Good morning. My name is Sara, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lear Corporation Fourth Quarter and Full-Year 2011 Earnings Call. [Operator Instructions] I would now like to turn the call over to Ed Lowenfeld, Vice President of Investor Relations. Mr. Lowenfeld, you may begin your conference.

Thank you, Sara. Good morning, everyone, and thank you for joining us for our fourth quarter and full-year 2011 earnings call. Our earnings press release was filed this morning with the Securities and Exchange Commission, and materials for earnings call are posted on our website, lear.com, through the Investor Relations link. Today's presenters are Matt Simoncini, President and CEO; and Jason Cardew, Interim Chief Financial Officer. Also participating on the call are several other members of Lear's leadership team. Before we begin, I'd like to remind you that during the call, we will be making forward-looking statements that are subject to risks and uncertainties. Some of the factors that could impact our future results are described in the last slide of the presentation materials and also in our SEC filings. In addition, we will be referring to certain non-GAAP financial measures. Additional information regarding these measures can be found in the slides labeled Non-GAAP Financial Information, also at the end of the presentation materials. Slide #2 shows the agenda for today's review. First, Matt Simoncini will provide a company overview. Next, Jason Cardew will review our fourth quarter and full-year financial results and full-year 2011 outlook. Then Matt will have some wrap-up comments. Following the formal presentation, we will be happy to take your questions. Please turn to Slide 3, and I'll hand it over to Matt.

Thanks, Ed, and good morning. We finished 2011 with another quarter of improved operating performance. Sales and earnings increased at a faster pace than the industry production and we achieved our 10th consecutive quarter of year-over-year improvement in core operating earnings, led by our growing electrical business. We generated $461 million of free cash flow in 2011 and finished the year with cash of $1.8 billion. Our liquidity was further improved in June when we increased our revolving line of credit to $500 million. The major credit rating agencies acknowledged the improvement in our operating performance and balance sheet with rating upgrades during the year. In addition to investing in the business, we initiated a share repurchase and dividend program in 2011. During the year, we returned $330 million to our shareholders through these combined efforts. Slide #4 shows our 2011 consolidated sales by region and customer. In addition, we have $1.3 billion in sales at our core nonconsolidated joint ventures, which further diversifies our sales profile. We will provide further detail on the next few slides. As shown on Slide #5, our sales in China, Brazil, India and Russia have grown significantly over the past several years, from $1 billion in 2007 to $2.4 billion in 2011. This represents an annual growth rate of 25% versus industry growth in these markets of 17%. Lear's total sales in China, including nonconsolidated sales of approximately $800 million, are $2.1 billion. Since 2007, total sales in China, including nonconsolidated joint ventures, have almost tripled. Slide #6 provides a summary of our 15 nonconsolidated joint ventures. We have 13 core nonconsolidated joint ventures, 10 of which are located in Asia. We consider our 23% stake in International Automotive Components, or IAC to be non-core. We utilized joint ventures, largely in emerging markets, to…

Thanks, Matt. Slide #11 provides financial highlights for the fourth quarter. Global vehicle production was up 1%, reflecting double-digit increases in North America and Japan, largely offset by production decreases in most other major automotive markets in the world. Lear sales were $3.5 billion, up 11% from a year ago, reflecting primarily our strong sales backlog and increased production in Lear platforms. Core operating earnings were $176 million, up 17% from a year ago. The increase in earnings reflects higher sales, as well as operating performance improvements, partially offset by customer pricing and higher cost for product development and launches. We generated $192 million of free cash flow during the quarter and finished the quarter with cash of $1.8 billion. Our reported EPS was $1.03 per share. Reported earnings per share decreased from 2010, reflecting higher restructuring costs and other special items, which offset the impact of improved core operating earnings and lower tax expense. On the next 2 slides, I'll cover our fourth quarter results in more detail. Slide #12 shows vehicle production in our key markets for the fourth quarter and for the full year. In the quarter, global vehicle production was 19.3 million units, up 1% from 2010. However, production was down in Europe, as well as in our key emerging markets, China, Brazil and India. For the full year, global vehicle production was a record 74.8 million units, up 3% from 2010. Slide #13 provides a more detailed summary of our financial results for the fourth quarter and full year of 2011. In the fourth quarter, pretax income before interest and other was $102 million, down $24 million from a year ago, reflecting higher restructuring costs and other special items. I'll provide more detail on these charges on the next slide. For the full year, pretax…

Thanks, Jason, great job. As we begin 2012, there are some macroeconomic headwinds that we're facing, particularly in Europe. Despite the near-term uncertainty based on our present production assumptions, we remain comfortable with the guidance we announced last month at the Detroit Auto Show. Looking at our 2 operating segments, we expect our Electrical business will continue its trend of improving sales and margin. As Jason mentioned, we expect that our Seating margins will moderate in the first part of the year before improving in the second half of 2012. Our competitive market position, as well as our balance sheet, will provide further opportunities to drive growth and create value as we invest in our core businesses to increase profit and improve our competitive position. In closing, I want to thank the Lear team for their continued hard work and dedication. 2012 will be another year of challenges, and I am confident with your support that we will continue to be successful. With that, we will be happy to take your questions.

[Operator Instructions] And your first question comes from the line of Rod Lache from Deutsche Bank.

I had a couple of things. First of all, maybe you could just touch on the -- your North American sales grew pretty strongly in the quarter, which is, I guess, a bit surprising considering that in the quarter production, the strength in North American production was disproportionately the Japanese and Chrysler. Was there anything unusual with respect to launch activity in the quarter in North America?

No, I don't think there was. We had a backlog that was coming onboard. Again, we don't necessarily, as you know Rod, sell to the industry overall. We sell at a particular mix. We're seeing continued strength in some of our production numbers on the cars that we're on. Nissan, for instance, has been a nice book of business for us. Jason, [ph] do you have any light on what might’ve driven that beyond backlog?

It really was a backlog story. In North America, we had $159 million of backlog that rolled on in our Seating business in the fourth quarter, and about $15 million in Electrical as well. And Chrysler was a portion of that.

All right. And just 2 other things. One is, noticed that you didn't change your European forecast. It's pretty much the same as what you had 4 weeks ago in Detroit. IHS did lower there forecast for Europe. So is there anything that you're looking at that's maybe specific to your customer mix that's driving this? And then lastly, click a few of your Japanese competitors, the caretses [ph] in electrical have been kind of out in the headlines lately with some fines on these investigations, and haven't seen Lear in any of those headlines. I'm wondering whether we should be able to interpret that as a positive, maybe indirectly, that you're not involved or maybe that -- and also wanted to know whether that's maybe opening your opportunity set with some of the Japanese customers?

Well, let me take the lead on these questions and I'm going to go the, go to the team for some additional data and support, Rod. Starting off on the European, we are aware that IHS has brought to production assumptions down for Europe in their January 15 release. We're still working through the details on that. From our standpoint, the market is really kind of a tale of two cities, with the premium brands and luxury brands in the higher end market being at half [ph], showing some sign of resiliency, and then the AV platforms showing some weakness. Our production assumptions, however, did zoom on the platforms that we were on, that there was some pullback. I mean, Jason, if you'd break it down from a customer standpoint, what were some of the key assumptions that we had in our [indiscernible]?

Yes, if you look at -- we are 4 down, about 10% year-over-year if...

We're talking about Europe, Rod.

In Europe, and Fiat down about 8%, Opel down 11%. So some of the customers were -- we have a little more vulnerability to the uncertainty in Europe, the BMC [ph] segments. We already had a pretty significant reduction in production volumes assumed in Europe in 2012. So we had the market down 800,000 units overall and then we've got the luxury brands relatively flat. Audi, BMW and Daimler are relatively stable year-over-year. So we think we've captured a lot of that risk and uncertainty in the initial assumptions that we made.

And we're still monitoring it, keeping an eye on it. Nothing at this point that we're seeing would tell us that our production assumptions, at this point, are incorrect in Europe, Rod. On your second part of the question regarding the Yazaki and Denso press release in Justice Department fine that were announced earlier this week. Before I get into the specifics of the case, I'll ask Terry Larkin, our General Counsel to talk about the specifics. Our business in this segment is growing and it's growing faster than the market overall and we are continuing gaining share. We're gaining share in a lot of different places from a lot of different competitors. It's hard to say whether the case has a lot to do with it. My instincts tell me no. I'd like to think that there will be a benefit to Lear Corporation as result of the disclosure earlier this week, but at this point I just think we're winning it based on the merits of our competitiveness. As far as our involvement in the review of the antitrust, Terry, do you have any update you can provide Rod and the team?

Yes. The DOJ [ph] did announce these pleas in the automotive electrical component business this past week. These are, we believe, related to the ones that they announced last fall involved in Furukawa. What we can tell you is that Lear has not been the subject of any DOJ proceeding in this matter. So we're not directly involved and we don't know more about it because we're not involved then what we read in the criminal information in the press releases that the DOJ has issued on it. We know that there are an ever increasing and broader group of components being subjected to inquiry. This criminal proceeding though is different than the civil antitrust class actions involving price fix and that we've commented upon earlier, I just want to make sure we're all clear about that. The status on those is that Lear has had roughly 40 separate lawsuits filed against it. There was a hearing before the judicial panel on multi-district litigation just last week at which various of the plaintiffs have asked that the cases be consolidated into one case. We expect that it's likely to occur. That court has -- the panel has it under advisement and we expect to hear in the next several weeks on that. As you know in the past we've said and we continue to maintain that we don't believe that we've violated any antitrust laws in those proceedings either.

Your next question comes from the line of Peter Nesvold from Jefferies. H. Peter Nesvold - Jefferies & Company, Inc., Research Division: When I look at the Seating margin guidance for next year, 6.5% to 7% -- taking into consideration that's a full-year average. Do I start at sort of the low end of that range and then work up to the high end of the range as the year progresses? Or do you think the variance is going to be wider than that over the course of the year?

I think, Peter, I think the variance is going to be wider than that, especially in the first half of the year where we'll start, I think outside of the 6.5% range on the low side, probably in the low 6% ballpark, 6% to 6.5%, something like that. And then towards the high end of the range in the back half of the year for the average. I think some of the drivers that we're seeing coming out is, again, a very active launch calendar, and some the inefficiencies associated with that, as well as the need to immediately fund your customer concession price cost downs in the beginning of the year as we work for offsets towards that. So it'll start off slow and then ramp up towards the target in the back half of the year. H. Peter Nesvold - Jefferies & Company, Inc., Research Division: Okay. And then the follow-up question. But what I think, through the margin sensitivity to further declines in volumes in Europe, is it fair to think about this conceptually this way? That as industry volumes decline in Europe, your losing volume just fairly high incrementals because there’re more mature platforms for you and you're sort of backfilling that with new volumes out of the sales backlog that might initially be at lower incremental margins because of launch costs and other items. Is that a reasonable way to conceptually thinking about it?

Yes, overall. Overall, I would say that is true. Let me try to put some bookends around it though to help you a little bit more. The content for vehicle, on average in Europe, for Lear, would be about $300, theoretical $300 per unit. Now again, it depends as much as anything on which platform goes down and how they take the volume out of the system and whether you're able to adjust your cost structure accordingly. But if you use a content of about $300, I think that's about the average. The downward conversion in the short term will be roughly around 15%, again cautioning that it depends on the particular car line. From a backlog perspective, usually backlog comes on at a rate lower than that while you work it up through efficiencies and value engineering propositions. But incrementally, typically, at about a 10% margin in a backlog.

Your next question comes from the line of Chris Ceraso from Credit Suisse. Christopher J. Ceraso - Crédit Suisse AG, Research Division: A couple of items. The fourth quarter margin in Seating, I'm just trying to get a feel for what some of the other factors are. You highlighted roughly $10 million in a couple of different categories, but even after I back that stuff out, it still looks like the contribution was a little bit thin. Is there anything else weighing on the results there? Is it mix? Is it materials? Is it over launches that were going on?

It always is a product of what you're making in the quarter because each kind of platform has its own kind of financial DNA or financial template. So it depends as much as anything on the mix of the products. Jase, what are some of the drivers in that segment besides that, that could help Chris get to the...

It really was launch and development costs were the main headwind. Yes, we were up about $200 million in sales and that all came through the backlog. So that converts at around 10% normally and they may have come in at $1 million or $2 million below that, but that was offset by the higher launch and development costs. Everything else sort of nets out year-over-year, customer pricing was offset by our performance actions. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Okay. And then you touched on this a little bit, but maybe you could give us dome more detail of the rough breakdown for you in Europe. How much of your business in Europe is BMW? How much is Fiat, et cetera?

I don't think we've gotten into that level of specificity on the breakdown. BMW is obviously pretty important. We have talked about BMW overall [indiscernible] the disclosures, Jase [indiscernible].

Yes. Overall, BMW is about 11%, 12% of our sales.

That's worldwide.

Globally, yes. In Europe it's a little bit higher percentage than that.

Yes, it's the percentage of sales -- of European sales. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Okay, but you're not willing to a give more detailed breakdown?

I think what we're trying to avoid, because a lot of this, too, is the import business or export business out of Germany from our standpoint. So if we gave you the production, it wouldn't necessarily tie to the sales. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Right. Okay. And then just one housekeeping item. You mentioned the tax rate. You're going to have to release that valuation allowance at some point in 2012. Is that like a Q4 event? Or when should we start dialing in the 30% rate?

I'll tell you that the drivers on when we release it as the profitability of our U.S. segment mainly, and from our standpoint, based on our guidance, we'd expect this to be about the third year. And Bill doesn't typically take about -- I'm looking at Bill McLaughlin, our head of tax, take about 3 years in order to justify releasing it.

Yes, that's right, Matt.

And then to the rest of his question, what does that do to our effective rate?

Well, we were thinking that it would -- the valuation offset would probably come off at some point in the back half of the year, and then at that point our effective rate should normalize around 30%.

Your next question comes from the line of Brian Johnson from Barclays Capital.

Just wanted to talk about the Seating business. Could you describe maybe sort of the next level down on the kind of pricing pressures? You mentioned that we’re well into first half. Where they're coming from? Is it a particular type of OEM or type of program? And then what are things you're working on in terms of pushing back and maybe helping them achieve the cost reduction goal without de-contenting the vehicles or getting back to where some of the mass market makers where severed a decade ago with poorly contented cars and squeezed suppliers?

Great, it's a good question. Normally, on the average, our pricing in this business is going to net out on a price down level at around 2%, slightly higher in industry years where volume's up. That being said, each car line's a little bit different depending upon the amount of content that we control, where it is to market and where it is to return on investment. We look at a lot of ways. We constantly look at our business on a return on investment basis. Now, we sell to a customer that has a product that's a consumer product, obviously, that's very dependent on price. They're looking for ways to take costs out of their product, and I think one of the benefits that Lear brings, as a global supplier with the amount of depth that we have, a vertical integration in our engineering capabilities, the way to find them solutions to take cost out of the product without impacting the quality and without impacting our margins. So some of the things that we're doing, were constantly benchmarked in best in class, trying to develop alternative engineering designs that take cost out and looking at the value stream beyond the Tier 1s to find inefficiencies to help pass that along to our customers. And so we're able to provide, in many cases, savings well in excess of a 2% that you'll see topside from our revenues or from our P&L. Some of the things that we'll do is streamlining the design, using lighter weight materials, trying to get the same type of performance in a seat or a structural electrical distribution system using less material, trying to identify potential inefficiencies in the sub tiers as it relates to logistics. Things of that nature, Brian, are what we attack so that at the end of the day the customer gets, and the end consumer gets a seat that is best in class, or electrical distribution system that performs additional electrical content with less cost.

And JCS flag [ph] having to put several hundred quality-control Black Belts, particularly in the Europe to handle launch issues, is that something you're seeing in terms of step up in complexity? Or is that an issue unique to a competitor?

Well I think that every business uses some form of lean combined with Black Belts to take variation and efficiency gains out of their facilities, and we're no different. Complexity in a launch is usually driven by the reach of it. One of the values, I think, Lear brings is our global footprint and as customers are going to these global launches, these launches are becoming very complex because you're managing, in many cases, multiple regions of the world, in many cases emerging markets. That's what we do. I don't see a particular demand or need for a Black Belt per se, although we do use Black Belt to try to eliminate the variation and improve our quality. But the business is challenging and you can see from the elevated launch costs that we've included in our Seating segment over the last several quarters.

Your next question comes from the line of John Murphy from the Bank of America Merrill Lynch.

I just had a question for Terry first, just on these antitrust inquiries and what you're facing. I just want to make sure this is clear, at least for me. The stuff that Yazaki and the other suppliers are facing are regulator-driven inquiries and accusations, and ultimately some fines here. But what you're facing is suits that are being brought up by lawyers on behalf of consumers, that they overpaid for their cars, which as I'm looking back at seats and your electronics business as being overpriced for the automakers. I'm just trying to make sure that we've got that straight. I mean these are consumer lawyer-driven inquiries as opposed to regulator inquiries, is that correct?

That is correct. That's a very important distinction. Right? What we're saying is that we have not been subjected to any criminal proceedings by the Department of Justice. We do have these civil complaints alleging that there has been price fixing and therefore excessive pricing on products that were sold to customers by us. And then later those customers of ours sold to retail consumers. And in those cases, Lear is not alone being a defendant in those. There are, virtually all the major electrical wire harness suppliers in the United States are parties to those suits, as well. And it's not an uncommon thing once you have these criminal complaints come down that civil complaints get filed. But they're 2 very distinct separate types of proceedings. And the civil cases, as I've mentioned, while they're many in number will likely ultimately be consolidated into just one for at least the pretrial proceedings. But you pick up on a very important point. There’s a substantial difference between being party to the criminal proceedings and being party to civil cases.

Okay, that's great. And then Matt, second question is as we look at the distribution of cash to shareholders, it looks like it was about 72% of free cash flow in 2011. I know it's hard to commit to percentages directly of free cash flow being returned to shareholders, but it looks like you probably, based on your share buyback and your dividend policy right now, would potentially be returning more than all of your free cash flow that you're forecasting for 2012 to shareholders. Just curious, is that a correct interpretation? And do you think you have some excess cash on the balance sheet in addition to the free cash flow you'll generate in 2012 that'll end up back with shareholders?

What I would say is that we have about 2 years left on our authorization, if not 2 years exactly. I mean, about $400 million of share buyback capabilities. What I would do, John, is just probably take the 8 quarters remaining and divide it into the overall authorization for some planning purposes.

So 72% or 70% of free cash flow back to shareholders is a decent placeholder for us to use for shareholders to just...

No, I wouldn't necessarily look at it that way. I would just say from -- probably the proper way to do it and what we've been saying is, we're going to return it on a consistent basis, depending upon other uses of the cash and market conditions and whatnot. What I would do for planning purposes is just take a quarterly run rate, as opposed to percentage of the free cash flow.

Okay, that's helpful. And then just sort of a follow-up on that and not to parse your words too much, but you said on the acquisitions that a transformational acquisition would not be -- is not needed or planned. But is it something that if it came up, you would consider it, if it was at a very attractive price?

Absolutely. We would consider it if it came up. We don't see anything on the horizon that would work. To us, our philosophy is, first and foremost, to kind of balance growth risk and returns and make sure that we provide value to our shareholders, taking that into consideration. We also look, at the same time, at what do we need to do to ensure that we maintain or improve our position in the marketplace with our customers. How do we remain and improve our competitiveness and provide value and improve quality? Because ultimately, that creates value for our shareholders. So I don't see it out there, John. I would love to do one significant acquisition that fixes the business or improves our profile. I don't think it's out there. I don't think we need it. I think we can compete otherwise, but if there was something out there that would improve our position with our customers and improve our ability to give balanced returns to our shareholders, we would absolutely look at it.

Your next question comes from the line of Aditya Oberoi from Goldman Sachs.

So I had a question on IAC. Last year there were some talks about potentially taking the company public and then the markets turned in the wrong direction. Is there any update that you guys have on that?

No. No real update. I think you read the tea leaves correctly on, the kind of, the thought process on the kind of potential IPO. What I can tell you is, that asset for us is non-core. We own roughly 23% of the IAC venture, the European and North American venture that's recently been [indiscernible]. We would look to exit [ph] and monetize that investment. We believe that global loss and the ownership team of a group of that business and the management team will be successful there. They have a track record of success. And they will be successful here as well. But in the end, we'd like just to monetize our stake and move forward.

Great. And I had another follow-up on T900 [ph], obviously there's a distinct thought process going on between what GM is saying and some of the other suppliers are saying, versus what IHS is forecasting. As you guys look at your schedule, at least in the near term or where GM is hinting to where production could go, what are your thoughts on that?

Jase?

Yes, Adi, we're looking at that. If you look at the announced down weeks that GM was talking about as they prepare for the change over to the K2xx, and you look at their production capacity in each facility, and we think that they can very easily build between 950,000 and 1 million units in 2012. We’ve used 960,000 in our outlook, which is conservatively higher than what I just recently disclosed. We've been in discussions with IHS. We're trying to understand their thought process, but what we think they've done is they've really looked at the capacity that GM had last year, overlaid the down weeks, and assumed that production would be down. And that's not what we're hearing from GM. That's not what we're seeing in releases. The sales have been very strong in the platform. Inventory levels are relatively low. And so we're pretty comfortable with the 950,000, 960,000 units.

Adi, if they sell them, they build them.

Your next question comes from the line of Himanshu Patel from JP Morgan. Himanshu Patel - JP Morgan Chase & Co, Research Division: Two follow-up questions. Just the pressures in Europe right now, do you think they create any opportunities to do any additional restructuring?

Not really. I don't think they do. Our restructuring there is largely complete. There's always things you'd like to do and maybe we'll try to do, but it really comes back down to more just whether or not the financial justification makes sense or whether operationally you can execute them in the timeframe. There may be some modest things we can do, but I really, Himanshu, don't think that the pullback will create additional restructuring opportunities. Himanshu Patel - JP Morgan Chase & Co, Research Division: Okay. And then just so we sort of understand the operating leverage on the T900 [ph], does that platform have a notably different level of vertical integration than sort of your average platform?

Yes, on the 900, again, what kind of impacts the conversion rates on any vehicle is, number one, the size of the vehicles. I mean 3 rows of seats is better than 2 seats or 2 rows. If it's a highly contented electrical content, electronic content, full power leather seats, thats usually adds to the value of the seats. And if we're making that content, that usually impacts the conversion rate both up and down. Something like the 900, one, it's a high running program, obviously, with the amount of units that go through. And also, there's a fair bit of content, there's a fair bit of Lear content on it, so it would convert up and down at the higher end of our typical conversion rates. Himanshu Patel - JP Morgan Chase & Co, Research Division: Okay. And then just going back to Chris's question on Slide 4, where you give a very useful customer breakdown. Can you just directionally tell us how much of the GM and Ford slivers are Europe-related?

I really want to get out of geographic breakdowns by customer mix because of the way that they cross over the lines in imported transfers. And I don't want to get into another slice of the disclosure, Himanshu.

Your next question comes from the line of Joseph Spak from RBC Capital Markets.

If I just had a couple of questions on EPMS, actually, if we could move the conversation there? It looks like contribution margins this quarter were about 15%, and maybe 20% if you sort of strip out the development costs. So I was wondering, is that sort of about the right run rate going forward, once you get that to scale and volume? Or can the contribution margins go get higher in another segment?

I would tell you that overall, while you'll see that type of conversion rate on a year-over-year or a quarter, there is a natural baffle in the business on returns. In this segment, I think, it's really no different, between 7% and 8%, and it really comes down to 2 things. At that rate, temporary return on our investment, both our engineering and our assets, at a rate that exceeds our cost of capital and we believe we can. And number 2, it's still a competitive marketplace. And so there's a natural kind of market baffle when you get up into these type of margin and performance levels that I think the marketplace will bring you back out into that range. So the first response is, yes. It could happen on the incremental sales ops if you're doing more of a platform and you're on a platform that's running well and you have an efficient manufacturing process. And yes, you can convert it back on a short term, but longer term it'll balance back out into 7% or 8%.

Okay. And then finally, I know in your guidance page you point to copper lower, but I didn't see it listed as sort of a margin benefit in EPMS for next year. Can you just remind us how much copper you use, and if there is a benefit that you've calculated for 2012?

Sure. And we use about 125 million pounds of copper at this production rate, and about 20% of that is our exposure. The balances are on an indexing agreement with customers, and so we have factored in a benefit about a $0.50 reduction on that controllable by about $10 million, $11 million year-over-year. And that's been offset by some commodity pressures in other areas of the Electrical segment, resins and some of the components.

Your next question comes from the line of Itay Michaeli from Citi.

I wanted to delve into the 2012 revenue outlook. You called out some mix headwinds in North America. I was hoping you can share what you're assuming for mix and the rest of the regions, particularly Europe and perhaps the BRIC countries, excluding the backlogs. So just how you're looking at Lear's revenue in those regions relative to industry production?

Sure. In Europe, we'd see our revenue changing pretty consistently with the market overall with the C and B [ph] segments down significantly more than the 5% reduction overall, and then the luxury brands sort of compensating for that and bringing it back in line with that 5% industry change. In South America, our change year-over-year is very similar to the market as well. We had a strong backlog that's rolling on in South America that's helping us in that region. And in Asia, our changes are very similar to the market overall. Not a real big mix exposure in the other regions. The mix issue that we have is more centered around North America.

That's helpful. And then on Slide 6, I appreciate the new disclosure on the JV incomes. Are you collecting dividends from the Asian joint ventures? And it looks like, for 2012, you're modeling about a neutral other expense. So what are some of the other offsets to that joint venture income coming in 2012 to get you to that neutral implied in your guidance?

We do enjoy dividends from our joint venture. Each one is slightly different. We've been able to fund a lot of our growth in Asia through the dividends. We have a pretty efficient cash modeling and cash structure that allows us to -- if you use the cash earns and many of these joint ventures to expand the growth and apply to other kind of investment opportunities. The second part of the question was on the other?

Yes, it looks like you're just...

Obviously it's just kind of getting a catch on a lot different things that go through there. Jase, what else can you help...

So we have equity earnings of about $25 million and that's offset by state multiple taxes, FX and other miscellaneous expenses. So we do have it at 0 overall.

Great. And a quick housekeeping. I noticed the D&A [ph] in the quarter, $57 million, a little bit light. Anything going on there? Or is that just kind of normal?

Yes, it came down from the third quarter to the fourth quarter, primarily because we had some assets in our terminals and connectors business that were fully depreciated at the end of the third quarter. And so we'll see that benefit continue into 2012, but then it's offset by the big step-up we have in capital spending in that segment.

Your next question comes from the line of Matthew Stover from Guggenheim.

Most of my questions have been asked. I do have some clarification, though. The first question is on the pricing discussion, Matt. 2% sort of the normal number. The implicit guidance for 2012 was in line with that normal performance? Or is it worse?

It's in line. I mean, it's a net 2% number. We're able to provide benefits in many cases, closer to 5% with engineering changes and some other things that we can do to help our customers get the cost down in their product. The net number's about 2% and our guidance is pretty consistent with that.

Good. The other question, I guess, is I'm a little bit confused to the answer to the last question about mix. I guess arithmetically, if European production is going to be down and ANB [ph] segment is going to be down much worse than the average, I would suppose then that your mix actually improves in Europe in 2012. Would that be correct?

You're saying that since we're higher on the luxury brand vehicles as a percentage?

Yes. C-Class plus you're going to be higher, and their performance is going to be better than average.

You could look at it that way, because we are seeing some stability in the C. The Audi A6, the 3-Series BMWs and I think Jag is -- well, Jag’s pretty consistent and Jag Land Rover. You could say that. Yes, you could say that. What we're trying to say, I think what Jason mentioned was our sales impact is pretty consistent with the overall assumptions for Europe because our business base, Matt, pretty much reflects the business base in Europe.

Your next question comes from the line of Ravi Shanker from Morgan Stanley.

Can you help me understand the launch costs a little bit better because I think your backlog is down for 2012 and overall from this point last year. So I know there's an FX component to that, but shouldn't [indiscernible] your launch cost should pretty much in line?

Normally it does. That's the biggest drivers, backlog, but you could be launching a lot of replacement business as well. So it's not exactly that clean, Ravi, as far as just the number of backlog. In any given year, you're constantly doing mid-cycle enhancements for 2 quarters, a new line layout or retraining of employees or expansion into other facilities, for instance.

Got it. So it's a way of implying that the mix of the new launches are a bit different. Does that mean that if you're doing more complex launches that the margins are going to be a little different than what your typical backlog incrementals are as well?

It could be, yes. They absolutely could be.

Okay. And also on the cash flow, I think you did a good job of walking between why the free cash flow declines in 2012 versus 2011, but when you look out to 2013 and beyond, I mean, do you think you can get back up to $400 million level of cash? Or is the CapEx a little more sustainable and the cash taxes as well?

Right. I wanted to get away from a little bit from giving projections in '13. But I will tell you that from a CapEx standpoint, what we've been talking about is a little bit elevated CapEx as we take advantage of our balance sheet strength and the opportunity to kind of put some footprint into the emerging markets to facilitate our growth and kind of have an opportunity to provide value and get a nice return for that investment. Cash taxes, I think, are really a function of a 1-year lag on your tax expense from a modeling perspective. And again, it all is driven by earnings, and earnings are driven by production. So I would work it that way, but I'd like to stay away from giving a projection on '13 at this point.

And your last question comes from the line of Colin Langan from UBS.

Just a couple of clarifications. In terms of the tax guidance, I mean, is that reflecting the 30% rate in the second half? Or will that tax guidance change once they allow it to...

I'm sorry, Colin, could you repeat the question? You broke up a little bit.

Yes, sure. Just clarification on the tax guidance. If the valuation allowances reversed, does the rate go up to 30% and that guidance changes? Or is that already reflecting the expectation that the valuation allowance will be reversed?

Colin, I'll start the answer and I'll turn it over to Bill McLaughlin. We have not assumed in our guidance the reversal of that valuation allowance. And so the 23% effective rate that we're using in the guidance does not reflect that reversal. Bill, anything?

Yes, that's right. The 30% that we talked about would start in 2013. And the 2012 guidance does reflect the fact that we did release several valuation allowances in Europe in 2011.

And just to clarify that again, if the valuation allowances released in the second half, the rate won't go to 30% this year, still it'll be next year?

No. Due to the way the accounting rules work, we would basically still be at the 23% that we're guiding to for 2012.

Okay, so using 23% is good for '12. It probably goes up to something like 30% if it's reversed in the second half?

Yes.

Okay. And then just I want to understand the Seating margins, why they're weak in the first half of the year. I thought in the third quarter it sounded like it was related to challenges with launching products that were probably going to continue into the first half. But from Slide 23, it looks like it's more of a mix commodity issue. What really is the underlining margin issue for Seating?

It's really the launch and the product development, and it's also driven by the fact that on January 1, there's a whole litany of customer pricing that takes place, Colin, that you then need to work to find offsets for [indiscernible] working with your supply base, your manufacturing facilities and the lean workshops and what have you, and just working for solutions to offset the price downs. So those are probably the 3 biggest drivers.

Okay, so the issues that we found in the third quarter are kind of addressed already at the point?

No, I think in certain cases they're continuing. We're still not as crisp as we would like on the launches and maybe, say, the manufacturing efficiencies of recently launched products because at some point, it's not an launch anymore. So we're still working through those issues to some extent.

Okay. And just one last one. The contributions are normally 15%. I mean, when we look at Europe, is that the same? Or is that higher or lower than the average for the company?

I would say that Europe usually comes in at about 15%, and that's a little bit lower than the impact on North America for several reasons. The biggest one being the level of vertical integration in Europe is typically a little bit less than you're going to see in North America, so that usually drives a lower conversion rate [indiscernible]. That's the end of the questions. At this point, I think it's mainly the Lear team that remains on the phone. I want to thank you for a very great job in 2011 and all the hard work and effort. We have some headwinds in front of us with uncertainty in Europe, but I know with dedication and working together, we will win together in 2012. So thank you very much.

And this concludes today's conference call. You may now disconnect.