the year. And we should just keep talking about that as we move through. And of course, I would also lean back on the comments of this strategic and financial review, those programs will be a part of that review as we move through the year as well. Greg Konrad - Jefferies & Company, Inc., Research Division: And then just as a quick follow-up in terms of 747 and the lower production rate in 2014. Does that kind of play into anything in terms of CapEx or any pressure on the program? Philip D. Anderson: Yes, we discussed the -- and Boeing just announced that here early in the second quarter. So we are going to take a look at that reduction as we move into the second quarter process. So I think the only commentary I could really make about it, because we don't really know the outcome of that volume reduction on 2014 but I think, as you know, the 747-8, most products have a thinly margined program that we'll just have to remain watchful of as we move through and incorporate that into our estimates.

The next question comes from Michael Ciarmoli from KeyBanc Capital Markets. Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division: Welcome aboard, Larry. I guess, Phil, just on the A350. You mentioned the contracts were set at breakeven. I mean, is that conservative enough? Can you walk us through some of the risk there were maybe that contract at 0% still has some risk in it? I mean, just trying to get the thoughts of remaining risk on that if you ramp. Philip D. Anderson: Sure. The -- I think we've looked at it. And we know what we know right now. And so as we look at the future, again, there's still a lot of change on the design that we're incorporating. And so we're trying to refocus on the forecasting the recurring costs for the airplane. And every quarter we're looking at everything we know, looking at the supply chain progress, looking at our labor, factory experience support, direct labor, as well as overheads. I think it's just -- it's too early to really call it. And so when we do, we think about 0 margin on the program, given we've only delivered 5 units. I think the first accounting block is 400. We're really just going to look at the estimates as we go through quarters. We -- from a process standpoint, it's important that every quarter we look at these programs and these programs change from quarter to quarter. And so as we get a view of risks, as we -- as that changes, we certainly update our view of the program. And I think our best view right now is, given we're only 5 units in a state of change on the design, that 0 is appropriate right now. Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division: Great. And then just on the 787 rate, you mentioned that 10 per month. Where do you guys plan to be in the next 3 months, the end of the year? I mean, are you shooting for that 10 per month by year-end? and shouldn't expect any additional CapEx associated with that? Philip D. Anderson: So certainly, some of the CapEx we're spending this year is for 10-a-month. And we expect to exit 2013 essentially at 10 per month.

The next question comes from Michael Callahan from Topeka. Michael Callahan - Topeka Capital Markets Inc., Research Division: Welcome, Larry, and congratulations as well. Larry A. Lawson: Thank you. Michael Callahan - Topeka Capital Markets Inc., Research Division: I guess, first thing is, it's kind of a follow-up on the development programs and securing contracts with your supplier. And I think a key focus there was obviously, hopefully, taking some costs out. Of the ones that you have secured at this point, what are your overall feelings as far as how successful you've been in negotiating those lower or in a more favorable position? Philip D. Anderson: Sure, Michael. We've had some good successes but there's a long way to go. But I think the fact is we've had some very, very favorable outcomes on moving to longer-term -- what I would call, long-term, appropriately priced contracts for lower-volume programs. And that is one of the challenges. The aerospace market, whether defense or commercial, is very busy right now in terms of the supply chain. And so we need to get these programs procured at what we think we can get them procured for and we've had some good successes, but a long way to go. Michael Callahan - Topeka Capital Markets Inc., Research Division: Okay. That's helpful. I guess, then, a second question here. Just consolidated margins broke 10% on operating margin here this quarter, first-time in, really, I guess almost 2 years. As we're thinking about consolidating margins going forward, what are your guys thoughts as far as -- is there is any improvement that you can make from here? I mean, in the past you guys have kind of said you anticipate maybe development programs would essentially offset the higher rates on core programs. Is that still the thinking? Or is it looking more positive from here? Philip D. Anderson: Well, I think that right now, we're looking at the -- all of that with the strategic and finance review. So I think I'll just take a pass on answering. But clearly, you're seeing the strength of the core business in our results. We continue to be focused on improving those margins in the core business. But I won't go out and provide you any guidance until we get through this review at this point.

[Operator Instructions] Next question comes from Peter Arment from Sterne Agee & Leach. Peter J. Arment - Sterne Agee & Leach Inc., Research Division: Phil, a question, I guess, on 787 capacity. Just mainly thinking about Wichita. Boeing's indicated that once they get to 10 a month and stabilize, clearly, there's a desire to move higher. How do we think about how your spare capacity is, what you put in place and the efficiencies actually you've been seeing? Philip D. Anderson: Sure, Peter. The efficiencies, I think we're doing very well on them. Our Chief Operating Officer is here, I'm looking at him, he says we're doing pretty good on those things. And we're seeing that coming through on the program. We exit the year at 10 a month and I think that's something we're intensely focused on, is the automated side of the process, the manual side of the process. And as you know, the automated side of the process really comes down to feeds and speeds on machines and efficiencies, which we're intensely focused on with our -- some of our R&D spend, which we have on an annual basis. So I think we're pretty optimistic about the efficiencies in factory. But I think I'd point back to, I guess, it's heavily buy, sort of a lot of supply chain in there. Some of it is source directed from our customer, which we buy through. And so some of it is very dependent on our customer. From a cost standpoint, there are price step downs, which we've talked about earlier on the call. And so all of the efficiencies we're getting out of the factory, we just have to stay intensely focused on those. And ultimately, I think, we believe it's a good long-term program. We're going to -- we'll do okay but it's a matter of getting down the learning curve we need to get down to match the price step downs. Peter J. Arment - Sterne Agee & Leach Inc., Research Division: Okay. And then if I could just ask a related question on the step downs. Larry, the -- Boeing's got a partnering for success program where they're looking for some price discounts and you've got a big 737 contract that's coming due. This seems like actually more of an opportunity for you to work at a larger agreement with Boeing. Could you maybe just give us some initial thoughts? Larry A. Lawson: Well that's the discussion that we're having and it's exactly that. Because it is a partnership, to your point and, obviously, one of our most valued partnerships. The -- and the balance between our business and their business is exactly as you state, it's how do you -- when you net all of this out, how does it work? And so we are -- we are having exactly the conversation you just had. I think it's been incredibly productive. We're -- I think we've broadened the discussion, let me just say, to include more data from the entire enterprise standpoint, to say, "Hey, here's the commitments we can make and here is the challenges we have and how we do we make this equitable for both parties?" So I think we agree with you, it's a good opportunity but it's probably a little bit longer conversation than the one we were having.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.