Hello, and welcome to the Third Quarter Earnings Conference Call for Amphenol Corporation. [Operator Instructions] At the request of the company, today's conference is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to introduce today's conference host, Ms. Diana Reardon. Ma'am, you may begin.

Thank you. My name is Diana Reardon, and I'm Amphenol's CFO. I'm here together with Adam Norwitt, our CEO. And we'd like to welcome you, all, to our third quarter earnings call. Q3 results were released this morning. I'll provide some financial commentary on the quarter, and Adam will give an overview of the business and current trends. We'll then have a question-and-answer session. The company closed the third quarter with sales of $1.153 billion and EPS of $0.98 before onetime items, meeting the high end of the company's guidance and achieving new sales and EPS records. Sales were up 5% in U.S. dollars and 4% in local currencies compared to Q3 of 2012. From an organic standpoint, excluding both acquisitions and foreign exchange impacts, sales in Q3 2013 were equal to last year. Sequentially, sales were up 1% in U.S. dollars and 1% organically from Q2 of 2013. Breaking down sales into our 2 major components. Our Cable business, which comprised 8% of our sales in the quarter, was up 28% from last year, primarily as a result of a 2012 acquisition. The Interconnect business, which comprised 92% of our sales, was up about 3% from last year, as a result of both increased demand and prior year acquisitions. Adam will comment further on trends by market in a few minutes. Operating income, excluding onetime items, was $227 million in the quarter. Operating margin, excluding onetime items, was 19.7%, up 20 basis points from 19.5% in Q3 2012, a good conversion margin on incremental sales of approximately 23% from last year. From a segment perspective, in the cable market, margins were 13.8%, up from 12.4% last year, primarily due to the positive impact of last year's acquisition. In the Interconnect segment, margins were 22%, up from 21.7% last year.…

Well, thank you very much, Diana, and I'd like to extend my welcome to everybody on the phone today. As Diana mentioned, I'm going to highlight some of our achievements in the third quarter, and in particular, I'll discuss the trends and progress across our various served markets. Then, finally, I'll make a few comments on our outlook for the fourth quarter, as well as the full year 2013. As Diana reviewed, we achieved new records in sales and earnings per share in the third quarter, growing from prior year by 5% and 9%, respectively. We are very pleased with these results, most especially given the increasingly heightened levels of uncertainty across the global economy. Our operating margins in the quarter remained very strong, as we secured a continuation of our industry-leading operating margins at 19.7%. These results just make me very proud of our agile and entrepreneurial Amphenol organization, every management team member of which is capitalizing on the opportunities created by the electronics revolution and are really demonstrating the discipline and drive necessary to create strong operating performance for the company. Acquisitions continue to be an integral component of our growth strategy. In that regard, we're very pleased to have added Ionix Aerospace Systems to the Amphenol family here in the first week of October. Ionix is a U.K.- and Estonia-based manufacturer of harsh-environment interconnect assemblies for the commercial aerospace market, with annual sales of approximately $35 million. This excellent acquisition is a strong complement to our leading offering of high-technology interconnect products for the European aerospace market, and in particular, enhances our position on aircraft engine interconnect. It's also very consistent with our longstanding strategy to acquire complementary companies with strong management, leading technology and excellent market presence. So as we welcome this outstanding new team to…

[Operator Instructions] Our first question today comes from Amit Daryanani with RBC Capital Markets.

Just maybe starting off on the defense side, Adam. I realize the uncertainties that you'd outlined. But I'm curious, given the debt ceiling and the budget resolution yesterday or today morning, does that make you think that December quarter could end up being a bit better, given your customers potentially have better visibility, at least for the next 90 days?

Yes. Amit, thank you so much for the question. I wish the 90 days counted as visibility. Let me just say -- I mean, yes, there was a resolution yesterday, and certainly, we're cognizant of that. But this was really just a kicking of the can. And I think that our customers, in the defense market in particular, there really is no clear direction about what's going to happen with sequestration. There's no clear direction what's going to happen come January 15 or February 15 or whichever next deadline is going to appear, and I wouldn't really say that there is a healthy optimism that anything will happen, except more brinksmanship in the government. But that's beyond the scope, certainly, of this discussion. I think we have a very strong outlook, given all of this. We expect the sales in the military market to increase sequentially into the fourth quarter, and as I've said, that's largely because of, in addition to normal seasonality, the programs that we've been working on, the new programs with customers. And I think our mission is really not to guess where the government is going to go, but to continue to drive the new technologies that our customers continue to have a tremendous, tremendous requirement for.

Fair enough. And if I could just follow up on your capital allocation going forward. I think Diana, you talked about having close to $1.3 billion of cash and investments on hand today. I'm just -- how much cash do you think you need to run on a steady-state basis? And I'm sure you guys want to keep doing acquisitions, but should we start to think about 1 million to 1.5 million shares being bought back quarterly as more steady-state as you go forward? I guess I want to think about, should we start thinking of share count reduction of 4 million, 5 million a year as part of Amphenol's long-term capital allocation strategy?

Sure. As you point out, we certainly have significant capacity, both from a cash perspective, from an availability perspective, I think over $2 billion at the end of the quarter. We also have tremendous ability to generate operating cash flow. And I think, historically, we've used about half of that operating cash flow for the acquisition program and the other half has gone back to shareholders. From a prioritization standpoint, we continue to believe that the acquisition program is the best use of that capacity, and I know, sometimes, that requires some patience relative to the use of cash on hand and that kind of thing, just to make sure that one has the ability to execute when opportunities come to pass. That being said, I think, over the last few years, we've certainly had a pretty consistent flow and balance to the use of the cash, and I think that we have fairly consistently been buying stock back for the last few years. I think that we do believe balance is important, and I think you'll continue to see us have a balanced approach in the future. I think the only caveat to that would be the case where we did have an opportunity from an acquisition standpoint to deploy more of our resources towards that. And I think for the right opportunity, we would think that, that would be the right thing to do for the company.

Our next question comes from Matt Sheerin with Stifel, Nicolaus. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Adam, wanted to just ask a question regarding the mobility business. Obviously, you got some headwinds there, both in terms of unit slowdown as -- and in addition to the connector content, with the proliferation of WiFi-only devices. As you look at that opportunity going into next year, do you see that trend continuing? And how are you looking at that in terms of your market share within that business and trying to grow it now against some of those headwinds?

Matt, thank you very much for the question. Obviously, we spoke extensively last quarter about the mobile devices market and the various changes that we saw, and I think we're very happy to see that, in this quarter, that market actually performed a little bit better than we had expected. I think that our position and our share remains extremely strong in that market. We have a tremendous position. But as we discussed last quarter, we did see the shift towards WiFi-only devices as one of the components of a change in our guidance. And I think, going forward, that is really kind of a onetime shift, because there is now a very high proportion of those devices which are essentially WiFi-only, a very small proportion, conversely, which are being sold with 3G or LTE access. And because of that, we wouldn't expect that to be a continual drag. All that being said, it's a very dynamic market, and we've never hid the fact that, that is a market where constantly there is change. And so we're not prepared today to give guidance in that market, certainly for next year, but we continue to have a very strong position. We continue to see a lot of opportunities with customers who are designing and developing innovative new devices, where our products can create value for them. And once again, I'll just remind everybody of our strategy there, which is, very clearly, we participate in that market where we can create value for our customers and thereby, earn the return for Amphenol. We've been very successful doing that through many, many cycles, with many different leaders and many different types of products that have come out, and we're confident for the future that, that will still be the case.

Our next question comes from Amitabh Passi with UBS.

Adam, I was curious about your commentary with respect to the volatility in the environment. I was just curious, was much of this exasperated as the quarter went on. And as we saw some of the shenanigans out of D.C., would you say it was tepid across the environment,, independent of what happened in D.C.? I'm just trying to get a sense of just sort of the macro environment in other geographies and whether it was relatively volatile throughout the quarter, whether you saw some things that have accelerated towards the tail end.

I would definitely tell you that if we look at orders for the quarter, and we did have a slightly negative book to bill, which we -- would not be the case in most Q3s, that, clearly, as the quarter went on, the hesitancy in certain -- in customers in certain markets, and in particular, I would say, industrial and military, which tend to be more broadly impacted by things like government spending and budget, certainly, we saw increasing levels of conservatism and hesitancy on the part of those customers as the quarter went on. How that will trend going into this month, what will be the impact of the various news items that we read about today, it's hard to say. But clearly, as that got closer, there was certainly an increased level of wariness by customers.

And any additional insight just in terms of geographic trends, Asia Pac, Europe and North America?

No. I mean, look, this -- clearly, in the month of September and October, the big story in the world has been the U.S. budget discussions. There -- it doesn't mean that the rest of the world is kind of smooth sailing. So I think -- but we haven't seen anything beyond that, that's so different, except for the kind of knock-on effects around the world in terms of people not being so confident if the world's largest economy can't pass the budget.

Our next question comes from Mike Wood with Macquarie.

A lot of positive content trends benefiting Amphenol. But in terms of the mobile device segment, with both smartphones and tablets, if we do have this longer-term shift that typically occurs in these electronics towards lower-priced products, how does Amphenol change its positioning? Or do you need to kind of accommodate that price erosion that occurs?

Thanks very much for the question, Mike. Look, I think we have seen many times over the course of our long-term participation in this market, that there has been a cycle of maturation, commoditization and innovation across the mobile devices market, and I would not expect that to change. The fact is, if you go back 2, 3 years ago -- say, 3 years ago, we never would have anticipated that there was even a thing called a tablet computer that would drive growth for us. What will be the next device? What will be the next innovation that comes out of our customers? Very hard to predict. Will we be positioned with those customers? That, we have a lot of confidence in. Will there be more innovations? That, as well, history has shown there are always innovations on the horizon that will come, and no doubt about it, we are working with customers on new devices around the world. It's clear that our performance this quarter was certainly impacted by change in tablets. When we look at the sequential growth that we had between the third quarter and the second quarter, in fact, a lot of that was driven by new higher-performance, higher-functionality ultrabooks. And so what will be the next thing? It's hard to predict. But again, we feel very comfortable and confident in our position to be there to enable that next-generation device to come, when it does indeed come.

And in terms of the uncertainty on timing of the network build-out that you've mentioned with the WiFi, what trends are you seeing from customers? How long of a lead time will you get from design work or early-stage order insight?

Yes. I mean, in terms of the network, I guess you're referring here to the mobile networks market and the kind of uncertainty around when that spending will come. And we work both with operators and OEMs, and they have different kinds of lead times. Sometimes, the OEMs will start to build in advance, and we saw even a little bit of that for China 3G, as OEMs start to build in anticipation, really, of awards that are coming. But the reality is, is the operators, there's a lot of factors that drives, ultimately, when they put towers up and when they install equipment. Even in North America -- I mean one thing that we have heard is one of the real bottlenecks in North America to install mobile networks is, believe it or not, availability of work crews, qualified, certified work crews to put up sufficient towers, and that has actually constrained the build-out for certain operators here in North America. I think early in the first half of the year, there was a fair amount of strength coming out of North America with the LTE build from several of the large operators. I think there will be a little bit more strength in Asia in the second half, and maybe a little bit less from North America. And I think that will balance out. But by and large, we feel that we have a great position in that market, and just to reiterate, that is a position that is both on the equipment, as well as direct with the operators on the interconnect and antenna accessories that go onto the towers. So to the extent that those build-outs happen in the traditionally unpredictable fashion that they do, we'll be very well positioned to participate.

Our next question comes from Sherri Scribner with Deutsche Bank.

I just wanted to ask a little bit about the growth expectations. Looking at your guidance, it looks like, at the midpoint, you're expecting revenue to be up about 1% sequentially. Usually, you're up about 3% to 4%. And just looking through the commentary, I'm trying to understand, is that slower growth? I know you commented on the different sort of volatility in the end markets, but is that primarily related to mobile devices, the way that you see it?

I think the sequential increase in mobile devices this year, both in Q3 and Q4 certainly, is a lot less than what one would normally expect, and less than what we've seen historically. So I think that probably would be one of the biggest factors in that comparison.

Okay. And then just also thinking about your growth, I think you said at the beginning of the call, organic growth this year on a year-over-year basis was about flat. I'm just curious what you think the market's growing at. And do you think you're able to get back to sort of your more historical growth rates going forward?

Yes. I think -- what the market ends up growing, we're one of the earliest to release our results here, and we will certainly see. But if we look back over the course of this year, we have clearly outperformed the market going forward in this year, and we have every expectation that our company continues to perform really at the leading edge of the interconnect market. I think the overall economy and the overall market and if you look at -- as it's reflected with a lot of the customers that we work with, there really has not been a tremendous amount of growth, and there doesn't appear to be a tremendous amount of growth going here into the third quarter. All that being said, we do have one of our segments, mobile devices, which is down sort of an abnormal amount this quarter. So we'll see, ultimately, where that works out. But we still feel very comfortable and confident that we continue to have, really, a strong industry-leading growth position. Where does it go long term? Sherri, I mean we're not going to give guidance right now for next year, but we continue to see tremendous growth opportunities for the company and for the industry. The expansion and, really, proliferation of electronics across all the markets that we see continues to have tremendous, tremendous potential. It really depends, obviously, what is the overall macro environment. We have been here for a couple of years in a real kind of a halting recovery, if you will, one which doesn't seem to gain real traction. And I think if that can really turn around a little bit, I believe that the opportunity for growth in the electronics, in the interconnect industry, and our opportunity within that industry has really a lot of potential going forward and for the long term. And we're very committed to continuing to have that industry leadership that we have had for so many years.

Our next question comes from Shawn Harrison with Longbow Research.

Firstly, I don't mean to nitpick on this thing, but you guys usually don't call out acquisition-related charges, so maybe you could just tell me why this was a little bit abnormal. Or is this something we should expect going forward? And then, second, I don't think this was covered, and I apologize if it was, but within the IT, Datacom space, I think, Adam, you cited just a weakness with customers. And I wanted to know if that was more tied to, whether it's market weakness, product weakness, company-specific or client-specific weakness. Just kind of what's driving maybe what's a little bit of an abnormal weakness in that sector for the fourth quarter?

Sure. We actually have called out acquisition-related charges for the last few years. So we had $2 million in the fourth quarter last year and I think $2 million in -- I forget which quarter, it might have been the fourth quarter of the year before. So I think, as you probably recall, the accounting rules changed, and I'm going to get my years wrong here, but I think maybe 3, 4 years ago, such that transaction-related expenses no longer went into goodwill or the basis of the company, and they just are P&L expense now. So we did, at that point, start to break them out because they're not normal operating costs. And from an operating management perspective, these are not costs that relate to the current activity. So we've been pretty consistent breaking them out for the last few years.

Shawn, and relative to the IT, Datacom commentary, you're right. I did talk about that we've seen some moderation, especially later in the third quarter, in terms of demand outlook. And I tend to think that, that has a lot to do with the overall macro economy. I mean, I think Diana mentioned that the industrial, military and then also the IT market are markets that do tend to have some more tied industry[ph] relationship to overall economic uncertainty. And what we've seen there is really not specific necessarily to one or another customer, but more just an overall sense of a moderation, and I think that there have been a couple of earnings releases over the last 24 hours which seem to certainly confirm that, that is not a frothy environment. And I think when we look at our performance, looking backwards compared to last year, it's extremely strong performance compared -- really, on any comparable basis, and we feel that we continue to make real incremental progress in this market. And if I look back over the course of this year, we have had just strong growth performance in the IT market, I mean, on a year-to-date basis, really growing stronger than virtually anybody who has released their results in terms of OEMs. And that really comes from what I said. It is the drive of new products that are essentially enabling our customers to do battle in a very difficult environment, where they got to sell on functionality and deal with data rates which are expanding dramatically, but IT budgets which are essentially flat. And if you can enable a customer to really offer the proverbial better mousetrap at the same price, whether that is ability to process more data or ability to use less power, that can be a very, very compelling selling proposition to our customers, and that's really why we believe our position continues to strengthen there. Looking into the fourth quarter, again, I think there is just some degree of conservatism by customers in light of the more broad economic uncertainty that's there.

Our next question comes from Jim Suva with Citi.

My question probably is good for both, Adam, on the strategy side, and maybe, Diana, to help us understand the financials a little bit. I find the acquisition today very interesting, that you announced, Ionix Systems. It looks like, from looking at their profile on the web, that they do a lot of cables and harnesses, and I didn't see much mention about connectors. So maybe I just misread it or whatever. But can you let us know, is it truly more of a cable harness company and strategically, that's something that Amphenol is looking at? I mean there's a lot of harness companies out there, aerospace, industrial, automotive. Are we looking at a bit of a shift to include that now in your profile? And then, Diana, on the financials side, I'm not familiar with harness making in cables. Is that similar to Amphenol's profitability, margins and outflows and cost of goods sold or returns of capital and capital deployment? If you could just kind of walk us through the strategy and financials of that.

Yes. Jim, thank you very much for the question. We're very pleased with this acquisition. And let me just say that we actually make a lot of cable assemblies in Amphenol, and we always have. And we have made cable assembly acquisitions. Even the one that we made earlier this year, DC Electronics, was a cable assembly -- high-performance, harsh-environment cable assemblies for the industrial market. Ionix is high-performance, harsh-environment cable assemblies for the aerospace market, and in particular, they have a very strong position in aircraft engines, but just tremendous performance capabilities in their assemblies. And we have expectations of all the companies in Amphenol, whether they make components or cable assemblies or whatever, that they have the opportunity to make the margins that we make in the company, and there's not something de facto which says that, that can be a lower margin. You referred to harnesses, and there is a whole world that is called harnessing and -- the automotive harnessing world, for example, or the big aircraft harnessing. These are the long kind of trunk harnesses, and that is not what we are getting into here. I mean, traditionally -- the implication of your question is correct, that harnessing tends to be a lower value-add and thus, ultimately, a high-material, low-margin business. That's not what we're getting into here. We're getting into cable assemblies that are high performance, harsh environment, ruggedized. They have a tremendous amount of content capability -- content opportunity for Amphenol products as well, and it is really right up our alley in Amphenol, of the strategy that we have been pursuing for a very long time, to expand the breadth of product offering that we can support customers in that important commercial aerospace market.

Okay. And Diana, financial views?

I don't know that I would have a lot to add to what Adam just said. I think, as he said, we have a large portion of our existing business which are various types of value-added product. I mean, from our perspective, the profitability potential of a business has a lot more to do with the technology that one brings and the strength of the management team. And I think this business has excellent technology. It has a very committed and effective management team, and we're very excited to have it as part of the company. And we believe it has great potential and should perform the same as you see the rest of our company performing.

Our next question comes from Brian White with Cantor Fitzgerald. Brian John White - Cantor Fitzgerald & Co., Research Division: Just on the mobile device segment heading into the December quarter, what area do you expect to outperform? It doesn't sound like ultrabooks are doing that great. So do we think smartphones or tablets are going to outperform?

Look, I mean, actually, what we saw in the third quarter was actually that our sales of products on the ultrabooks were really a strong driver of what was a higher-than-expected sequential growth into the third quarter. What that will be going into the fourth quarter remains to be seen. Again, it is not the easiest market to predict, but we still see continued strength in ultrabooks. And I think the broad range of products that we have really, we see, on a sequential basis, helping to drive what we don't expect to be an enormous uplift into the fourth quarter, but we do expect to see some moderate degree of growth. Brian John White - Cantor Fitzgerald & Co., Research Division: Okay. Wearable devices, are you seeing any programs around wearable devices that Amphenol will participate?

Gosh, I remember we made our first connector on a smart watch about 11 years ago. I remember wearing the first prototype of that. I don't know. I mean, look, we don't talk about specific devices with specific customers. Obviously, when something is super small, the opportunity for content in such a thing would be less than something that is a bit bigger and has more functionality to it. But certainty, to the extent that there's interconnect and antennas involved and that does create value inside a wearable device, I'm sure that, that could be something that would be an opportunity for Amphenol. But will that be a huge driver? I think too early to say what, ultimately, a wearable device looks like and what the architecture underlying that thing will be.

Our next question comes from Mark Delaney with Goldman Sachs.

I was hoping you could talk a little bit on the margins, the strong performance at 19.7% EBIT margin in the last couple of quarters, which is the highest level since the first quarter of 2011. And as you guys look forward, do you expect drop-through to operating income to mirror historical rates? Or are there other things that might be impacting that, potentially on the positive side, such as commodity prices?

Sure. I think, as a company, we have a goal, and we talk about conversion margins or how much incremental income does one get on incremental sales. And the goal that the company has is to target 25% conversion margins, which would imply that, as a management team, we continue to work to increase the overall profitability of the company. As -- ROS at this point, as you've pointed out, stands at 19.7%. I think that there are a lot of things that go into that. Certainly, participation in the high-technology end of the markets that we're involved in and very strong operations management and execution of the whole team are, I would say, 2 of the most important factors. I think that certainly having a normal commodity environment or a balance between input costs and pricing dynamics is something that also is important in being able to achieve these high profitability levels. I think that the higher the profitability of the business becomes, obviously, the harder it is to get those incremental ROS levels. But this team has a great track record. We've had a very strong performance this year. I think we have good guidance going into the remainder of the year, and we're still very confident in that 25% conversion margin goal.

For my follow-up, I was hoping you could talk a little bit more on the cable business. I know, traditionally, pricing has been very difficult there. But now that you've expanded your portfolio with some of the acquisitions, are you able to do things, just selling an entire solution to maybe offset some of the traditional pricing pressure?

Yes. No, this is a very nice question, Mark. I -- one would hope. But let me tell you that, ultimately, customers, when they buy cable, they certainly push for a price for that cable, and it really depends on the behavior of competition. And I think we've talked about that this year, we haven't seen the most disciplined behavior this year on the Cable Products. I think the better benefit really comes as we broaden the range of these different products, the variety of interconnect and value-add products that we have really been able to build out, together with the acquisition that we made of Holland. That gives us really higher value to those customers because we're creating higher-technology solutions for them. We're helping them to solve a lot of real challenges that come in the cable, the satellite and the telco area of TV and high-speed data delivery. Because as LTE has come out, that has created new problems, interferences and other things. As you get these new systems, you create just a lot of complexity over the type -- the standards of the different data that is really flowing into the house. And if you can help the customer solve those problems, then they're very happy to come to you. And ultimately, there is -- I believe, can be a benefit of that kitting. But it's got to be really over time, as the customers realize that the value is coming from those new high-technology interconnect products that we're presenting them with. So I think, long term, there can be a benefit. I can't say that, short term, we have seen real pricing benefit on the bulk cable, but we have certainly seen an enhancement to our margins from the generation of these higher-value, higher-margin interconnect components.

Our next question comes from James Kisner with Jefferies LLC.

I guess I just wanted to talk about your acquisition strategy. Just in general, could you update us on how the pipeline of acquisition targets looks right now, I guess, even relative to 6 months to a year ago? And then, separately, just given the acquisition of Molex by Koch Industries, is it possible that you could see incremental competition in your bids for new targets, just given that there's deeper pockets there and that company has sort of the history of being acquisitive once they bought a company?

Sure. James, thanks very much for the question. I think relative to our pipeline, we have a very strong pipeline. It is a real part of the Amphenol operating culture and the regimen that we follow to really drive acquisitions and to drive that pipeline, just as we drive the organic growth of the company. And I think that results in us being able to uncover and incubate a lot of interesting companies that may not otherwise rise to the surface to our competition. So we feel very good about the pipeline, and whether it's incrementally good over the last 6 months, I mean, that's always hard to judge. But it is a very strong pipeline. Relative to the acquisition of Molex by Koch, certainly, we congratulate the family and the management team of Molex. This is obviously a very nice resolution for all of them. Does that make a new competitor in the market for acquisitions? Molex has been an acquisitive company before. The management team was always very focused on this, and I don't think that, that necessarily creates big changes in our market. If it did change their appetite, we have been very successful over years when there were others who are out there making acquisitions without regard to price, and we still made tremendous numbers of very, very strong acquisitions. And the beauty of the interconnect market is it is a constant wellspring of innovation, just like technology is. And with that wellspring of innovation, it creates as well a wellspring of new companies that come about, new companies that you never knew of before or existing companies who have now grown and reached new levels of performance that make them, thereby, attractive as an acquisition. And I think that, that just sort of spring of…

Next question is from William Stein with SunTrust Robinson Humphrey.

I hope not to beat the M&A horse, but I do have another question about it. The way I see the acquisition that you announced today, it sounds highly consistent with prior deals, both from a technology perspective and the sizing, certainly not unusual. But 2 questions about the M&A pipeline. Understanding the timing of deals is highly unpredictable, I wonder if you can characterize whether there are any significant deals, any outsized deals in the pipeline. And also, anything that would kind of take you away from your traditional technology envelope? And then I do have a follow-up, if I can.

Sure. I think that -- nice to hear your voice again, Will, first of all. I'll tell you that timing is impossible to predict, and we never do try to predict it. We never forecast acquisitions and -- nor do we really comment about near-term acquisitions. I'll just tell you that we have a good pipeline of a wide variety of companies, and I'll kind of leave it at that. Relative to traditional products and our expansion as a company into other segments, I'll just tell you that for a long time, we have always been sensitive to where technology is moving in our industry and have made acquisitions that, at the time, may be somewhat ancillary to our core products, but really, were one of -- one and the same as a total solution. I remember, a dozen years ago or more, when we made our first acquisition into antennas. And antennas, at the time, certainly had a different word for it than connector, but we viewed an antenna as really an extension of the interconnect system. And I think there are other things that are out there that we would view, in addition, positively, as something where there is technology that is embedded in it, where it's consistent with our approach to our customers, and we would certainly not shy away from considering some of those things, so long as they fit with our financial criteria and we really view them as part of that system, that interconnect system and the relationship that we have with our customers from that technology standpoint. But again, we are always open-minded about this, and we are very, very good at executing upon that with our lean team here in the headquarters.

Appreciate that helpful answer. A follow-up, if I can. I wonder if you can characterize the results and the outlook in terms of geographic and channel strengths and weaknesses.

Yes. I mean, I think, geographically, not surprisingly, when you have strong performance in automotive and Commercial Air, Europe was not so bad for us. I think Europe was a strong growing market for us. Because Commercial Air tends to be either Europe or North America and automotive, for us at least, tends to be more of a European business. I think that on a sequential basis, we had strong -- we had some growth in mobile devices, that tends to be more Asian-related. So I think it's not surprising, and I don't know that there's anything that's more of a regional macroeconomic trend as much as it is that the strength in the various end markets that we have tends to have some impact on those regions. In terms of the guidance, I wouldn't say anything really different from that. I think it would be largely consistent with our market guidance that I've given.

Our final question today comes from Steven Fox with Cross Research.

So Adam, I guess the first question should be whether you have that smart watch still, but I'll skip that one. So just 2 real quick questions. Just, first of all, on the guidance, Diana, it seems like you're assuming less-than-typical conversion margins. I don't know if there's any cost pressures that need to be called out for Q4 we should think about. And then, secondly, just looking at where your net-debt-to-cap is right now. I mean, 27% is relatively low for the company. I think, prerecession, you were in the 30s, which is pretty significant sort of lower capital structure. Is there anything -- I know you don't like to provide targets around that, but is there anything that will prevent you from sort of heading back up towards the mid-30s if you saw the right opportunity for shareholders?

Let me just answer the last question first. I mean, no, I think that the capacity of the company from a leverage perspective certainly is very much a function of the company's ability to generate very strong operating cash flow. And so, certainly for the right opportunity, one could adjust the structure, and this would be not any sort of an issue whatsoever from an operational perspective. I think the one caveat we would put around that, I think that the investment-grade rating is something that the company feels is important, but even that being said, there's a lot of capacity within that rating. So I think for the right opportunity, as you said, certainly, that is something we would consider. From a profitability perspective, I guess, as far as we look at the fourth quarter, the conversion margins that we would see in the fourth quarter are about consistent with what they've been so far this year, kind of in that 23% kind of range. So I think that we would look, on an annual basis, to close at about 23% year-over-year conversion margins, which we feel is good performance against our 25% goal. If you're looking maybe at a -- from a net earnings perspective, the tax rate in Q4 is slightly higher than in Q3, so I don't know if that maybe somehow impacted the math. But I think from an ROS perspective, the guidance is very consistent with how we have historically performed.

Well, thank you very much, Steve. And I noticed, on my analog windup watch here, that we have really reached the top of the hour. And I'd like to extend my appreciation to all of you for joining our call this quarter, and wish you all a successful completion to 2013. And we certainly look forward to speaking to you all next year, when we talk about the fourth quarter. Thank you very much.

Thank you.

This does conclude today's conference. You may disconnect at this time.