Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Emerson Second Quarter Fiscal 2011 Results Conference Call. [Operator Instructions] This conference is being recorded today, Tuesday, May 3, 2011. Emerson's commentary and responses to your questions may contain forward-looking statements, including the company's outlook for the remainder of the year. Information on factors that could cause actual results to vary materially from those discussed today is available at Emerson's most recent annual report on Form 10-K as filed with the SEC. I would now like to return the conference over to our host, Lynne Maxeiner, Director of Investor Relations. Please go ahead.

Thank you, Christina. I am joined today by David Farr, Chairman and Chief Executive Officer of Emerson; and Frank Dellaquila, Senior Vice President and Chief Financial Officer. Today's call will summarize Emerson's second quarter 2011 results. A conference call slide presentation will accompany my comments and is available in the Investor Relations section of Emerson's corporate website at emerson.com. A replay of this conference call and slide presentation will be available on the website after the call for the next three months. I will start with the highlights of the quarter as shown on Page 2 of the conference call slide presentation. We saw strong second quarter sales that were up 18% to $5.9 billion, with increases in all segments. Underlying sales were strong at 14%. Gross profit margin of 39.4%, down 20 basis points in an increasingly challenging material inflation environment. Our operating profit margin increased to 160 basis points to 16.9%. Earnings per share was $0.73, up 38% compared to $0.53 in the prior year quarter. Strong operating cash flow in the quarter of $753 million and free cash flow of $627 million. Our free cash flow to net earnings conversion was 113%. Our balance sheet remains strong and flexible. We have returned 51% of operating cash flow to shareholders in Q2 through dividends and share repurchase. And we have room to increase share repurchase in the second half of fiscal '11. We had a very strong first half of fiscal 2011. Slide 3, the P&L. Again, sales increased to 18%, with underlying sales up 14%, acquisitions added 3 points and currency added 1 point. Operating profit up 30% to $991 million or 16.9% of sales. The increase driven by volume leverage and cost reduction benefits partially offset by higher material costs. Earnings from continuing ops up 36%…

Thank you very much, Lynne. Welcome everybody this afternoon. First, I would like to say that I personally believe this was an excellent quarter in total for the company. Sales of 18% growth, underlying sales of 14%, record operating profit margin of 16.9%, net income up 38%, EPS up 38%, operating cash flow up 19% to $753 million, free cash flow up 15% to $627 million. The balance sheet was greatly strengthened at all levels. And in our board meeting today, the finance meeting this morning made the decision to increase our shareholder buyback given the strong balance sheet and cash flow and given the fact that we're modulating back in acquisitions given all the acquisitions we've done over the last 2 years. However, we will continue to do bolt-on acquisitions. Secondly, I would like to recognize the 133,000 people around the world that through their efforts in delivering an outstanding quarter and a very challenging and I would say uncertain global environment, I want to thank them. I also want to recognize the employees and families that have had their lives torn up and turned upside down in the recent tornadoes that went through the South through Arkansas, Mississippi and Alabama. We had 3 facilities very negatively impacted, one of them totally destroyed. Families have lost homes. Fortunately, we've not lost any employees there or family members. There's a lot of rebuilding, and our hearts and our prayers are going out to these people as they rebuild their lives in the Mississippi, Alabama and Arkansas area. We had 3 facilities, one of them torn down completely and 2 of them right now continue to have no power, and clearly, we'll have interruptions, we don't know exactly how long and how much but the most important thing is that none…

[Operator Instructions] And our first question comes from the line of Scott Davis with Morgan Stanley.

Dave, you kind of -- you're calling them operating issues in China. Is it specifically kind of -- is it truly operating issues or do you have some competitors that have been irrational over the last quarter or so and you're just kind of responding to something that's going on there if you don't mind clarifying?

I mean, from my perspective in the China Telecom market space, it's a very aggressive space. And as the market growth -- and this is a telecom space. As the market growth really came down as the government backed off the incentives, clearly, the market pricing got very competitive, and we've have to protect some of our base and some base, we had to walk away from. So I mean, I never call a competitor totally irrational. Obviously there's a reason why they do things. But some of our competitors, local competitors got extremely aggressive and caused some significant price erosion. At the same time, we did lose some business because we walked away from it. And from my perspective, where we are right now is we're retuning where we want to aim our guns here, and we're also retuning what type of cost structure where we want to go forward. So it's nothing unusual for us, but it did accelerate quite rapidly here in the last 3 or 4 months.

Okay. I think you spent a lot of time explaining that. So I move on to something more positive and that's the Industrial Automation business, which is just showing some phenomenal numbers. I mean, I think we all know that the alternator business is great, but what is surprising me is the strength of the drives business. Can you talk about that? I mean, is there something out there? I mean, obviously, there's an OpEx cycle. And there's demand, because things are getting running again. But it seems like it has to be more than that to be driving these kinds of growth numbers in energy efficiency replacement, I mean what ...

You hit me. Now I have this two. There's 3 things going on, Scott. You hit them all 3 perfectly. Number 1, clearly, there's an operating investment going on from the standpoint of people looking at their factories and the productivity element of that factory and given where you are, be it in China costs going up or the U.S., or Europe or whatever. As you upgrade that factory, you're looking at new automation and drives clearly is one way to do it. Energy efficiency is clearly another thing that's going on right now, so people, when they go in and look at their upgrades, you're going to see synergy efficiency is clearly one of these key things. Including China, now this is one case where our China investment is truly paying off and it's been a good growth for us relative to our Drives business. And the third thing would be just from the standpoint of the investments we've made over the last couple of years and in particular, trying to leverage it across our whole Industrial Automation and our Process business, and so we're getting into new segments that we've never gotten in before. I think, fundamentally, if you look at the drives market right now, it's a good business and we have a very good cost structure with our new product platform underway there.

Right. So it's fair to -- I mean, I think you're outgrowing the industry by at least 10% as we see it, but so it's more adjacencies moving in adjacencies that's getting you there or...

I think that I would look at adjacency. I think we've expanded our, what we would -- what we call -- see our vision of what the adjacent market is. But you don't move share that much, as you know, in a quarter...

Yes, that's why I asked the question. It's just such a big number so.

We have [indiscernible]. So that's what's going on right now.

And our next question comes from the line of Christopher Glynn with Oppenheimer. Christopher Glynn - Oppenheimer & Co. Inc.: Dave, another question on Network Power. But just looking at it strategically, a lot of acquisitions in the past and you have highlighted that you'd like to do more over the next couple of years. I just wonder if there are any specific technologies there that would benefit the portfolio particularly or fits more in Process R&D type properties you'd look at?

Well, I mean, from my standpoint right now on Network Power, I don't see anything that we need to do right now. We have what we need for the current market I see out there and clearly, what we want to do, I would say, that I will be probably rationalizing more than I imagine. Now I look at some of the segments we want to go after in Network Power, I will continue to rationalize that as we look at the pieces we have here. We've made a lot of acquisitions and the business will recover here as we come through that but I don't see anything big I would want to do at this point in time. Christopher Glynn - Oppenheimer & Co. Inc.: Okay. And then a little maybe conceptual preview of what you're going to talk about at EPG, but looks like the guidance for underlying growth allows for similar second half growth is in the first half. So just wondering if you could address where some of the acceleration versus deceleration might be or at least the sequential ramp might be more pronounced? Some pieces are obvious, but not all of them.

Yes, let me grab the pieces here by business. I'm just grabbing something now. I know we have it in here. Yes, from my perspective, EMEA, as I look at it right now, I think Industrial Automation is going to stay pretty strong. Network Power is going to pick back up. The comps will be easier from the standpoint of our -- a lot of China growth last year, so Network Power will be a pretty good growth basis. I think the Process business will be a little bit stronger in the second half than they were in the first half. And I don't know about Climate Technologies. It could be slightly better. It's a tough call. A lot depends on North America and the inventory. What happens -- the inventories are very low right now, they have a low heat. I don't see the residential market coming back, but the Climate Technologies could do a little better, and I don't see much movement in Tools and Storage. So I think that the positives right now are going to be Process and Network Power, Industrial Automation, and the wild card will be Climate Technologies. And I don't think much will happen with Tools and Storage.

And our next question comes from the line of Steve Winoker with Sanford Bernstein. Steven Winoker - Sanford C. Bernstein & Co., Inc.: Just maybe coming back to China for a second. I guess the China nominal GDP was up around 15%, 16% in the quarter, so it makes me wonder if you take Network Power, what were you guys -- I know you said 9% including Network Power, but what if you took it out?

The other pieces -- the Industrial pieces did very well there. I would say that Climate Technology, which was more than doubling last year at this time in China well had it -- I bet you had to be flat or slightly down in the quarter. The Industrial business we're grabbing it here, by the very businesses here. But the 2 businesses that did not do well would be Climate and then Network Power, so we're grabbing... Steven Winoker - Sanford C. Bernstein & Co., Inc.: And the reason I'm asking is just your in niche...

Yes, well, the Climate was down, too, because -- you know, Climate was up 40%, 50% last year at this time. And so we have 2 things, where the government was really stimulating in residential and nonresidential and telecom in 2009, 2010. And now they backed that off. And so we have that going the other way. So those 2 guys were down. The other businesses were up quite significantly. Steven Winoker - Sanford C. Bernstein & Co., Inc.: So as you look forward given the niche, you're in more attractive niches in general GDP growth normally, right?

Yes. Steven Winoker - Sanford C. Bernstein & Co., Inc.: You're viewing this as an aberration and a very significant one. You should be growing at a multiple nominal GDP in the country, no?

We would look at -- I wouldn't look at nominal, I would look at fixed. But we would -- we have been certainly growing around -- we've been growing close to that 20% mark. And so we have over $3 billion of sales in China now, so we've been growing close to that 20% mark. And we do have segments that will go in and out based on what's going on in the government. And right now, where the focus is at this point in time, we're trying to sell certain segments down. I still think we'll have good growth this year, but it's going to be a little bit different mix. Steven Winoker - Sanford C. Bernstein & Co., Inc.: Right. And maybe just also going back to your comment where you talked about the local competition, the answer to Scott's question and those you walked away, you had pricing issues with those guys. Other than retuning your own strategy, what makes you believe that the industry structure and competitive dynamics are going to change, turn positive? Are you going to get guys going out of business? You're going to get -- why would this have been a onetime thing?

I think there's 2 things going on. I think that what we'll do is re-aim where we want to play that in the telecom space and what type of product, and we'll retool our product offering to be a little bit changed, which we can do within a 12-month time period. So I would say that we will be less and less focused on telecom in China in the coming 12 months, which will allow us -- and we're not going to go back and start a war, like a battle. And so we're going to re-aim where we want to play and put our resources, which we can do in the space.

And our next question comes from the line of Rich Kwas with Wells Fargo Securities.

A question on Process. Given the strong order growth rate there, how would you characterize the MRO business right now? And then, are we transitioning into the...

White hot.

Okay, it's still hot?

White hot.

Okay. And then when do you think we transition more into the project-type stuff and then when margins start to, the leverage starts to maybe not be as robust?

The margins will start -- I mean, I'm sorry, not the margins. The big project business will start shipping in the second half of this calendar year based on the way the order pace is going right now. And so the game for us right now is to clearly continue to do our normal cost reduction, our repositioning and things like that so we can try to offset that hit we're going to get there. But if you watch our margins in this business, we'll run them up there towards the 20%. The big prices will come in and we'll bounce back and forth in this 19% to 20%, a little bit 20-plus percent. That's what's going to happen.

Okay. And then are you surprised how strong MRO has held or were you kind of expecting that?

No, I think that -- Rich, I blew it probably 18 months ago. I thought that MRO would come in faster, it didn't. And given the fact that going back to the question, I think it was Scott, asked or brought up, in the U.S. in particular, people have really curtailed investments for so long, they need to invest in their plants. And with the price of natural gas being so low and the whole logistics cost going so high, people are reinvesting in those, I would say, the plants here in the U.S. But also, if you look at our European business, they're doing the same thing there. So this is something that has been expected for quite some time now. And I think it could hold up as I think I pointed out in February, I think it could hold up for all this year and maybe a little bit going into next year. The pace will obviously change, but there will still be pretty good MRO business out there for us.

Okay. And then, just a bigger picture question, Industrial Automation in February, you talked about maybe shifting the mix longer-term in that business. Given companies with a lot of cash out there, is there anything that you're looking at in terms of, from a divesting standpoint that you're getting close to?

We only have one divestiture underway right now and it's not in Industrial Automation. It's in our Appliance Components business. It's heating products. I mean, people know that's on the marketplace and we would expect that to be done before the end of this fiscal year. And I don't see at this point in time. I'm not -- in the acquisition mode, the price has gotten much higher so we're doing bolt-ons right now and strategically, we're backing off and getting our balance sheet strong again. And we'll come back out at the right time.

And our next question comes from the line of Jeff Sprague with Vertical Research Partners.

First, just on Avocent and Chloride, the way it's worded in the press release, the additional restructuring or integration, however you characterize it, it sounds like it's something different than the original plan. Is that the case?

No. I mean, I -- let me tell you what happened. When we did the deal, I struck a deal with the board and Tim Cobalt [ph], that we would keep Chloride separate so they could do their March 31 close and bonus payout. And that was the deal that we struck with the board. And so from my perspective, when March 31 came, we paid out the bonus for the whole fiscal year. And then we made the decision of how we're going to -- which people are going to be doing what, so we've had a lot of -- we've done a lot of organization changes here over the last couple of weeks. And now what we're doing is we're accelerating the integration, which we had held off. And I didn't want to go public and talk about that because I felt that would be unfair to the employees of that organization at that point in time. But we made -- I made the decision with the board of Chloride to keep them standalone until the end of March. And now that, that's the case, now we're going about doing the integration of Chloride, Knurr, which we have done a couple of years ago, and Avocent. So that's what that was. It's not that we're going to spend any more money, there's not going to be more restructuring. I just want to let people know that we are now picking up the pace. That's what it was. And I didn't want to talk about it previously.

Understood. And next on China, your comment about kind of retooling manufacturing, it sounded like maybe you're talking about something even more broad than Network Power. Is that the case? Is there some reevaluation about how much footprint you want in the country or for where it's at in the country?

Yes, what we are doing right now and have been underway for the last 12 months across all of Emerson is evaluating. We have a significant presence in China. We probably employ well over 40,000 people in China these days. And what we're looking at, Jeff, is we're looking at our various manufacturing facilities and we are repositioning them, and I have explained this to the government, within China, where we're moving further west and we actually are going to be moving some out of China because of the cost structure. So this is underway and will go underway for the next 18 months. There won't be any big announcements. We'll just start working it very carefully here, and at that point in time, it's across the board. And so where we look at capacity and where it's going to be in China, given what I see, the economy is going into a more costly mode, then we need to figure out where we're going to be. We're not walking away from this market because I think this market is going to be a $6 billion market for us like within 5 years, but we're just going to have to re-fix where we manufacture.

And then on inflation, now that the debate so far is really still just around price costs and getting caught up in that balance. But are you seeing any demand destruction anywhere? Any behavior change by people because of what's going on with inflation? And if so, where?

And you're talking about from a customer perspective, Jeff?

Yes, from a customer perspective.

I haven't seen any of that. Maybe it's clearly in certain market segments that where the consumer could be very sensitive and unwilling to pay the higher prices, but most of our customers are facing the same issues we're facing and they're going to have to go out and raise prices. We're all going through the process right now, do we want to be in this segment or not be in that segment, product line or something like that. But I think that from the standpoint of the whole price/cost situation, we are in a mode here for inflation for a couple of years. And people are gearing up in how you adjust to that and how do you take the necessary actions. But I haven't seen a demand destruction yet. I've seen more demand destruction from the global economy, from the Japan situation, from the war in the Middle East, from all those things going on around the world than anything else.

And then finally for me, can you give us some sense overall how quickly the kind of the power quality-related businesses are growing? How Chloride did on a pro forma basis and the like?

I mean, I can't do it right here, but I'll do that when EPG meets. It's very good. It's better -- the better growth and they're performing better than the total business is performing. But I'll have to look at that and get an underlying growth rate for you so I just don't take a stab. But I'll do that so we can have that at EPG.

And our next question comes from the line of Ajay Kejriwal with FRB (sic) [FBR] Capital Markets. Ajay Kejriwal - FBR Capital Markets & Co.: Just following up on China. So obviously, a very important component of revenues and your long-term strategy. You talked about wage inflation and obviously, that's more related to Network Power and Climate. But I would think that has broader implications for other businesses. So maybe share your thoughts on what you're seeing. Is that isolated? Or is that a little more broader? And in fact...

It's across all the board. And I think what it would do is it'll accelerate investments by companies in China into productivity and equipment rather than using low-cost labor. So as that labor pool gets more costly, you're going to start making those trade-offs relative to using more automation versus labor. And I think that we will continue to see that. But this issue has gone across -- it's not just Network Power or Climate. The Network Power and Climate thing is based on the government trying to draw back the demand more than anything else. And then inflation is just happening across the country right now. And it's one of the things that the government's trying to get back under control, but it's very difficult when they have national wage increases of 20-plus percent. So I think this is across all business segments. Ajay Kejriwal - FBR Capital Markets & Co.: And you'd expect to move manufacturing out to other countries that you'd have lower cost there?

Yes, we will do some. We're going to reposition some. We still have a very, very significant presence in China. What I would say in this, there are some segments I look at. As I look at if I have 100% capacity of a product, I might look at taking in 80% and leaving it in China, I might take 20% and move it out to a different country within the region. I'm doing more of a strategy where our manufacturing now is going to be China for China, and then it's sort of a North Asia and a South Asia type of strategy for manufacturing. And we're going to start dividing up that way from the standpoint of just -- from a diversification, but also from a cost structure standpoint. Ajay Kejriwal - FBR Capital Markets & Co.: Good. And then in Europe, a very nice pickup, 17% growth, easy comps obviously helping, but 17% is a very solid number. So what's driving that? Is it any specific businesses, countries that stood out?

No, it's pretty much across all the businesses. All businesses are coming back quite nicely. The industrial businesses in particular are doing better given the fact that they had their investors for a while. And I expect Europe's going to have a continued -- I put a forecast out of this year that Europe would outgrow the U.S. Now, Europe is doing extremely well right now so it's giving Europe a run for it. And I still think that Europe is going to have a very good growth in the second half. It won't be the 17%, but I still believe it will be double-digit in the second half of the year. Ajay Kejriwal - FBR Capital Markets & Co.: Good. And maybe one modeling question if I could. On the corporate and other line, that moves around quite a bit. So maybe if you can help with how we should think about the second half with the $100 million kind of the run rate? Or with a different number?

Yes, that's right. I mean what we have moving around within the quarters is the incentive comp where we had a pickup this year versus last. And then we will have a pick up on a net basis for the balance of the year, but it will not be even through the 2 quarters. That's the major item that's moving around on us on the ...

I mean right now, we can be more than $100 million, we can be less than $100 million. These guys look at it different than you look at it, you know that.

The one thing to keep in mind, Ajay, is on the corp and other line, as Frank was saying with the stock comp expense, that can be a little bit lumpy even though it's going to be a tailwind for the year. So we had $33 million favorable in this quarter that we just reported. Next quarter, I don't want to get too technical on this, next quarter which is our third quarter, you have to remember if I compare it to a year ago, the stock price went down $7 from the end of March to the end of June. And so our stock comp...

We're losing quite a bit to-date so maybe we'll [indiscernible] on this.

Hopefully, we'll got some of that back. But so it's not likely to be a tailwind like we saw in the second quarter, so you're likely to see that higher and you're also likely -- obviously, gains don't repeat, so you got $19 million favorable on gains. So just between those 2, you're talking about $50 million, give or take. I mean that should give you some color.

And our next question comes from the line of Deane Dray with Citi Investment Research.

This is Jessica Mullin for Deane. That was a nice sequential uptick in Climate Technologies. Can you give some more color on the pricing increases and the realization?

The realization, it happened, and we're about to embark on our third price in this area sometime this summer. I mean -- the issue relative to our price is not what's driving the margin up, it's in -- our price cost situation when we deal with our big OEMs here in this area is we pretty much stay in balance, in a quarter and out a quarter -- within a quarter. We're pricing every 6 months back and forth. So I mean that didn't drive our margins. What drove our margin here was the investment and the new innovation in the electronics businesses we've been investing in and also several new products that we brought out. So at this level here, our profitability should stay pretty good given the current mix. And we are getting the price necessary to cover the costs. So it's not a headwind nor is it a tailwind right now. It's we're neutral. And so that's where it's coming from.

Okay, thank you. And is there any color on the top line for revenue growth where pricing was?

Well, the overall price -- yes, we can give you that. I mean I think it's in the queue. So do you know about point of growth on pricing? I would say -- I would tell you in a second. One second. [indiscernible] But I think it's probably about 1 point from Climate Technology in the second quarter.

Okay. All right, thanks. And any other noteworthy surprises in pricing? Industrial Automation seems strong. Anything going on in Process?

No. I mean we're raising -- we're having to go after price increases across the board because of material issues and in a couple of cases in -- all of the business are going to have to raise prices. And we did -- in the Q, it's going to show 2 points of the growth was from price.

For Climate?

Per Climate. To go -- we said one, it's 2 points.

All right, that's helpful. And you said Climate again would be a wildcard for the remainder of the year. If orders have upticked nicely, do you expect the lead times to get longer? And how would that compare to Process and Industrial Automation?

Climate lead times are very short. I mean, we have the capacity, we deal with it. Unless there's a -- and we do have one of our facilities that got hit with the Climate facility in Alabama, so that's a wildcard for us right now. I don't know what that's going to do, but they're still down. But I think that the key issue for us -- there's 2 things going on. The orders are pretty good in Climate. China is definitely, right now, it continues to drop because of the demand and the comparisons are tougher and the Chinese government had been raising interest rates, so I expect China to be pulling down on us. And then in North America, if we get any heat at all, the inventories are very, very low out there that we'll obviously have to raise production. But you'll see that pretty quickly. If our orders tick up within 60 days, we're going to be shipping. In fact, it's typically 45 days.

And our next question comes from the line of Shannon O'Callaghan with Nomura.

On the challenges slash kind of wrinkles that you didn't expect in the quarter, Dave, I mean, we spent a lot of time talking about this China telecom situation. I mean, were there other things I mean, that you had? The Japan disruption, I mean any other things that you were talking about when you made that comment?

No, I think there are couple of things that are coming at us right now. One, the fact that the government had pulled back on the tax incentives and sort of the rebates that they have been giving -- we have been working with for quite some time, and those are significant numbers. That causes us both to get -- lose some operating profit and we also lose at the tax rate too. That's hurt us a little bit. And I would say that the pricing intensified as the quarter went on further than I thought. And there's not much we can do about that at this point in time. But those are the 2 big things there. The inflation thing, I think, I thought would be more tapped down, but the government's trying but I don't see it having any impact at this point in time. And so the China inflation is a situation that is a concern of mine, and clearly, will have an impact on the whole economy there if they don't get that back under control.

Okay. And then on in terms of sort of the fix being in on Network Power, I mean as you think in terms of, like, exiting 2011 and out into next year, I mean what's sort of your view on how long this fix is going to take and when you feel like you're going to get Network Power margins back up to something you view as more normal?

I think it's going to be -- we'll start making headway as we move into our fourth quarter calendar here, but from my perspective, I won't be happy with them until -- we're not going to be getting up into what I am comfortable with, probably until we get into the first part of next year. They're going to get sequentially better as the year goes on, but they should be closer to 15% EBIT margin and we're not there -- and obviously, we're not going to be quite there as we finish this year. I thought we would, but we're not going to be quite be there. And so that's what -- at this cycle, that's where they should be and I think it's going to be more into 2012 before we get there.

Okay. And can you just size sort of the China telecom business for us at this point?

I couldn't tell you off the top of my head. I mean, we've been shifting away from it ever since for quite some time, but it's still out there and it still plays around with us -- we'll still be a player, but we're going to be less and less a player.

And our next question comes from the line of Julian Mitchell with Credit Suisse. Alexander Virgo - Crédit Suisse AG: It's Alex Virgo for Julian. I was just wondering, could you give us some idea of where you expect order run rates may fall for say, i.e. in Process towards the end of the year just in terms of what you talked about? Where you talked about a good foundation for 2012. I mean, where do you see that sort of the trend moving in the remainder of the year and into '12?

Lynne, you got the order trend right here? I want to see where their trending right now. I'm looking for the graph, but I don't think I have that graph so, I just have that. I mean, I have to look at this, Julian, and we'll talk further -- I'll look at it and think about it when we get down to EPG. Right now, as I look at where we're trending, it would have to be trending in the solid. I'm looking at on a fixed rate basis here, not a GAAP because GAAP obviously is going to be in play with the weaker dollar, but I still think it's going to be in the 15-plus percent range. Or right now, I'd say 14% to 16% to 17% range as we leave this year with those 2 particular businesses. And in comparison, they're going to be tougher and tougher to go forward here. But I'll take a look at that and see those comparisons. But I think we're going to start looking at double-digit growth for those 2 businesses as we start out the year next year. Alexander Virgo - Crédit Suisse AG: Thanks. And Network Power? Can you do the same for Network Power?

No, I can't. That one's far more challenging. You got a lot -- too many moving pieces. The Process Business, Industrial Automation business, is a lot easier to trend. They're pretty steady once they go into mode.

And our next question comes from the line of Terry Darling with Goldman Sachs.

Dave, I was wondering if you could just maybe give us a little bit of color on what happened with the Embedded business? And then as you think about the Network Power top line improving in the back half, what are the drivers there? Is it just the comps get easier? Or are there some businesses that really you expect to pick up sequentially?

I mean the comps are going to get easier, but I'm also expecting in the Precision Cooling area -- or not in the Precision but the Reliable Power area, those will get -- those orders and the sales will get better as the year progresses here. Because the order pace is coming already and we see the quotes out there, so that business is -- and that's normal cycle. It should be stronger in the second half this year, and then really strengthen as we move into the early part of 2012. So that's where that cycle's going right now. And it's pretty much where I thought it would be.

And the Embedded business, is that the one you're talking about improving sequentially? And then can you talk about what happened there from a cost perspective as well?

The Embedded business will -- should improve in sequentially. And the cost, this is in Embedded, right now, it's in pretty good shape. Our manufacturing is both split between China and the Philippines there. We're obviously dealing with some inflation in China, but it's not that bad right now. And more of my concern with Embedded is from the standpoint of the component inflation, the component points, the premiums I have to pay for certain components right now. That's the biggest issue for me at that point in time

Okay. And then just to clarify on Network Power margins getting better, are you saying it should get better 3Q versus 2Q? And 4Q versus 3Q? Or you're just saying exiting the year, we feel it would be better?

No, I feel that at this point in time, based on the plan, we should see sequential improvement in the Network Power margin. We're taking the necessary action. The level though, I'm not sure. I mean, we're redoing our forecast right now based on the first half of the year. That's clearly one segment a little bit weaker, and I have some other segments here that are going to be a little bit stronger. But I would expect that the best margin will be the fourth quarter as we leave that quarter, as we leave the year.

Okay. And then just lastly, at a high-level, Dave, obviously, you've got a track record of having very conservative guidance. I'm narrowing in on the fact there are a lot of issues, a lot of different issues, and some uncertainty on timing resolution, Japan is still a wildcard and the fact that maybe you're a little bit south of the cash flow number as you talked about earlier. How would you like us to think about this new range on guidance now? Do you still feel like it's got the normal level of Emerson conservativeness in it? Or really as it sounds, you're more likely -- the high end of the range, it's sort of not best-case, but very good case?

Yes, I mean, from my perspective, if I look at where we are right now, the guidance I'm giving you, I feel is pretty solid. I don't have an omen of conservatism here. The issues that -- if we didn't have issues going on out there relative to the material inflation issues, relative to the China sourcing issues, relative to the various things that we discussed in the conference call here, maybe it would be a lot easier, but right now, there's a lot of things tugging at us at this point in time. We're going to have a very, very good year and with strong underlying growth and good earnings growth, but from my perspective, there's a lot of things pulling at us from the standpoint of the whole material and the pricing action. And so the pressures we see in the telecom is in the fix. So I'd say the guidance I've been giving you is tight, and you should not be looking in that as Dave is trying to sandbag us. That's not what's going on here.

[Operator Instructions] The next question is from Eli Lustgarten with Longbow Securities.

[Technical Difficulty] Just a couple of cleanup questions. One, we now have 2 points of currency benefits. Do you have any currency earnings built into the second half of the year?

Yes, we've built-in, I mean we've added -- we've raised the sales -- the reported sales levels, we put in currency. We flow in at a, it's around a 15% rate. That's basically what we're flowing at.

So, I see. And one of the questions that everybody seems to be driving at is, you've got a consensus estimate at $3.29, $3.30. And I think that as if you just don't really want to cut estimates today or something like that.

No, I mean my forecast has been $3.20, $3.30. I mean my forecast is still there. I've never cut estimates. I mean The Street ran right up. They ran right up, Eli. That's what they did. And I...

I guess my question is, what kind of -- in order to get to the other part of the range, is it just strictly the volume levels that will come through? Would that get you there? With all the problems that have that, if you had the stronger volume levels, will it put you at the upper end of the range? I mean, is that what we have to worry about at this point? Do you factor in all the other stuff?

From my perspective, I look right now. And I'm looking at the volumes, I look at the orders, I look at the margins, I mean, I look at -- we will be at the upper end of that range if everything comes through at the higher volumes, yes.

Okay. Did you hear anything or talk about we have a unique tax -- you're talking about tax attrition in China. We do have the 100% depreciation write-off in this country at least for this calendar year. Are you seeing anything that is helping drive demand? Or people talking about it because it -- one of the things we hear is that it's easier to justify to have to take the pricing, at least that can write it off this year. And maybe I want to make sure we get -- do you have anything being driven by that tax incentive or is that just still in the background?

I don't hear anything like that, no. I don't hear anything like that.

And our next question comes from the line of Steve Tusa with JP Morgan. C. Stephen Tusa - JP Morgan Chase & Co: Just on Network Power, there's been a lot of discussion around China, but your U.S. growth rate slowed to up 5% versus up 9%. There's also the dynamic around the recent orders being flat to down. So I'm just curious, question number one is, could you just talk about the different moving parts in the U.S. and what's going well? And maybe not as well there? And then secondly, given you expect this kind of come back in the next couple of quarters, how should we jive the kind of order rates over the next couple of quarters? How would you -- would you expect to see a nice pop in those and movement in the next quarter or should it be much more of a gradual move from flat to kind of that double digit rate that you probably would be talking about for next year?

From my standpoint, it's going to be gradual. I don't see a pop. We had a strong pop a year ago on the Embedded Power and Computing, and that's what's dragging down the North American orders at this point in time because those -- at this point in time of last year, the orders in Embedded Power and Computing were extremely strong, and now, we're working through those comparisons and those have been very weak. And those are starting to pick back up. So from my perspective, I would expect a gradual improvement. I don't expect a pop here. And I would expect that improvement to grow across the board as the year progresses. C. Stephen Tusa - JP Morgan Chase & Co: Okay. And then just a comment on -- a lot of moving parts here. You guys actually are one of the few companies that actually said you built inventories as kind of a safety stock here. How much do you think either your customers or suppliers, how much of that is going on given that a lot of companies have been surprised [indiscernible] revenue growth in March? Do you think that's happening -- whether it's a pre-buy ahead of price increases or just kind of a land grab to de-buffer from impacts in Japan? Is there enough going on here to have a kind of a pronounced positive impact on kind of shorter cycle businesses across the globe? Do you see that going around a lot?

Well, I think that -- one of the things, I think people are going to try to grab and bring in more inventory. I mean, we didn't get as much in as we wanted to because obviously sales were stronger. And I think that's a natural tendency. So, I think that there probably is a little bit of pop going on right now, but it's not going to go away because the pipeline is going to have to be replenished. So I think that this is going to go on here for at least 6 to 9 to 10 months. So I mean from my standpoint, in the current quarter we're in right now, our third quarter, we'd like to build a little bit even more inventory relative to around these commodities as we try to bring them in. C. Stephen Tusa - JP Morgan Chase & Co: Okay. And then one more question. I'm not sure I read the comments on Process. You basically said that some of the bigger projects are coming through. Does that mean we're kind of at a peak level for Process margins over the next year or so?

Yes, in a year or so. I mean, I would say that our margins will probably will not peak in Process within 12 months. I mean, they could go up and we could work our way up a little bit next year again. I mean we have -- the projects will come in but they don't -- they'll sort of work their way in over time. In my opinion, the MRO is going to stay pretty strong out there through early parts of 2012. So the margins will continue to look pretty good for Process. You're going to have quarters go up and down based on mix. But right now, I think our Process margin will continue to trend upwards.

I think that was the last person in queue so I think we're over time, so we won't have time to repoll.

Thank you very much. Thank you very much for joining us today. Bye.

Ladies and gentlemen, that does conclude our conference for today. If you would like to listen to a replay of today's conference, please dial 1 (800) 406-7325 and enter in the access code 4432781. Thank you for your participation. You may now disconnect.