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

Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division Howard A. Rubel - Jefferies LLC, Research Division David E. Strauss - UBS Investment Bank, Research Division Myles A. Walton - Deutsche Bank AG, Research Division Cai Von Rumohr - Cowen and Company, LLC, Research Division Carter Copeland - Barclays Capital, Research Division George Shapiro John D. Godyn - Morgan Stanley, Research Division Kevin Ciabattoni - KeyBanc 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. Second Quarter 2013 Conference Call. My name is Mayesha, I will be your coordinator today. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the presentation over to Mrs. Coleen Tabor, Director of Investor Relations. Please proceed.

Thank you, and good afternoon. Welcome to Spirit's second quarter 2013 earnings call. I'm Coleen Tabor, and in the room with me today are Spirit's President and Chief Executive Officer, Larry Lawson; Spirit's Senior Vice President and Chief Financial Officer, Phil Anderson; and Heidi Wood, Spirit's Senior Vice President of Strategy, M&A and Investor Relations. After brief comments by Larry and Phil regarding our performance and outlook, we will take your questions. [Operator Instructions] 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: Good afternoon, everyone. Thank you for joining us today. We scheduled this call to move expeditiously and to provide information to you as soon as possible. We had a chance last week to discuss with you the most recent outcomes of our strategic and financial review, we relayed the decision to offer the Oklahoma sites for sale and we gave you an outline of the charges. Today, we can provide a complete picture of the financials, and as you can see, overall, we're making progress. We reported $1.5 billion in revenues, with $209 million in operating income before the $448 million charge, a $239 million loss after the charge. Operating cash flow was $60 million and our backlog rose $2 billion sequentially to an all-time high of $38 billion. We reported earnings per share of negative $1.47 after charges. On an adjusted pre-charge basis, earnings per share was $0.72, which was up 44% year-over-year. I want to go straight to the charge and begin by saying we're not happy about this. As you heard, we took a charge of $448 million in the quarter, $426 million of which reflects the revised cost projections on the Gulfstream G280 and G650 wings. Last week, we gave you a preliminary range of $350 million to $400 million prior to the conclusion of the review, which was based on a 400-unit block on this G650, which is in line with market forecast. Ultimately, last week at the conclusion of the review, it was determined to use the previous block size of 350 units spread over an additional 2 years to 2019. We will continue to review the block size in future periods and determine when the modification is appropriate. Looking forward, I would like to summarize the points I made at the management call regarding our recent decisions and our strategy. We can get into more details during the Q&A. We have taken a number of actions to include the sale of Tulsa, a reduction in our workforce and an organizational realignment. We are aligned to our customers, focused on program commitments, we've added some great talent and we are reducing costs. We are making the hard decisions. Spirit is intensifying the focus on 4 key things I think is worth reiterating: disciplined decision-making and market focus, focus on performance, on cost and on cash flow. We believe we have a strong value proposition in the design and manufacture of some of the most complex aerostructures in the world and the best value for our customers. With the healthy mix of maturing new programs and commercially-successful long-lived programs, like the 737, the 777, the A320, the 787 and the A350, we are very well positioned to participate in the commercial aerospace up cycle. In this context and with a keen eye on performance, cost and cash, we are refining how we use our resources and balancing our mature program performance against the investments necessary for new programs. We are determined to advance our differentiation in the marketplace. This provides a framework which you can understand, both [ph] our underlying performance and our strategic decisions around divesting the Oklahoma sites. My last comments concern our focus on cash. All of our financial metrics are important, but we are especially focused on cash flows. We will challenge cost, focus investments, choose markets and incentivize the right decisions. We will drive value for our customers, our shareholders and for our employees. At this point, I'm going to turn the call over to Phil so he can walk you through the details. Phil? Philip D. Anderson: Thank you, Larry, and good afternoon. I would like to provide you with our segment highlights for the quarter, and then I'll summarize the company's financial results for the second quarter of 2013. On Slide 4, the Fuselage segment had strong top line growth and operating performance, with operating income of $150 million on $732 million in revenue during the second quarter, as volumes across mature programs increased. The Fuselage segment's 737 production line has now delivered more than 4,500 ship sets of the Next Generation fuselage, and together, Boeing and Spirit have delivered over 7,600 737s, an incredible accomplishment by our customer. As you know, we are continuing to innovate the 737 as we invest in the 737 MAX, which will create the next industry-leading single-aisle aircraft for years to come. The 787 fuselage team delivered the 130th forward fuselage section in the quarter, which includes the first 787-9 derivative. And we are proud to partner with Boeing on this Next Generation twin-aisle airplane as their growing backlog and customer base demonstrates the market demand for the -8 and -9 airplane, as well as strong interest in the recently-announced -10 derivative. During the quarter, the Fuselage team continued to make progress on the A350 XWB program, delivering the sixth production composite center fuselage to our Airbus customer. And we congratulate Airbus as they achieved the important milestone of the A350 first flight in the quarter. Congratulations to Airbus. On Slide 5, the Propulsion segment reported strong operating income of $82 million on $419 million in revenue, as volumes across mature programs increased. Propulsion 737 Next Generation engine pylon and thrust reverser production lines are performing well at high rates, as the teams have now delivered more than 4,500 units of hardware. The 777 nacelle and pylon lines delivered the 1,120 package in the quarter. Additionally, the 787 Propulsion team shipped pylon line unit #132 in the quarter, which also included the first 787-9 derivatives. Development of derivative in Next Generation products continues in the Propulsion segment, as we again successfully achieved milestones on the 737 MAX, 767 Tanker, the Bombardier CSeries and Mitsubishi regional jets. On Slide 6, the Wing segment reported operating income of a negative $404 million on $369 million in revenue during the second quarter, as volumes increased and the forecasted future cost growth of $448 million, primarily on business jet programs, was recorded. The charge on the business jet programs represents the culmination of changing conditions and new developments as we have worked to understand the go-forward supply chain costs and incorporated additional labor performance and revised recovery plans into our projections. In a quarter with such complexity, the additional time provided to this update, to the estimate, demonstrates the fidelity of the process and the outcome. Spirit Europe operations continued to produce significant volumes of hardware for our Airbus customer, surpassing line unit 5,800 for the A320 wing components. Spirit Tulsa's Next Generation 737 slats and flats production lines should steady mature program performance, having delivered more than 4,500 ship sets. The Tulsa team delivered the 1,034 (sic) [134th] 787 slats, which included the first 787-9 derivative. As Larry discussed in his opening comments, separate from the performance in the quarter, we made a strategic decision to pursue a divestiture of our sites in Oklahoma. While these sites have great products, people and programs, we are refocusing the company on Spirit's differentiating capability in large-scale, high-volume commercial and defense aircraft. Turning to the consolidated results for the company. On Slide 7, revenues for the second quarter of 2013 were up 13% as compared to the second quarter of 2012 on higher production volumes and nonproduction revenue. Operating margins for the quarter reflect the charge. Excluding the net forward losses, cumulative catch-up adjustments and certain other items, operating margins were 11.7%, reflecting year-over-year improvements associated with increased production and productivity and efficiency improvements on mature programs. The quarterly results reflect positive contributions from the mature programs as Spirit realized the net favorable cumulative catch-up adjustments, totaling approximately $41 million. Fully diluted earnings per share for the quarter was a loss of $1.47 per share driven by new program charges. Excluding the forward-loss charges, cumulative catch-ups and certain other items in the quarter, earnings per share would have been $0.72 per share, reflecting the strength of our mature business. Adjusted free cash flow for the quarter was a $21 million source of cash, a solid $50 million improvement over the year-ago quarter. Slide 8 provides a look at the second quarter GAAP earnings per share to the adjusted earnings per share of $0.72. Slide 9 summarizes cash and debt balances. Cash balances at the end of the second quarter were $317 million, as compared to the first quarter of 2013 cash balances of $313 million. At the end of the quarter, our total debt-to-capital ratio was 39% and our net debt-to-capital ratio was 31%. We continue our strong track record of liquidity and balance sheet management as a result of the financial strategy implemented over 5 years ago to support the company's day 1 customer diversification strategy that is focused on clean sheet designed aircraft. Currently, to address the charges to earnings in the quarter, and as we now work through a strategic and financial review of the company, we have amended our senior secured loan and credit facility to suspend the existing financial covenants through the fourth quarter of 2014, after which time, the financial covenants will apply again. During this period the company will be subject to a liquidity covenant and any draws on the revolving credit facility will be subject to a borrowing base limitation. Our U.S. defined benefit pension plan remains fully funded, while we continue to make modest cash contributions to our U.K. plans. Slide 10 summarizes net inventory balances at the end of the second quarter of 2013. Physical inventory balances remained stable in the quarter, as we continued to actively manage inventory growth in a rate-increasing environment. Nonrecurring inventory balances decreased as we met milestones, primarily on the 787 and 737 programs. The 787 program realized a net decrease of $2.3 million in deferred inventory on 14 deliveries or approximately $160,000 per ship set. While this performance does not signal -- this performance does signal an important milestone reached, it is important to remember that the 787 contract includes step-down pricing for the -8 that our performance must follow in order for our results to continue this trajectory, and we still must determine the pricing for the -9 and -10. As we shared with you, our comprehensive, strategic and financial review continues and we expect to report our progress on these initiatives and any financial implications in the coming quarters. And now I'd like to turn it back over to Larry for some closing comments before we take your questions. Larry A. Lawson: Thank you, Phil. So to conclude, we have made progress. There is much more to do. We are charting a path forward towards being a performance and financially-driven enterprise. With high expectations, the emphasis throughout the company is going to be about driving for cash. There is no shortcut, it is about focus and discipline. We're going to sharpen our focus on what we do best, we're going to drive on cost and performance, where the standard is world-class. We're positioning the company going forward for prosperous growth for our customers, for our shareholders and for our employees. With that, we're ready to take your questions.

[Operator Instructions] Our first question is from the Doug Harned with Sanford Bernstein. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: I'm interested in the charges. I'm trying to understand how the Wing Systems charges went up. You're taking the block size down to 350. And I know before, you had talked about that the cash impact of this would likely be spread over an extended period of time. And how are you looking at this now? As you bring that block size in, you take the charge up, how should we think about that in terms of the cash impact? Philip D. Anderson: The cash impact really, of the charge is now -- 85% of it is 2014 through 2019 now. I think if I do the math, it's roughly about $16 million a quarter over 6 years. And then the rest of that, about $65 million, $70 million would flow through 2013. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And then on the 787 wing charge, what drove this? What are the considerations that took this up from the number you had before? Philip D. Anderson: Yes. Mainly, our current period performance and continuing to work through our recovery plans on the program were the main contributors. Again, that -- it was about $22 million in the period that we recorded, and that was the 787 wing component.

Our next question is Howard Rubel with Jefferies. Howard A. Rubel - Jefferies LLC, Research Division: Larry, sort of a blunt question. Why not break these contracts, especially with the Gulfstream, than proceed with them, given the substantial charges? Larry A. Lawson: Well, certainly we've evaluated all of our options and I will just say that this reflects a complete consideration of all the options, Howard. And I would just say that it's a judgment call regarding the timing of when you kind of incorporate market data and use market data. There's the assessment itself of market data and then there's the accounting rules. So you get your own conviction. One of the questions I -- you may be concerned about, for example, the effect this might have on a buyer in the facility. But the truth is that the buyer always is going to do their own assessment of the value of the products that you're selling. They're going to use market data, and they'll decide what market assessment they're going to use. Current market assessments range from 400 aircraft to 550. The buyer will make their decision about what range to use. The buyer will make a judgment regarding what synergies they think they bring to the acquisition of the product. The buyer certainly will decide what value the site has to them in terms of access to markets. And so I would just say, there's accounting treatments and there's assessments and judgments applied. And there's, as you know, the sites for sale, there are some things that the buyer is going to do as it relates to how they assess the situation. And I guess, I probably should say that, since our management call, there has been a lot of interest expressed in the sale of the site.

Our next question is David Strauss with UPS (sic) [UBS]. David E. Strauss - UBS Investment Bank, Research Division: It's UBS. A350, I had a chance to quickly look at your 10-Q filing. It looks like deferred -- your deferred balance built significantly there on just 1 delivery in the quarter. Phil, can you just talk about A350 and when you might be in a position to evaluate that program for a charge? Because it looks like you're running at a significant loss as we sit here today. Larry A. Lawson: No, that's a good question. I think at the management call, I made the comment that we were very focused on the performance side on the A350. And I'll tell you that we're early in the program, and so there's a number of factors that I'm looking at. I'm going to take my time really, to kind of work my way through this. But one other -- I think the thing that's important is you have to differentiate the development cost versus what you think the going-forward recurring costs are going to be on the platform. And you take all the information on board. We are running a little hot on development. Why is that? Well, I asked myself the first 2 questions when I looked at the development program, the 350 is. Number one, do we have a plan that both parties agree to communicate with each other regularly on, that's metrics driven and so that we're both working to the same piece of music. And I'll tell you that this was a particularly challenging program early on because it was a new product, a new customer and a new site, and that represented a unique set of challenges. Today, I can tell you that we have a common piece of -- a common plan, I usually often refer to it as a common piece of music that we're both playing to, and that we're status-ing with each other, and that's a tremendous accomplishment. And we have to give both members of the team, Airbus as well as our team, a lot of credit for getting there. But that hasn't always been the case. And so it gets you to the second part of the question which is, do you have the right team to go execute the plan. And I've told you early on that we have realigned, and part of that realignment, to be quite blunt, was to put additional resources and the right resources in the plan. Now why is this? Well, because really, you burn money. You can burn money. It's much more painful to miss schedule. You will spend a lot more money if you can't stay on schedule than you do if you expend resources to get back on plan. So right now, we're running hot to get the plan completely implemented and get right on schedule, and we're making a lot of -- I mean, we're making great progress. And you can ask yourself the question, all these programs, the development programs, will the 350 be different than other programs. I mean, all I can point to is the major metrics all indicate that Airbus is doing quite well and we're going to make sure that we do what we have to do to support them. And again, I guess, if I were to boil this down and get into the simplest way to say it, the most important part of the development side of this is to stay on schedule.

Our next question is Myles Walton with Deutsche Bank North America. Myles A. Walton - Deutsche Bank AG, Research Division: First one is a clarification, if there was any benefit from the Boeing master price agreement not being settled up yet in the quarter. And the second one, Larry, you're cash focus, you talked a lot about. I'm curious, as you go into negotiations with customers, Boeing and/or others, are you making active trade-off decisions between offering up some profitability for better cash terms at the front end of these contracts? Larry A. Lawson: Well, that's not really something that we would really -- I mean, those are always options and we don't get into negotiations. But I think -- I don't think the 2 were really disconnected. Really our emphasis on cash is trying to drive the decision-making in the enterprise to be thoughtful across the board. We want to challenge everything that we do, so whether we're talking about our capital investments or the things that we're pursuing or the businesses we participate in, if they're not profitable, then, of course, they don't throw cash in the end. So those are -- that's really a difficult trade to talk about, because it is effectively the profit that drives cash. I think it's really -- what I'm really trying to say is that all the other decisions in the enterprise, whether it's overheads, cost of goods sold, CapEx, and then I could continue on and kind of go through the details. But really trying to get the team to challenge everything we do across the board that takes those profits that you were referencing and take them to the bottom line. Now that doesn't mean we're going to be shortsighted about investments. I hope I was clear in my comments, that we recognize that to participate in the future and partner with our customers, these investments are necessary, but we need to be smarter about the decision-making that we're involved in. And obviously, we'd like to invest in things that have -- that we believe will be very successful and have a long cycle and lead to future business. Philip D. Anderson: Miles, on your pricing question up front, we are in the interim pricing period with our customer. So just to be clear on that. And of course, we won't talk about kind of the economics of that, but I did want to make clear, we are in the interim pricing period. Myles A. Walton - Deutsche Bank AG, Research Division: Is that helping? Philip D. Anderson: Well, I'll leave that to you to do the math.

Our next question is from Cai Von Rumohr with Cowen and Company. Cai Von Rumohr - Cowen and Company, LLC, Research Division: Impressive $41 million in positive cum [cumulative] catches. I mean, it looks like you achieved that all on the 737 and 777, so it's on, what, about $850 million. So it's like 4.5 -- 450 bps on the revenues. Maybe explain why that number was so good, whether you dipped into any of the deferred production credits that you have and kind of your thinking and showing a number that good while you're still negotiating with Boeing. Larry A. Lawson: Great questions, as usual, Cai. Right to the point. So I think the performance of the programs is coming through. We have been in a rate-increasing environment really across-the-board for the last several years and that is continuing in '13, and then we grow, again, in '14 on the 737 program. So I think we've been prudent on how we've managed through the deferred balance that you're talking about, looking at all the risk in front of those, which would include pricing, quite frankly, in the bigger scheme of things. As we know, it's sustainable performance, we've talked about this before. We are about constantly improving the performance of the company on a sustained basis and I think that's what you see us doing, when we feel good about the prospective performance, that's when we release those cum catches. Yes, I think the obligation of the company regarding negotiation is -- we're performing well, right, and we have an obligation to shareholders to report the performance of the company. And frankly, I think Boeing appreciates the fact we are doing so well on the programs quite frankly. Larry can certainly speak to the quality costs and other things that go on Boeing. But financially, they need a strong supplier. We are, and we look forward to doing business with them long into the future. Cai Von Rumohr - Cowen and Company, LLC, Research Division: Okay. And then maybe on the [indiscernible], your site is frozen. Can you give us what the deferred production costs were by the other team program, the G650, et cetera? Philip D. Anderson: I don't have those numbers in front of me, Cai. Maybe we could take that it up with you -- it's in the Q -- it's in the Q, yes.

Our next question is Carter Copeland with Barclays. Carter Copeland - Barclays Capital, Research Division: Nice to see some downward deferred production numbers. Larry A. Lawson: Yes, it is. Carter Copeland - Barclays Capital, Research Division: I have a question for Larry, really quickly, kind of big picture conceptual. There's a lot of stuff moving around here in terms of both some of your key programs and some degree of change with your customer and the re-engine-ing [ph] and potentially what happened with the 777X. You've, obviously, got some other contracts and sites and then lots of moving considerations around cost actions. And I wonder if you could touch a little bit on the prioritization of when you reach a steady-state, and you have a book of business that has a set of contracts, there are often times trade-offs between how much you invest, how much a partner invests, whether or not you want to trade profit for cash. There's more to it than just simple cost and price. And I wondered, relative to your comments about cash being a priority, if cash would be something that you would place a premium on in such a way that you might be willing to accept in some of these negotiations for the moving parts, lower prices at future points in time or different investment profiles. How do you think about that trade space? Larry A. Lawson: Yes. I guess I'm sending absolutely the wrong message. And let me be clear, I mean we're not -- we don't have any liquidity issues. We have a cash reserve. We're not trying to build up a cash reserve to build out, reduce debt or any -- it isn't really -- that's not the premium here. So trading profit for cash really wouldn't be -- I just can't think of an example right now where that would be a smart thing to do. Unless potentially, it was on new program and we're talking about shaping the curves. And I don't mean learning curves, I'm talking about inventory versus payback. That's really not what I'm referencing. What I'm really referencing is how we make decisions as a team. It just strikes me that cash drives focus because it takes the profits that you're garnering on these programs, this performance that you're referring to, and drives this cash flows to the bottom line. This is about cash flow, not cash. And so if there's not -- I'm not trying -- there's not an objective to build a big stockpile of cash to go buy something. I mean, frankly, we haven't even started having conversations with what we might do if we had a large cash bucket. But it's more about behaviors. So this is not about our customers, this is more about how we make decisions in terms of cost structures, investments, et cetera. And back to your comment about investments, look, all of these are unique and what we want to do is partner with our customers. I mean, we're looking for opportunities to be involved early in the game, to understand what their needs are, because it's really, frankly, it's the early investments that make the best payoffs. So if there's a particular technology, a manufacturing approach that our customers need or -- frankly, I think as the aircraft become more and more integrated, whether it's the nacelle or the engine, doing that work upfront is where the premium is. And so we're really trying to drive our team, kind of to answer your question about investments, that's where we think we get the biggest bang for the buck on the investments, or I should say, where we think our customer gets the biggest bang for the buck on the investment. So I hope that answers your question. I may have said my emphasis on cash, it's really more about cash flow. Carter Copeland - Barclays Capital, Research Division: No, that's great. It's helpful. And just a quick one for Phil. At times you've had -- if you look at the operating performance x the cums and the charges in the quarter, the 11.7, is there anything beneficial to note in the mix or is it relatively normal operating performance? I know sometimes you get development revenues and the like. Is that a clean number? Philip D. Anderson: Yes. It's a pretty clean number, Carter. Just really the operating engine of the company delivering the value.

Our next question is George Shapiro with Shapiro Research.

I just wanted to pursue the 350 a little bit more. If you look at it, it looks like the deferred increase was about $33 million for the ship set delivered. And when you delivered the 2 in the first quarter, there was about $24 million for each of them. So if you could just follow-up your comments before. I mean, do I look at this as getting worse or is this just jumping around? Or how do I look at that? Larry A. Lawson: Well, I would say a couple of things. Number one is the configuration of the vehicles are different. So I'm not sure exactly which deliveries you're pointing at. Some go -- some are units that go to structural testing, others are units that go to flight. So configurations are common and all, but some have instrumentation, et cetera. They're not all exactly the same. So I'm not sure I know what the difference is in the comparisons, George, but I'd be happy to go back. I will tell you that we're not seeing degraded performance against the deliveries, actually our performance is getting better. You may have noted, George, from our customer, some of the commentary offered that I think probably indicates an improving relationship, and you know relationships are all founded on performance.

Yes, I was just looking at the fact that the first quarter you delivered 2 ship sets and this quarter, you delivered 1, and we're just looking at the difference in deferred per delivery. Larry A. Lawson: Yes, if it's okay, I'm going to -- since I don't have that right here in front of me and I don't -- I will definitely do a little more research here. What I look at -- so like the data I see is the number of hours per unit, the actual unitized cost, the touch and material and support differentiations will support costs. So again, I need to do -- I need to go look into it a little bit more. But everything I'm saying clearly shows an improving trend as it relates to -- on the manufacturing side, as it relates to the performance against the aircraft. What I would say, again, and I said earlier, on the development side, we're running a little high. I think it will pay off in the long haul. And I'll be honest with you, some of that cost, the development cost, is just catch up on some things like concessions, et cetera, that we and Airbus both have to go work on.

Our next question is John Godyn with Morgan Stanley. John D. Godyn - Morgan Stanley, Research Division: I was hoping that you could just speak to the -- your commitment to divesting Oklahoma. And at what point would pursuing the divestiture become a distraction or at odds with potentially optimizing operations, if perhaps the interest wasn't as good as maybe you had hoped? Larry A. Lawson: Well, for sure, it's not a fire sale, John. So I would -- we're right now, I mean, I'll tell you we're very focused. I've spent a lot of time in Tulsa, with the Tulsa team, with the management team. You can't imagine the amount of time that was spent putting the fidelity around the planning that went forward that, frankly, defined this charge. And so we're committed to the site as an ongoing operation. We think there may be a better owner. We think that there may be folks out there who have similar 2 [ph] contracts, that can provide efficiencies, people who will look at that site in terms of access to markets they don't currently have. And of course, they're going to look at that -- they're going to look at it again from their assessment of the market, not only the current market, say, for the 280 and the 650, but then where those markets might go. And of course, we talk a lot about, frankly, the 280 and the 650, but it's a very diverse business, with 737, 777, 787. I mean, there's just a lot of great programs in there. So we'll see what the interest is, we'll see how it material -- materializes in terms of the financials, and we'll make our decision on all of the above. John D. Godyn - Morgan Stanley, Research Division: Okay, that's helpful. And if I could just ask about a separate topic. As I know, you've heard Boeing has been looking at potentially moving above 42 over time, or at least those are some of the soundbites that they've offered. Could you just talk about the opportunity for productivity improvements from here at the mature programs? And could they create capacity over time for you to move above 42 on the 737? Or is there just sort of a CapEx bottleneck there that productivity can't get around? Larry A. Lawson: I think, as I understand it, Boeing actually announced that they were looking forward to a higher build rate. They're exploring the build rate. I think the number that they said was 47 aircraft. And you can be assured that we're working hand-in-hand with them on that, because there's 2 really questions that have to be answered, not just what can our factory support, but what can our supply base support and what's the associated cost in terms of where the inflection points are and where the risks are as you build up in rate. That's an ongoing conversation. We have with them, overall, frankly, a wide range of rate options. But today, I'd say that we're focused right along the lines of what the range they've said that they're looking at. And we don't see any major roadblocks.

Our next question is Michael Ciarmoli with KeyBanc Capital Markets. Kevin Ciabattoni - KeyBanc Capital Markets Inc., Research Division: It's actually Kevin Ciabattoni on for Mike. Just one quick one for me. It may be too early to be looking at this, but I'm just wondering how we should be thinking about kind of the long-term target for operating margins. Is north of 15% kind of a reasonable target, given what we're seeing from other competitors in the structure space? How have you guys been looking at that? And maybe some general commentary on the... Larry A. Lawson: Well, I think that's -- yes, Kevin, thanks. I think that's why I really referenced investments versus any particular program look. I mean when we deal with our customers, I mean, we're balancing the portfolio all the way down to the net operating margin. So you can look at it in any one segment and get a view. But from us, we're looking at kind of a consolidated operating margin, which, frankly, is -- which is in line with our customers. We're not askew from them. So we're trying to figure out in the long haul, you're talking of the long haul, we bring all of that in balance, because a number of decisions have been -- were made in the 2005 and on timeframe that have presented us a host of opportunities here that we're working our way through. And kind of our going forward conversation we have with any of our customers has been trying to look at this in terms of total portfolio, total business that we do with them. Their only request back to us is reduce your costs, improve your performance, enhance your quality, collaborate with us and figure out a way that we can go forward together smartly, and that's exactly what we want to do.

Our next question is Peter Arment with Sterne Agee. Peter J. Arment - Sterne Agee & Leach Inc., Research Division: Larry, just a quick one. I guess, you delivered out the 130 787-4 fuselages. What are you seeing there in terms of the overall progress on that program? And are you -- what are you seeing now that you're at the 7-a-month rate? Larry A. Lawson: Well, I think the -- I think, it's clear. We're moving to 10-per-month build rate and we're on track for that. We have delivered both -8s and -9s. The feedback I get from the customers is they're very happy with that. I will tell you, just as [indiscernible] to this business. I've been here 4 months. And I was -- spent 33 years in the defense business in which I had the opportunity to work on some really exciting things. When I went out and looked at the 787, I thought we were probably leading the field in terms of the manufacturer composites in the defense business. We were doing some pretty extraordinary things. But then I went out there and looked at taking a 1/4-inch piece of carbon tape and then winding it into a Section 41 or a forward fuselage, as you referenced that, in a very complex monolithic structure, it was really eye watering. And I would tell you on the flip side, from my standpoint, equally impressive is we're building these wing spars, I mean, for these very large wings and we're holding tolerances to 5 and 10 thousandths of an inch. So it's an impressive capability that Spirit brings to the marketplace. And then overall, we're moving, I think, Phil mentioned that we're bringing costs down and we're moving rate up. And so for us, I think the vectors are in the right direction and we're going to continue to press on all fronts, whether it's 787 or any one of these programs. They're all important to us.

Our next question is a follow-up from Doug Harned with Sanford Bernstein. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: Yes, just one more thing. I'm interested in understanding on the pricing negotiations. When you look at the 737 and the 777 negotiations with Boeing, as well as getting pricing set on the -9 and -10 787s, and then lastly, potentially moving out of the wing portions of these, are you in a discussion with Boeing about this all collectively? Or could you describe sort of the timeline you think these will get resolved on? Philip D. Anderson: Look, I think we're certainly talking about, I think, all the things you just mentioned with Boeing. And I guess, I'd just make some broader comments because I don't really want to negotiate in public, quite frankly. They think -- there's a lot of a symbiotic relationship and that's kind of how we view it, I think. We're a good supplier of Boeing. We delivered significant value to our biggest customer over the last 8 years as a standalone company. And so I think they value that, so we're really working together. Larry's coming in now and really understanding the customer, understanding what Spirit brings to the game for them. And I think we're having very constructive discussions overall, on all fronts, quite frankly. It will take some time. So I'm not going to just prescribe through a timeline right now, but other than -- we're going to work with our good customer and there's a way to get all this done. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: Does the potential of exiting the Oklahoma operations and the 787 Wing, does that affect the timing of these discussions and how these go forward? Philip D. Anderson: Well, I think it's an element. I don't really think it has to dictate timing.

Our last question is a follow-up from George Shapiro with Shapiro Research.

Yes. Phil, just looking at the -- quickly at the Q. It looks like that deferred balance for Boeing other programs came down about $30 million. Now this -- I would think you would have to finish that with -- when the 737 block ends, which is the end of this year. Is that correct? Philip D. Anderson: Yes. Generally correct, George. I think the -- yes, that's technically how it works.

Okay. And then maybe one for Larry, also, skins [ph] in the Q. It looks like there was something, you've transferred some business back to Gulfstream on the G650. If you could just go through a little more color on what was in the Q? Larry A. Lawson: Well, we didn't -- so there's work that's, what we call, station 2, 3 and 4 work that we do at Gulfstream today. It was originally targeted to be done in Tulsa. It's being done at Gulfstream today. It's really kind of a risk management approach. We will ultimately bring that work back to Tulsa and actually that's part of the detailed planning that we laid out.

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