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 Sanjay Kapoor - Chief Financial Officer and Senior Vice President

Carter Copeland - Barclays Capital, Research Division Howard A. Rubel - Jefferies LLC, Research Division Julie Yates - Crédit Suisse AG, Research Division David E. Strauss - UBS Investment Bank, Research Division Ronald J. Epstein - BofA Merrill Lynch, Research Division Robert Stallard - RBC Capital Markets, LLC, Research Division Amit Mehrotra - Deutsche Bank AG, Research Division John D. Godyn - Morgan Stanley, Research Division George Shapiro Samuel J. Pearlstein - Wells Fargo Securities, LLC, Research Division Seth M. Seifman - JP Morgan Chase & Co, Research Division Finbar T. Sheehy - Sanford C. Bernstein & Co., LLC., Research Division Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division Kenneth Herbert - Canaccord Genuity, Research Division

Good day, ladies and gentlemen, and welcome to the Spirit AeroSystems Holdings, Inc. Third Quarter 2013 Earnings Conference Call. My name is Vanessa, and I will be your coordinator today. [Operator Instructions] I would now 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 third 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; and Spirit's Senior Vice President and Chief Financial Officer, Sanjay Kapoor. After brief comments by Larry and Sanjay 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. In addition, we refer you to our earnings release and presentation for disclosures and reconciliation of non-GAAP measures we use when discussing our results. 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 good morning, everyone. Welcome to Spirit's third quarter earnings call. First, I want to thank our Spirit employees for their hard work and determination. This team is really concentrated on performance, which is essential. We're making good progress in the drive to reduce our cost and to deliver high-quality aerostructures to our customers and cash to our shareholders. Obviously, there's more work to be done. I would like to take a moment to welcome the newest member of the executive leadership team, our Chief Financial Officer, Sanjay Kapoor. We're very pleased to have Sanjay on board. His experience across the commercial and defense programs, as both a CFO and as a P&L leader, give him the knowledge and perspective necessary to help us in our drive towards predictability in our financials. He has a very strong track record, particularly in the areas of program and cost management. He is a true complement to the team. We're continuing to make additions to the team in alignment with our 4 key themes: disciplined decision-making and market focus; a focus on performance; a focus on cost and, of course, a focus on free cash flow. Welcome to Spirit, Sanjay. Now let's turn to our results in the quarter. We reported $1.5 billion in revenues with $170 million of adjusted operating income and $51 million in operating income, including the charges. Operating cash flow was $185 million, and adjusted free cash flow was $141 million. We are pleased to see the improving results on cash flow. The backlog continues to be on a record high of $38 billion. We have reported earnings per share of $0.65 after charges. On an adjusted basis, earnings per share were $0.77, which is up 18% year-over-year. The quarter included a net $112 million forward loss on the recurring and nonrecurring contracts for the A350. We told you we would disclose information as we progressed through our assessments. There have been a number of actions on the A350 that we have taken and updated plans and settlements that are reflected in the quarter. On the recurring side, the cost of early development and production discovery, along with the concurrent production costs, are incorporated in the charge we took this quarter. In addition, longer-term costs associated with the recurring transportation and material test costs were also included. The nonrecurring cost side reflects the scope of development work for the -1000 derivative. As we continue to work in the early phase of this program, we are closely monitoring costs and schedule performance, while working cost improvement initiatives with our customer. Turning to our strategic and financial review. We continue to forge deeper into our cost structure and refining what we measure, so that we track and reward the right behavior that positions Spirit for long-term success. You saw us take action with additional overhead cost reductions; we are progressing on the Tulsa sale; we have announced the intended sale of our interest in Progresstech; and we announced a teaming agreement with Bell Helicopter on the V-280 Valor, the next generation tiltrotor designed to meet the army's future vertical lift requirements. We've also decided to centralize our procurement function, consolidate other support functions. We continue to balance our capital needs and assess our material make-buy decisions. I also want to point to leadership and organizational changes that we've made which will pay off in the future. Spirit's undergone significant change in the last 6 months. You have seen new leadership changes at the top, but there have been numerous leadership and management changes occurring throughout the company. We continue to strengthen our team. These decisions sharpen our focus on what we do best: value-added engineering and the manufacture of complex aerostructures. Let me just say that fundamental to our mission is a relentless commitment to drive quality into everything we do. So last quarter, I talked about energizing Spirit's focus on free cash flow throughout the enterprise. We see the beginnings of positive cash flow trends this quarter. We have a long way to go. We won't see the results of all these changes overnight, but we're making solid progress. We plan to conclude the strategic and financial review by the fourth quarter, and we will be prepared to give 2014 financial guidance and set expectations concurrent with our fourth quarter and full year 2013 earnings report. So to wrap up my comments. We work very hard to ensure our customers don't miss a beat. We're delivering aerostructures to our customers at all-time highs, and our quality and attention to detail is getting better. We're making strides in running a better business. We are taking action. And most importantly, we're well-positioned for a long-lived commercial aerospace up-cycle. So at this point, I'm going to turn the call over to Sanjay, so he can walk you through the details. Sanjay?

Larry, thank you so much, and good morning to everybody. First and foremost, I'm excited to be part of the team at Spirit and I want to thank Larry and the board for their confidence in asking me to join the Spirit team. I also want to take a moment to thank Phil. As many of you know, he moves into a new role leading our Defense and Contracts organization. I'm 4 weeks into the job, and while it's early for me to assess all of the challenges and opportunities, I do look forward to leveraging my experience and background in both aerospace and defense, in finance and program management, and both from United Technologies and Raytheon, as we leverage our $38 billion backlog at Spirit and drive predictability into our results and, ultimately, deliver on cash. Now turning to the results in the quarter. We will start with our segment highlights, and then I'll summarize the company's financial results. Moving to Slide 4. The Fuselage segment had solid top line growth and operating performance. Operating income was $26 million on $710 million in revenue during the third quarter, as higher volumes on mature programs were partially offset by the forward-loss charges on the A350 program. Adjusting for the charge in the quarter, operating income was $142 million. The Fuselage segment's high-volume 737 production line delivered the 4,600th ship set of the Next Generation Fuselage and continues on plan to step up to 42 planes per month. The 787 fuselage team delivered the 145th forward fuselage section, and celebrated with our customer as the first 787-9 took flight in September. This is a very exciting new airplane and we are proud to be on it. We continue to support our customer in the test phase of the A350 XWB program, with the seventh delivery of the composites and the fuselage. At the same time, we are also incorporating $79 million of higher costs on the recurring contract, primarily associated with change activity and early development discovery and the associated production inefficiencies in this early stage of the program, as well as higher-than-expected test and transportation costs. Separately, on the A350 XWB nonrecurring contract, the scope of work for the design and tooling for the -1000 derivative was agreed to in the quarter, and that translated to a $33 million forward loss. Moving to Slide 5. On Slide 5, the Propulsion segment reported solid operating income of $70 million on $389 million in revenue, driven by higher volumes on our mature programs. The 737 Next Generation engine pylon and thrust reverser production lines continued to perform well at these high rates, having now delivered more than 4,600 units of hardware. The 777 nacelle and pylon lines delivered the 1,150th package in the quarter. And the 787 propulsion team delivered the 146th pylon in the quarter. We also celebrated our Bombardier customer's achievement of the first flight on the CSeries in September, and our congratulations to Bombardier. On Slide 6, the Wing segment reported operating income of $35 million on $398 million in revenue during the third quarter, again, on higher volumes on mature programs. Our European operations continued to produce significant volumes of hardware for our Airbus customer, surpassing line unit 5,900 for the A320 wing components. With more than 4,600 ship sets delivered, Spirit Tulsa's Next Generation 737 slats and flaps production lines showed solid performance in the quarter. On the 787 program, the Tulsa team delivered the 152nd ship set in the quarter. As you can see from these results, we continue to focus on driving performance in Tulsa, just as Larry and the team pledged to do when we announced the intent to sell the Oklahoma site. And to that end, by the way, I'd like to say, the sales process is moving along as planned. On Slide 7, turning to the consolidated results for the company. Revenues for the third quarter of 2013 were up approximately 10%, as compared to the third quarter of 2012 on higher production volumes. Operating margins for the quarter reflect the charge. Excluding net forward losses, cumulative catch-ups and other items, adjusted operating margins were 11.3%, as we achieved year-over-year improvements associated with increased production, productivity and efficiency improvements on our mature programs. The quarterly results reflect positive contributions from the mature programs, as Spirit realized net favorable cumulative catch-up adjustments totaling approximately $28 million. Fully diluted earnings per share for the quarter were $0.65. Excluding the forward-loss charges and the associated positive net tax impact, cumulative catch-ups and other items in the quarter, adjusted earnings per share was $0.77. Adjusted free cash flow for the quarter was $141 million, reflecting a solid improvement over the third quarter last year, with each benefit in the quarter, driven by higher production rates and performance on core programs, as well as modest contributions from tax and milestone payments. Slide 8 summarizes the cash and debt balances. Cash balance at the end of the third quarter was $436 million as compared to the second quarter 2013 cash balance of $317 million, an improvement of $119 million. At end of the quarter, our total debt-to-capital ratio was 37%, and our net debt-to-total-capital ratio was 27%. Our U.S. defined benefit pension plan remains fully funded, and while we continue to make modest cash contributions to our U.K. plan. On Slide 9, we summarize net inventory balances at the end of the third quarter for 2013. Physical inventory balances improved as business jet deliveries increased, and we continued to actively manage inventory growth in a rate-increasing environment. Deferred inventory balances increased by $96 million, driven by the A350 XWB program and Gulfstream programs, offset by positive cumulative catch-ups on our mature programs. $33 million of the deferred growth is attributable to the A350 XWB program. Work completed at our customers' sites on previously shipped units is also included in the balance in this quarter. The 787 program realized a net increase of $9.9 million in deferred inventory on 15 deliveries, or approximately $660,000 per unit as we delivered 2 -9 units and continued to transition to 10 per month rates. As we have said before, it's important to remember that the 787 contract includes step-down pricing for the -8 and that our performance must follow in order for our results to continue on that trajectory, and we still must determine the pricing for the -9 and the -10. Nonrecurring inventory balances increased as development work continues on the A350-1000. The recognition of forward losses on the A350 program drove the increase to the forward-loss provision balances. As Larry has noted, we expect our comprehensive strategic and financial review will be complete in the fourth quarter, and we intend to provide our financial outlook for 2014 with our fourth quarter and full year 2013 earnings report. It's important to note that while we plan to conclude this review in the fourth quarter, several of our new programs will remain in the development and early production phases. And many factors, including program schedule, performance and cost improvements, will continue to influence our financial results. I'd now like to turn it back over to Larry for some closing comments before we take your questions. Larry A. Lawson: Thank you, Sanjay. In summary, we made progress. There's a lot more to do. Please bear in mind that it takes time to implement these changes and for them to generate results. We are definitely on a path to a disciplined data-driven enterprise, generating predictable and consistent free cash flows. We are forging a results-driven enterprise that is sharply focused on what we do best, driving performance, addressing cost, with an emphasis on cash, and we believe we're well-positioned to realize the commercial aerospace up-cycle. Our focus, obviously, is on delivering value to our customers, our shareholders and for our employees. We're ready to -- we're now ready to take your questions.

[Operator Instructions] And we have our first question from Carter Copeland with Barclays. Carter Copeland - Barclays Capital, Research Division: Just quickly on the announced rate increases that Boeing has called out for the 87 and the 37. Can you give us a little color around what the scale of investment you're going to need to make to hit those rates might be, and when we should expect it? And better yet, in addition to that, can you tell us if that investment is all yours or, in some way, shared with Boeing? Larry A. Lawson: Well, Carter, I'll answer that. The -- normally -- first of all, we work very closely with Boeing on -- in terms of preparation, in terms of what's required and when it's required, in terms of the implementation, and to be quite candid, often those, the negotiations around how that's done is incorporated into a larger negotiation regarding the total package. So I would say, at this point, it's not determined. We have a very concise plan. That plan has been provided to Boeing, both on the 737 and the 87, but we haven't concluded anything as it relates to how that business deal would be put forward. Carter Copeland - Barclays Capital, Research Division: So it's fair to say that the partnership for success, and the -9 pricing and the repricing on the legacy stuff and these investments, that's all included in 1 big bucket here? Larry A. Lawson: Well, I wouldn't say partnering for success. Partnering for success is really kind of something, I think, it over arches everything. But our conversations usually are pretty specific and delivered around each program. Carter Copeland - Barclays Capital, Research Division: Okay. And just a -- as a follow-up. On the increase in the 787 deferred production amount in the quarter, was that related to a repricing, as you called out? Or is it related to the -9 cost? Is there -- or is it both, I guess? Larry A. Lawson: Well, no, actually, that's -- you got it right. It's really a -- it's the mix of the products. It's a mix of the fact that we have -8s and -9s quarter-to-quarter actually affects the 2 cost propositions. So last quarter, I think you saw a little bit of a reduction in the inventory. This quarter you saw a little increase. So it's just a -- it's a function of the change in the mix as we kind of push our way below that, push our costs down below the line.

And we have our next question from Howard Rubel with Jefferies. Howard A. Rubel - Jefferies LLC, Research Division: Nice quarter on cash, and maybe you could elaborate a little bit more, Larry, on both that and talk about the new cost structure that you seem to be targeting? How are you thinking about how much additional fixed costs you take out and what you do in terms of cycle time to improve your cash flows? Larry A. Lawson: Well, the -- let's see, let me take the second part first and just kind of talk about the things that we've already done and then the things that we're doing. We've made a -- without getting into specific numbers. We've made a pretty substantial reduction in our headcount, as you know, principally in the salaried workforce -- actually, almost totally in the salaried workforce and principally, in overhead. And I can tell you it was a double-digit reduction, healthy double-digit reduction in terms of total salary headcount. The -- interestingly enough, while we're doing that, we're actually hiring on the hourly side to take on these -- rate growth that's occurring both on the 37 and the 87. We've made a number of -- we're kind of, I'll say, as it relates to the things that we're looking at going forward without being, I'll say, deterministic in terms of a value, I think I alluded to the fact in my comments that we're really looking at a couple of areas. That is, specifically, how we distribute our capital spend and making sure that it's very focused on the specific things that we need to go do. And then making the decisions about what we continue to do versus what we make versus what we buy. And those studies aren't done yet. So I really can't kind of assign a value to them. But I can tell you that it certainly will help us in our cost structure. I think your question was related to -- the first part of your question was related to cash. And it really was -- I think I'm going to let Sanjay answer that because there were several moving parts on the cash side of the equation.

Thank you, Larry. Howard, if I was to summarize the cash flow, and like you said, we had a good cash flow quarter. And like Larry said, a lot of the improvements are performance-driven. But there are some one-timers in there. We do have some benefits from a tax refund from a prior year, as well as, and you probably have noted in our results, we really didn't have any tax payments in the quarter. So those were kind of one-time, along with some other one-time events associated with some tooling and some payments associated with R&D. So adjusting for that, some other working capital timing issues, but a large chunk of it was in terms of performance. Larry A. Lawson: Yes. I mean, by far, Howard, the majority was performance-related. Howard A. Rubel - Jefferies LLC, Research Division: And then just a follow-up. When we look at the segment from line items, you have a fairly large, kind of other cost of goods sold item now, I suspect is where you've allocated restructuring. And we should probably expect some additional restructuring going forward. Is that fair?

Well, Howard, that reflects the current charges associated with both the voluntary and the involuntary reductions that Spirit has been making. So that reflects our current view on the costs associated with that.

And we have our next question from Robert Spingarn with Crédit Suisse. Julie Yates - Crédit Suisse AG, Research Division: This is Julie for Rob. Can you guys offer -- can you offer any additional details on the Tulsa sale in terms of the level of interest versus your expectations or, perhaps, what we should be thinking on timing? Larry A. Lawson: Absolutely. The -- this may surprise you, but I think we frankly were a bit surprised. We knew there would be a healthy interest in Tulsa. I think we were a bit surprised at the amount of interest. As you know, Julie, these things go through phases, so we started with a very large group and then, actually, narrowed that down. That has narrowed. We've actually moved from the Phase 1 part of the activity down into the second phase of the activity. So we've actually selected what we think are the best buyers to go forward. And we'll try to complete the second phase of this work this year. So now, timing, I can't -- as you get into the very final phase of this activity, timing is pretty hard to predict. You go through a -- generally, a phase where you're trying to close. It could be short, it could be longer. I really couldn't tell you. But it's most likely to extend into next year some time. Julie Yates - Crédit Suisse AG, Research Division: Okay. That's very helpful. And then how should we be thinking about the percentage of the total company's earnings and positive cash flow that you will be selling? Larry A. Lawson: Well, I think if you're thinking long-term, the -- you should think about us in terms of earnings. We're probably going to be in family with our customers. So you should think that this company will have margins consistent with our customers, margins. And, certainly, we'll drive to constantly make that better. But we're a big part of their business, so if our margins get -- it creates cost pressures the other direction, that's kind of really, to be honest with you, kind of how this partnering thing works. As it relates to cash flows, we're obviously going to, over time. Right now, if you look at us, we have a -- we probably have, as it relates to kind of a balance of new programs, to mature programs, we've got these wonderful mature programs. But probably a little heavy on new programs for, I'd say, any company, and those new companies are driving some investments, and those investments tend to consume cash. When we look at this over the next couple of years, what we see is that we kind of burn down those investments, and then try to be really thoughtful about kind of -- I mean, the great news is there's a great number of opportunities in front of us. They have some investments associated with them as well. And we'll play those investments out in the near term and continue to push up. As it relates to Tulsa, in terms of their cash contribution, Tulsa -- I mean, I don't, Sanjay, you want to...

No, I mean, I'm sorry. At this stage, we're not giving out information on Tulsa. I mean, like you said, it's at the very early stage of divestiture and we're right in the middle of a negotiation, and we'll see how that goes.

Our next question comes from David Strauss with UBS. David E. Strauss - UBS Investment Bank, Research Division: I wanted to touch on A350. You're only 7 ship sets into a 400 airplane block at this point. Given that and the size of the charge, how do you feel about having this size in terms of the potential for forward -- additional forward losses on the program? And then can you also touch on the charges all related to the Fuselage portion? What's going on with the wing-leading edge portion of the program? Larry A. Lawson: The charges are, David, the charges are relative to the Fuselage. There are no charges against the wing portion of the contract. The -- How do I feel about this? Well, what I'd tell you is that, in all of these -- you kind of take 2 views on this. First of all, the first view is, "Hey, look. Are you going to be on the 350 program?" And, certainly, we're happy to be on the 350 program. It's a -- it's going to be a long program, and it's important for us to participate in it. The -- we're not -- and we're never happy about having to take a charge, but these development programs, as you point out, we're pretty early, 7 ship sets in. The charges really are kind of a mix between, I'll say, the recurring costs that we're seeing in the concurrent part of the production of the 900, and then a portion of the charge is assigned to a nonrecurring, kind of a forward-looking charges that relates to what we expect that we will spend on the development of the -1000. And so as it relates to the recurring charge, I mean, what we're really doing is we're making sure that we get -- keep this project on schedule. One of the fundamental elements that really cause costs to balloon in these programs, especially these concurrent programs, that is where you're testing and producing simultaneously, is staying on schedule. And so a good portion of this cost is related to driving, investing in the resources needed to drive us back on to schedule. The -- it shouldn't be a surprise to you, but early in the development cycle, you see -- you have tested, testing and then you get concurrent change. That concurrent change sometimes, some of it hits you in the factory and, unfortunately, some of it will hit you downstream. And there's -- when you travel work, your productivity reduces and it frankly has a big impact on you. But those are the -- that's kind of the downside of concurrency. The plus side of concurrency is that you test -- the assets that you take to test are built in production facilities, and you move down your learning curve at the same time. And this is always kind of the constructive tension that goes on in these concurrent programs. And I would just say that the emphasis, and I think I said this at the last call, the emphasis for us is, stay on schedule. When we look at the A350 in the macro terms -- I mean, the program has done a pretty reasonable job of hitting their flight dates, they now have 2 aircraft up and flying, they're accumulating a lot of data. And moving along, I think, if you were to look at the -- at how they did in terms of hitting the first flight date they did, it's a pretty respectable performance. So I don't want to -- what I would say is that it's early, as you point out, and -- but I believe we're doing the right things. As it relates to kind of the future, we'll continue to monitor our progress, but that's -- I think that's the most I can offer you right now. David E. Strauss - UBS Investment Bank, Research Division: Okay. I wanted to follow up on that about the 87 and the 47. On the 87, it looks like you're delivering -- your actual deliveries are running below your kind of underlying production rate for the last several quarters. Could you maybe touch on that, what the differences, is that -9? Or is that Boeing sitting on excess inventory? And then on the 47, what rate are you at today? And when do you expect to hit the 1.5 that Boeing is now going down to? Larry A. Lawson: Yes. Great, David. The -- as it relates to, I don't know about several quarters, I mean, it's -- we certainly -- in delivering the -9, your insight is very good. In the delivery of the -9, what happens is when you introduce a new variant into the production line, it actually slows down. It actually impacted the -8 production. So we actually went down, but by the end of the year, we'll be at a build rate of 10. So -- and we're progressing quite smartly toward that build rate. On the 47, as you know, the Boeing has announced a build rate of 1.5 per month, and we're moving to that pretty quickly. So I think, today, we're at 2, we'll be 1.75, I think, at the end of the year, and then moving into 1.5 next year.

Our next question comes from Ron Epstein with Bank of America Merrill Lynch. Ronald J. Epstein - BofA Merrill Lynch, Research Division: Larry, just a quick question for you. As you think about the contract, this master contract you're working through with Boeing, it's my understanding that Spirit actually has a fair amount of intellectual property on the 737. When you think about production rates going from 42 a month to 47 per month and the broader negotiation, in some way, do you kind of have the keys to the kingdom because of that intellectual property? Larry A. Lawson: Well, I don't -- we don't look at the world that way. I mean, look, to us, Boeing is, I mean, an incredibly important customer and has been a great partner. We think that when you look at the value -- we kind of look at this from a value proposition standpoint. And when Boeing decided to allow us to diversify, and then since the IPO, we've created a lot of value for them, and so, when we look at the relationship, it's mostly around value, making sure that we deliver product to them, that the product gets there on time, that the quality of the product is great, and that the -- and that it is a great value. So that's how these conversations go with them on 2013, and we kind of look at how this all fits into the overall value proposition. Now, specifically, as it relates to 2013 negotiations or to your point, the overarching negotiation, one of the things we've done here recently to kind of turn up the gain, is you noticed in the organizational chain, I announced that Phil Anderson would be the Head of Contracts. And Phil has been dedicated to working with Boeing in terms of trying to close out these negotiations. And I think we're making good progress. Ronald J. Epstein - BofA Merrill Lynch, Research Division: Okay. Great. And then one follow-on, if I may. As I'm sure, as we think about -- I think this is a follow-on to, actually, Carter's question. As we think about some of the investment required particularly on the 737, is that -- and I'm usually thinking about it, but what's required to do that? I mean, is it just some more machines? I mean, how do you get there, I mean, when we try to think about the type of investment that's required? Larry A. Lawson: No -- look, it's all of the above. We're looking at -- we've looked at a whole host of options to be very honest with you. But it's the obvious things. [Audio Gap] Because, obviously, we need -- there's capital and tooling affiliated with going from a 42 to a 47. We need a little more high-base space. And so we're actually looking at trying to -- how we would take advantage of that additional space in terms of actually improving the productivity of the overall enterprise. But it's really a combination of tooling and space, to be perfectly candid, to get to 47.

Our next question comes from Robert Stallard with Royal Bank of Canada. Robert Stallard - RBC Capital Markets, LLC, Research Division: Just a couple of quick financial questions. I was wondering what your expectation might be for CapEx for the full year? And also, on the income statement, what do you think the tax rate will be?

Robert, this is Sanjay. In terms of capital, again, I'm not giving any guidance for the year or anything like that. I mean, it's pretty consistent with what we have experienced in the first part of the year, year-to-date. But I'd just, again, I'd go back to what Larry had commented, which is we are putting an enormous amount of discipline into how we make these decisions. So every capital investment we are looking at, whether it would be for rate increases or it would be for production efficiency improvement, et cetera, is going through a lot of scrutiny, and rightfully, in terms of the return on investment that we expect to generate from those decisions. So I think it's going to be consistent going forward. Your second question on tax rates. Again, you saw the big swing on taxes in the third quarter in our numbers. And that basically is based on an assumption as to where we think we're going to end the year at. So, again, I can't give you any guidance for the rest of the year, but that's where I'll leave it. Robert Stallard - RBC Capital Markets, LLC, Research Division: Is it safe to assume you went back to having a tax charge in the fourth quarter?

Well, again, like I said, I can't sit here and tell you what my Q4 incomes are and all that. We are working through all of that right now. And you'll see that when Larry and I talk to you about -- in 2000-and -- for the full year results. Robert Stallard - RBC Capital Markets, LLC, Research Division: Okay. And then Larry, just a quick one. I was wondering if you can you give us an update on how the G280 is tracking related to your plans? Larry A. Lawson: Actually, smartly. It's -- 280 is doing well relative to the plan we laid in and we discussed with you in the last quarter.

We have our next question from Myles Walton with Deutsche Bank. Amit Mehrotra - Deutsche Bank AG, Research Division: It's Amit Mehrotra here for Myles Walton. Larry, I think it's safe to say that at least in the near or midterm, you'll probably have more control over the cash flows of the business than the margins, just given some of the beauty around contract accounting. If that's the case, how do you think about the outlook for cash conversion of the business over the next few years? Larry A. Lawson: It's a great -- it's a good question. I think I actually was asked earlier. And what I would say is that the -- what we're really trying to do is -- in the near-term here is you kind of said it right. I mean, a lot of the investments that have been made in the new programs certainly have affected the margins on those programs. And that's been kind of the vision we've had, to say, "Okay. Let's kind of get laser-focused on cash flows going forward." And really, try to figure out how to deliver cash that's consistent with an enterprise of our type. The -- and the balancing of all that has been investments that you have to make as it relates to your long term, kind of the long cycle of this business. And that's the balancing act that we're going through here in, I'll say, the next 3 years.

Our next question comes from John Godyn with Morgan Stanley. John D. Godyn - Morgan Stanley, Research Division: Larry, I was hoping to just sort of ask a broader question about your vision for the conclusion of the financial review. We've seen some indications of progress, of course, throughout the year with some of these piecemeal announcements. And I'm curious, as we think about what the financial review represents or what it might not represent, should we be expecting kind of a big-bang large announcement of a number of initiatives? Or more piecemeal initiatives that kind of tie together with guidance and all of these things that we've been looking for? I was just hoping you could offer some color. Larry A. Lawson: I really wish I could. I -- what I -- the best I can offer you is that we're going to provide guidance when we give you the 2013 wrap-up. We're going to issue guidance for '14. And at that time, I think you'll get a good sense of where the results, the wrap-up is, that the strategic review, it will be done. We'll disclose kind of whatever is left to disclose or conclusions regarding the structure of the company. And then we'll give you tangible, "Hey. Here's what we believe we're going to do in terms of revenue, cash, EBIT, margins, et cetera." Operating income, you'll get a good view of that. And I hate that we're not there. I wish we were, I wish I was reporting that right now. But we will -- I'm telling you, we will give you that at the end of fourth quarter. John D. Godyn - Morgan Stanley, Research Division: No problem. That's very helpful. And Sanjay, I was hoping to follow up on some of your comments about disciplined CapEx. So we sort of heard that a couple of times. I was hoping that you could give us some metrics that sort of help us understand that discipline. What kind of ROIC are you targeting? Does it vary if we're looking at a growth opportunity or some sort of internal investment opportunity? If you could just kind of elaborate on that, I think that will be helpful.

No, no, I appreciate that. And, again, I think the answer depends on what the investment is. And I think one of the best things that Larry has brought to the table here, which I've already seen in my last 4 weeks here, is that a number of people are not just going out in their little silos making the right decision that makes sense for them. We're trying to look at this across the portfolio. We're trying to make sure that the investments have a good, quick payback in some cases, a higher return in other cases, and also fulfill our strategic intent in terms of what Larry has laid out. So we're trying to take these things one at a time. Again, this is a healthy business. There is plenty of cash in our business to make all of the right kinds of investments. We are just being much more disciplined about how we're going to do this, and that fits in with the strategy that Larry has laid out.

Our next question comes from George Shapiro with Shapiro Research LLC.

My question -- a couple of questions, on the balance sheet, I noticed that accrued expenses went up like $49 million from Q2 to Q3. Does that relate to the tax benefits you were talking about? And then just in general, what percentage of the cash flow would you say was from operations? I mean, you kind of said the majority of it, but if you could pin it down a little bit?

No, I understand. Again, and Larry talked about it and I also answered a similar question earlier. But, clearly, we had some very healthy cash flow in the quarter. And again, I think I -- but if I was to give you a little color on it, a large chunk of it clearly was in terms of performance. But you are referring to the other chunks, and one of them is the accrued expenses increase. And then third chunk was -- about 1/3 was related to taxes and some milestone payments that we got in the quarter. So the sort of one-time things were 1/3, the accrued expense is another chunk, and then the rest of it, clearly, is performance. Hope that helps.

Yes, that helps. And then just one follow-up, Sanjay. As a new CFO, are you looking at all about changing how you account for some of these programs, like specifically, I mean, you have a 400 aircraft pool on the 787. Boeing just went up to 1,300. And do you look at that, are you going to stick with the discipline of keeping it at 400?

Okay. That's a fair question. And I got to tell you, my last 4 weeks, as you can imagine, have been pretty intense, as I came in here for the third quarter closing. All of these decisions and all of these questions that you're asking me, we'll have answers for some of these things. But, I mean, I'm at the early stage of trying to explore these. Obviously, Larry and I are going to go through some of the pros and the cons of this stuff. I don't have a decision for you right now. Larry A. Lawson: Hey, George. This is Larry. And what I would say is you need to remember that we're on contract accounting. Boeing is on program accounting and as such, we don't actually have the flexibility to change the size of the aircraft that you would have flexibility in terms of program accounting. We don't -- we just don't have that flexibility. And so a discussion around the block size, what size block you have out of your total contract is -- could be one conversation. But I think today, I couldn't find any fault and, frankly, given that we are on contract accounting, how we're doing it.

That's right.

We have our next question from Sam Pearlstein with Wells Fargo. Samuel J. Pearlstein - Wells Fargo Securities, LLC, Research Division: Can you talk at all and give us any update on your assertions with Gulfstream? And I know they're still underpaying receivables, and any sort of insight as to when that might get resolved? Larry A. Lawson: Well, we did announce in this quarter, you probably -- you haven't seen the Q yet, but we are in arbitration with Gulfstream. And we did actually see an inner arbitration over that very issue. Gulfstream is still taking withholds and I believe they'll continue to do that until we settle this arbitration. Samuel J. Pearlstein - Wells Fargo Securities, LLC, Research Division: Okay. And then, Larry, you talked about the cost structure and trying to improve it. And I guess, what should we look at to see the improvement? Is it something that we should be focused on employment levels? And can you talk about where you were and where you are now? Or are there other metrics that, really, you're focused on in terms of being able to show improvements? Larry A. Lawson: Well, I think that always the challenge, Sam, is the -- trying to figure out how you make sure that your cuts -- you're working your efficiencies. And so there's a number of metrics we look at in terms of trying to figure out whether our support ratios are in line. So to kind of walk you through the way we do this, it's kind of -- I'll describe it -- I describe it to my folks as 4 steps, but it's really -- I'll be -- it's really kind of 2 steps. So you start measuring and you make sure you measure the right things. And then you effectively look at the programs you have and you find your highest-performing elements of your programs. And then, you set those as the initial targets for everyone. And in programs, they're all in different phases. So the development programs are going to have higher support ratios than, let's say, your very mature programs have. And -- but you set those at targets and you put them on timelines, and then you kind of lay that against your manpower plan. You -- ultimately, what you'd like to do is then move to, what you'd define as world-class metrics, if your best-performing program you don't think is, I'll say, a world-class performer. Actually, I've built a lot of airplanes and I'll tell you, looking at a lot of these programs, I mean, they're pretty good. I mean, it -- what I'm really trying to sort out now is kind of what is unique about 1 program versus another, either whether it's in development or production, or whether -- for example, some of the highly automated programs, like an 87 program, actually requires slightly lower-touch labor levels but higher support levels just because of the way it's tooled and the way we actually manufacture the product. So we're kind of working through those specific metrics to try to figure out whether we're in the right place. I'll tell you that when we look at our macro metrics, which is sales per employee, to figure out whether we're kind of where we sit relative to our peers. We look quite attractive today. And so we're going to continue to drive this. We've -- like -- as I said earlier, we've taken out double-digits in terms of, I'll say, salaried headcount. And so now we're kind of tuning, is the way I would describe it, in terms of personnel. On the other side, it's always been the question is, how you handle your material costs and are you negotiating, have you achieved, really, the most you can squeeze out of your material cost. And then in terms of what you make versus what you buy -- and you're to be very careful because, I mean, for us, the most important thing is to make sure that we protect our customers' deliveries, and then be very deliberate about -- the switching can be quite, if you're not careful, can create bigger problems than the benefits they yield. And so we're going to be very deliberate as a go forward.

Our next question comes from Joe Nadol with JPMorgan. Seth M. Seifman - JP Morgan Chase & Co, Research Division: It's Seth Seifman on for Joe this morning. Just a quick question maybe on the good results in the Propulsion segment. If you add back the adjustments, it looks like you're able to generate roughly the same level of EBIT as Q2, with sales down and including the sales on the programs that produce earnings. I wonder if you could talk maybe about the role of the aftermarket in that segment in the quarter, as well as the sustainability of the EBIT level and the margin level going forward? Larry A. Lawson: Well, first of all, Seth, I'll have to tell you, I don't believe we mix the Propulsion in the aftermarket, but we do, okay. So, I guess, I don't have them. I know what the margins are on both. I couldn't probably address the mix so...

Seth, what I will tell you is it's a very small percentage at this stage, right? So it's not a meaningful number. Clearly, this is an area that we're looking at. We want to grow eventually, but it's not something that is small. Larry A. Lawson: Also, what -- Seth, here's what we'll do. We'll follow up with you, and I'll have Coleen follow up, and we'll get the answer to your question. How's that? Seth M. Seifman - JP Morgan Chase & Co, Research Division: Yes, that sounds great. And then it sounds like then, the good margin performance were pretty much attributable to the core programs then? Larry A. Lawson: Well, obviously, I guess. Our mature programs tend to do better on margins.

Our next question comes from Finbar Sheehy with Sanford Bernstein. Finbar T. Sheehy - Sanford C. Bernstein & Co., LLC., Research Division: I just wanted to ask if you could characterize the status of your provisions now for the Gulfstream programs? You took a small additional charge this quarter. But at this point, are these provisions something we should see as sort of covering the worst case at a best estimate? How much uncertainty do you have looking forward now about whether this covers the total outlook? Larry A. Lawson: Yes, let me just say -- and there was a question earlier about how we were doing on 280, and I guess the first point I should make is that the charge we took was not a performance-related charge. It's actually related to pricing and the contract itself. And so it's not some charge-related. So we're kind of -- we're, I guess, back to the point. The question was, are we on track performance-wise? We are -- that charge was really tied to pricing dynamics. The question is, is the MP adequate to cover our exposure? Well, I mean, we believe we've provisioned it to be so. So that's the best, I think, I can offer you. Finbar T. Sheehy - Sanford C. Bernstein & Co., LLC., Research Division: Well, on the pricing side, I mean, can you expand a bit on how the pricing changes unexpectedly at this point? Larry A. Lawson: Well, we don't set the pricing for the airplane. It's tied to the sales of the 280. Finbar T. Sheehy - Sanford C. Bernstein & Co., LLC., Research Division: So it's tied to the sales price of the 280? Larry A. Lawson: Yes, the ultimate customer, yes.

Our next question comes from Michael Ciarmoli with KeyBanc Capital Markets. Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division: Larry, maybe just if you could give us an example. You talked about this new discipline and the new philosophy across the enterprise. Can you just give an example of -- you've got the -- you're going to be participating on the V-280. Maybe what you kind of introduced into the, I guess, the bidding process there or why it even made sense to bid on that program and introduce it, while you've got so many other kind of balls in the air with legacy rate increases, divestitures and so many other moving parts? Larry A. Lawson: Well, we committed, Michael, to make an entree into the defense business. And the truth is, the V-280 was absolutely a perfect partnership for us. I mean, it's a great match. As you know, we build the composite fuselage for the CH-53. And so when Bell was looking for a partner, in terms of going forward, somebody who could build a high performance, low weight, low cost composite structure for their tiltrotor, they came to us. And so they said, this is -- was part of the partnership. So we already have, I think, the right experience to do this. We didn't take -- to be candid, we didn't take a substantial financial risk. And we believe it's the right program to participate in. And, frankly, it's almost a perfect alignment as it relates to -- in terms of what makes sense. Michael F. Ciarmoli - KeyBanc Capital Markets Inc., Research Division: Okay, okay. That's fair. And then just a last one. As the 747 rate comes down, are you guys going to be able to adequately manage maybe some of that cost pressure associated with those volume declines? Larry A. Lawson: There is no doubt that the reducing rate on the 747 will challenge us. It's -- we're obviously focused on trying to figure out how to do that efficiently and economically. But it certainly creates pressures for us.

Our last question will come from Ken Herbert with Canaccord. Kenneth Herbert - Canaccord Genuity, Research Division: I just wanted to follow up on comments from prior calls. Where are you specifically in negotiations with your supply chain on both the Gulfstream as well as the A350? And is there any update you can provide there? Larry A. Lawson: Well, on Gulfstream, actually, we're pretty -- I mean, we're well into defined arrangements with our suppliers. So that's just the kind of the way I'd describe that. We continue to have some negotiations open, but it's really more around established supply base, and I'll say, negotiations. The -- on the A350, again, we have delivered 7 units. There's a lot of change going on there. And the truth is that we're about, I'd say, 40-some-odd percent of the buy is still on spot line. And we're out working to, as the product stabilizes, we'll continue to negotiate going forward on the long-term agreements. But we've got a ways to go on 350. Kenneth Herbert - Canaccord Genuity, Research Division: Okay. If I could, just one follow-up, that's helpful. It sounds like one of the still-lingering concerns for Boeing is supplier -- sub-supplier management. Broadly speaking there, is there anything you're doing now in, I guess, more specifically, on your legacy programs to specifically address ways you might manage the supply chain a little differently? And then, of course, any comment on just ongoing efforts to continue to take cost out from your supply base? I know you've talked about the make versus buy discussion, but any other comments you can make on managing your supply chain would be helpful. Larry A. Lawson: Yes. I mean, look, we're always out looking at which of our long-term agreements expire and where our opportunities are. Yet, our business is a little bit different, I think, and when you think about it, we have a very high raw material content in our product. And so a lot of what we buy is commodities. If you really get down to it, it's aluminum, titanium and carbon fiber. We would be excited if Moore's Law applied to aluminum. It would be a great thing. I've seen that in other points of my -- other places I've worked in my career, but unfortunately, we're pretty heavy in the commodity side of things. So where our focus really is has been on fabrication, and where those materials then are converted into products. And we have a tremendous amount of energy, frankly, going right into exactly that, which is where do we do fabrication and how we do fabrication.

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