Good morning, and welcome to Whirlpool Corporation's Second Quarter 2011 Earnings Call. Today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Larry Venturelli, Senior Vice President, Financial Whirlpool Corporation. Please go ahead.

Thank you, and good morning. Welcome to the Whirlpool Corporation Second Quarter Conference Call. Joining me today are Jeff Fettig, our Chairman and CEO; Mike Todman, President of Whirlpool International; Marc Bitzer, President of Whirlpool North America; and Roy Templin, our Chief Financial Officer. Before we begin, let me remind you that as we conduct this call, we will be making forward-looking statements to assist you in understanding Whirlpool Corporation's future expectations. Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K and 10-Q. Turning to Slide 2, we'd like to remind you that today's presentation includes non-GAAP measures. We believe that these measures are important indicators of our operations, as they exclude items that may not be indicative of or unrelated to our core operating results. We also think that the adjusted measures will provide you with a better baseline for analyzing trends in our underlying business. Listeners are directed to the Appendix Section of our presentation beginning on Slide 29 for the reconciliation of non-GAAP items to the most directly comparable GAAP measures. Our remarks today track with the presentation available on the Investors section of our website at www.whirlpoolcorp.com. With that, let me turn the call over to Jeff.

Well, good morning, everyone, and thank you for joining us today on the call. As you saw earlier this morning, we released our second quarter financial results. And you could see these results summarized on Slide 4. For the quarter, sales reached $4.7 billion, which was a 4% increase from the prior year. On an operating basis, excluding non-operating charges for recent legal developments, our EPS was $2.76 a share versus $2.82 a year ago. And while earnings are down slightly from last year, our second quarter performance demonstrates that we have the ability to quickly adapt our business to build up our revenue growth and operating earnings due to our strong global leadership position even in what I would describe as a very challenging environment. In our release today, we are reconfirming our annual operating EPS guidance of $12.00 to $13.00 a share and free cash flow guidance in the range of $400 million to $500 million. Given the current operating environment, which we'll describe as we see it in great detail in a few moments, we now see EPS at the low end of the range. As a result of our non-operating charges reported, our GAAP EPS guidance is now $7.25 to $8.25 a share and free cash flow is now $160 million to $260 million. While our second quarter results were impacted by non-operating charges, we are pleased to have substantially reduced our legal uncertainties and financial liabilities going forward. The Brazilian collection matter is now completely behind us, and we took an accrual for the ongoing European Union investigation for the Compressor business. Now I'd like to provide you some perspective on 3 things: The global economic environment and how we see it impacting our business and the industry, the actions we are aggressively taking to…

Thanks, Jeff, and good morning, everyone. Let me start by giving you my perspective on North America's performance for the quarter. As shown on Slide 9, we continue to achieve solid productivity and direct cost reduction gains across the region, which only partially offset low volumes and higher material costs. As Jeff mentioned, our April price increases have been fully implemented, and we have announced an additional cost base price increase for August due to further material cost increases. And as a result, our price mix while still negative on a year-over-year basis, improved substantially quarter-over-quarter. Regarding industry unit shipments, we'd expected to see negative U.S. industry unit shipment trends during the second quarter, given by the 2010 cash provided program and housing credits. However, the decline was clearly steeper than expected. On Slide 10 you will see U.S. T7 industry for the first half of the year, compared to prior periods back to 2005. You will note that the first half 2011 industry volumes has dipped to 2009 recessionary levels, has continued high unemployment and low consumer confidence continues to depress the U.S. housing market and discretionary purchases. In fact, given the current U.S. economic environment, the percentage of our business representing replacement purchases is at an all-time high. Based on these recent trends, we expect to see only modest growth in the second half and now expect industry shipments to be down 1% to 2% for the year compared to our previous forecast of up 2% to 3%. On Slide 11, you will see the North America's financial performance in the second quarter. Regarding our overall unit volume, we saw our North American unit shipments down 5% in the second quarter, despite the U.S. industry, down within 10%. Net sales of $2.4 billion were down from $2.5 billion…

Thanks, Mark, and good morning, everyone. Let me start with a second quarter 2011 review of our International business on Slide 14. Overall, compared to last year, our International business' balance of sale grew from 45% to 50%. Sales of $2.4 billion grew 17%, growing 7% excluding currency. In Europe, developed market economies continue to remain weak and the region continues to face high material cost inflation. To address these costs, we have announced 5% to 7% price increases in most countries across the region, which will take effect between August and October. In Latin America, unit volumes were up 21%. We saw solid demand growth both in Brazil and also within the remaining countries that make up our Latin American region. Demand in Brazil during the second quarter was significantly higher as the industry comped against a weak quarter last year, due in part to last year's World Cup, as retailers shifted their focus to brown goods from white goods. Material costs are also significantly impacting this region of the world, and during the second quarter, we announced and are implementing cost based price increases to mitigate the impact. And in Asia, we saw a slowing demand with unit volumes 4% below 2010 levels. Inflation and a weak summer season in India due to adverse weather conditions were partially offset by strong unit growth in China, despite a softer industry in China. Now let me walk through each region individually to provide more detail. Turning to Slide 15, in the second quarter, our Europe, Middle East and Africa sales improved 14% year-over-year to $841 million with unit shipments increasing 2%. Excluding favorable impact of currency, sales decreased approximately 2%. The region's operating profit of $20 million was flat with the previous year. Results were unfavorably impacted by lower product…

Thanks, Mike, and good morning, everyone. Beginning on Slide 19, I would like to summarize our second quarter results. First, before focusing on our operating results, I'd like to comment on the quarters 2 non-operating charges. As we discussed earlier on the call, our results include $4.86 per share of expense to settle a Brazilian collection dispute and provide for recent developments in the ongoing Embraco antitrust matters. As previously disclosed, we reached an agreement on June 22 to settle all claims arising from a long-standing dispute in Brazil. The settlement enabled us to remove significant uncertainty and financial risk by bringing financial closures to the matter. The settlement amount is within the range between the previous disclosed accrual and the previous disclosed maximum exposure. During the second quarter, we reported an additional pretax charge of $439 million with an interest and sundry expense to adjust our accrual to the full amount of the settlement. Based on recent developments, we made an $83 million accrual this quarter for the ongoing EU investigation of Embraco and other matters related to the global antitrust investigation. The accrual is reflected within interest and sundry expense. As previously announced, the Brazilian and U.S. antitrust investigations of Embraco have been settled. Taking these matters into account, we remain in a strong financial position and continue to maintain our liquidity priorities. Now I'd like to comment on our base operating results for the quarter on Slide 20. Our sales grew 4% to $4.7 billion. Excluding the impact of currency, sales were down slightly on unit volumes, which increased 1.4% from the prior year led by Latin America. We continue to benefit from higher productivity and cost reduction initiatives during the quarter. Based on volume and product mix, we also monetized $79 million of BEFIEX credits compared…

Thanks, Roy. I'd like to take a moment now and kind of put all these pieces together and provide you with a perspective of how we see the business. I'm going to be referring Slides 25, 26 and 27, which showed the priorities, which we laid out and discussed with investors late last year at our Investor Day conference. As a company, we are now at our 100th year of operations. We are today the global leader in the major home appliance business, and we see significant levers for us to grow in the future. We remain very well positioned, and I think we're demonstrating that we are capable to quickly adapt to changes in the environment. For a reference, during last 3 years, we've substantially lowered our break-even point by reducing capacity, fixed cost and optimizing our global operations, and we see more opportunities in this space. We've invested and continue to invest in great new product innovation, and I think today have the best portfolio of winning new products than we've ever had in our history. As Roy mentioned, we have greatly strengthened our balance sheet, we've improved our liquidity and we have dealt with some very large historical liabilities that are now behind us. In addition, we continue to grow and are getting an even stronger position in critical emerging markets like Latin America, India and China. What we expected late last year was some economic recovery in our developed markets. We certainly didn't foresee the extraordinary inflation that we've experienced this year or the weakening of demand levels. So this economic challenge has delayed the growth rate and margin improvement that we expected in the first half of this year. But it has not changed our expectations or commitment to execute our roadmap for growth and valuation[ph], which we've presented last year. We are aggressively responding to these economic realities that we see today around the world as we've laid out throughout this presentation, we've implemented additional price productivity and cost actions to overcome higher material costs, higher inflation and lower demand levels. We clearly expect second half margins to improve, particularly in the fourth quarter, where we will have the full impact of our announced and implemented price increases with cost and productivity levels, which will fully offset inflation and positively contribute to our margins well. So to summarize, we are in a period where global growth is uncertain and in that environment, we are taking necessary actions in order to expand our operating margins, improve our earnings and generate cash in line with our target range projections, which we remain committed to delivering. So with that, I'd be happy to open this call up for questions.

[Operator Instructions] Our first question comes from the phone of Eric Bosshard with Cleveland Research.

On Latin America, I'm wondering if you can just give a little bit more color on the margins there which have, excluding the BEFIEX, seen some erosion. In the U.S. it seems like will start to stabilize or improve the margins a bit, but can you just talk about what's going on with Latin American margins, what's driving the change there?

Yes, Eric, this is Mike Todman. We did see a reduction in margins in Latin America in the second quarter. We actually saw that, that had started in April, largely driven by material costs, but also driven by price mix. And that's why we executed price increases beginning in the second quarter and kind of taking effect through the quarter and into next quarter. But we did see some erosion, we expect that to improve as we go to the back half of the year because of the price increases to offset the erosion.

Can you talk about your sort of confidence and conviction in that and perhaps compare and contrast that to North America? Because you're absolutely dealing with similar issues?

Yes, we're actually very confident. We've already started the execution of those increases, and we are beginning to see them, to see the results of those. So we expect them to absolutely to take hold, and we're very confident that we will see them in our margins as we go in the second of the year.

And then I guess the second question, a follow-up question. In North America, you've talked about the being less promotional in the back half of the year. Pretty meaningfully less promotional not being a favorable contributor to margin. Can you just talk about your expectation about how that will influence volume and how you expect the discipline to be in the industry to hold that position if volumes continue to behave in a challenging fashion?

Eric, it's Marc Bitzer. First of all, the comment referring to, the overall promotion environment in the industry. Obviously, promotions are determined and decided by the retailer. The reason I will believe the overall promotional noise is going to be less than last year is very simple. But if for any reason, the return on investment in promotion is significantly less than last year. And that is very simply driven by the fact that the direct purchases or base of purchases are at an all-time high. There is just no return of putting a promotion out there for [indiscernible] And we saw that already in the second quarter, but I would say the lift which many retailers got from promotions were lower than expected anticipated, and we therefore, expect that the retailers adjust that behavior also somewhat in the second half. I don't think it will overall impact the levels of industry demand and we've factored that promotional assessment already into our expectation for second half industry volumes, which again as I mentioned before, we expect the full year to be down minus 1 to minus 2. And if you translate that into a second half, we expect the second half to be up plus 1 to plus 2.

Our next question comes from the line of Laura Champine with Cowen.

Can you comment on your inventory levels? Still up 15% in this kind of demand environment. Looks a little frightening, and I'm wondering how much it is impacting price mix globally and how much it should impact price mix in Q3?

Yes, Laura, this is Roy. First of all, Laura, let me talk a little bit about inventory. In the general, at $3.1 billion, that's up just under $400 million from a year ago on the balance sheet. And first of all, and very importantly, $200 million of the $395 million, Laura, is just simply the result of the changing currencies year-over-year. And then you've got, what I would estimate just under 3 days or about $115 million would relate to what we would call excess inventory. And a lot of that is in our International businesses and a lot of that is seasonal related inventory with the chunk of that related back to what Mike talked about in terms of the seasons that we experienced in some of our international markets relative to that inventory. And so we'd that's about $115 million. And then the other $80 million, Laura, is 2 things. Part of it is just the cost lift as a result of higher commodities, and then when you look year-over-year, obviously, a year ago, we were building inventories relative to a low position. And so, we had some availability issues. And so if you look year-over-year from that perspective, those 2 components give you the other $80 million. From a company perspective, Laura, and I know you've followed us for a long time, we normally build somewhere around $425 million of inventory in the first half of the year just so to support the seasonality in the business. This year, we built less than that at $280 million. We did take 5% of our units out globally in terms of production year-over-year. The greatest reduction being in North America, in Marc's business, where we took out about 8% year-over-year in terms of production units. And we've planned and have plans in place to continue to take production down over the back half of the year to get our inventories aligned. I think last call, Larry Venturelli mentioned that our plan was to take inventory levels down to $2.6 billion or roughly thereabouts. We still have those same plans in place. We have our production schedules aligned with the most recent demand that Jeff talked about in order to achieve that inventory reduction. It is, Laura, admittedly more reduction than we typically do, midpoint, end of year. But we did the same level in 2008, and we did $309 million of take down in 2009. So we're confident in our ability to get the inventories down over the remainder of the year.

Our next question comes from the side of Sam Darkatsh with Raymond James. Sam Darkatsh - Raymond James & Associates, Inc.: A couple of quick questions. First off, there seems to be a lot of things going on in price mix. Can you parse out the price part versus the mix part both in the quarter and then your expectations for the year?

For the quarter, Sam, this is Roy. Let me give you a little bit of high level. For the quarter, Jeff talked about we had roughly 2 points of impact on price mix from a margin perspective. I want to emphasize that. Like-for-like, Sam, it was about 0.5 point relative to the 2 points. Allowance is about 0.5 point and then if you look at mix globally, that was about 1 point of the 2-point reduction. And Sam, those numbers relative to year-to-date are probably fairly similar. As you know, in the first quarter, we had minus 2.3 and this quarter minus 2.0. Sam Darkatsh - Raymond James & Associates, Inc.: Two more quick questions if I might. Any early read through so far in terms of 2012 inflation based on what you're looking at the raw materials markets right now?

Sam, this is Jeff. No, I don't think we really have a -- I think there is a lot of things that are changing very quickly. We're kind of at an odd point in time in the economy where you have record high in inflation and relatively weak demand. So we are seeing, again included in this forecast, some turning of material costs, but it's -- we probably don't really begin negotiations or getting a firm handle on that 'til late third quarter, early fourth quarter. Sam Darkatsh - Raymond James & Associates, Inc.: Last question if I might. Electrolux yesterday or the other day mentioned that the Latin American industry, they've pegged a 7% growth and you folks with the very high market share grew your units considerably more than that and also took your BEFIEX rates higher. What are you seeing there from a demand standpoint? Is it a fair amount of market share gains and why would that be or is it definitional? Why the discrepancies?

Well, Sam, first of all, we said for the year, we are holding to the 5% to 10%. If you think about it, the second quarter was up fairly substantially year-over-year because of the down quarter last year. So I'd say that's the first thing. Now in terms of our business, as I said on the last call, we've expanded our distribution to areas of growth within the country. There is some 6,000 cities in Brazil and a lot of them were small. But that is where we're seeing growth, and so we've expanded our distribution there, and so we're enjoying good solid growth in those regions. Sam Darkatsh - Raymond James & Associates, Inc.: So if I could take that further, you would anticipate growing perhaps considerably more than the 5% to 10% industry growth that you're pegging?

No, I'm not saying that, Sam. I think that's a reasonable level of growth that we should expect.

Sam, this is Roy. Let me talk a little bit about your BEFIEX question. Because I think it's an important one, and by the way I know you've been following us for a long time, so you know the connection here. But with respect to BEFIEX, we did take up our guidance. We did have a higher BEFIEX in the second quarter. But a couple of things, Sam, to emphasize here with respect to the why. As you know, this is not only volume driven, but it's also very much tagged to the mix that you have within that volume, and we have the highest IPI taxes, and therefore, the highest BEFIEX offset in the laundry category at 20%. And as you know, the lowest at cooking at 4%. And so what happened in the second quarter and what we project happening over the remainder of the year is one, we have taken share in laundry and improved our laundry mix. Laundry mix is up 6% year-over-year. We have a case of innovation that we're bringing into the market, continuing throughout the back half of the year. And so that was the reason one for the higher BEFIEX in the quarter, but very importantly, to your point too, the reason we've taken the guidance up for the year related to those 2 matters.

Our next question comes from the side of David MacGregor with Longbow Research.

Hopefully this heat is helping your replacement refrigeration sales. I guess a couple of questions. It appears that you gained some share in North America, so I wondered if you could address that. And then the second question just pertains to your ability to secure price increases in a down commodity market. And history would suggest that at the peak of the commodity markets, manufacturers typically have a tough time securing a full pass-through, and where does your confidence come from that you can be a little more successful in this time around as commodity prices continue to come down?

David, I'll take the first part. It's Marc Bitzer. Just on the share, first of all, when we talked about our overall unit that went down 5% in an industry that's down 10% percent, keep in mind this overall unit include our entire North American business, everything from Mexico, Canada, et cetera. If you look at our core appliances piece at market share, which is obviously a subset of our overall North American business, we would say on a year-to-date base, our share is flat, year-over-year it is flat. However, it is sequentially down from the first quarter. That is total combination of somewhat seasonality but it's also we expected some share drop as a result of our price increase in April 1. So I would say we're pretty pleased with where we are today from share it's flat. Some share loss which we expected due to our price increase, and we're pretty comfortable to where we are today in share position.

How much share do you think you forfeited with the price increase?

I would say a big part of the Q2 and Q1 drop, but a result of us going very early and aggressively and decide to give a price increase, and we expect over time to get that back.

David, that's not an abnormal pattern for us. Let me address the price increase, David. I don't think I could agree that we're yet in a down commodity cycle. In fact, we raised our material forecast from again to $450 million to $500 million. I know there was a period where we had some peaks, but I mean, we never buy the peak, we never buy the bottom. The trend is still up. What I said was we've expected the second half to be high. In fact we peak in the third quarter and then, but stabilizing. There are a few isolated cases where you've seen small declines, but if you take that material cost increase at the second half of last year plus this, it's been the biggest commodity and material cost inflation push that we've ever seen. So I think the price increases we're asking for are very justified. And unless -- well I certainly don't think that cost situation turning. We think it's very predictable between now and the end of the year, simply, as I said based on hedging and contracts. So if they did turn the next year, that's a different issue. But I would say margins have been hugely impacted at every level due to this inflation, and we've got to recoup it with price.

Just Roy, quickly on the credit facility revision or extension, were there any change in the covenants?

No. Same financial covenants, David, that we have before.

Our next question comes from the phone of Josh Pollard with Goldman Sachs.

My first question is on your cost initiatives. I think it was back in 4Q when you guys first laid those out, you guys laid those out again. But I think what investors are looking for is actually some dollar figures to actually put around those initially when you gave guidance in 4Q, you said you'd be able to offset the $250 million to $300 million unfavorable impact from inflation. When you raised it in 1Q, your inflation numbers, you said, you'd still be able to offset it. It seems like now you guys aren't saying that you will offset it fully. So I really don't have a good view on what the total dollar figure is of cost initiatives you guys are having, how those breakout by the items that you outlined, Jeff? And then I'm also trying to get a sense of how they breakdown by quarter.

Josh, I can give you a couple of those pieces. First of all, relative to the original material guidance of $250 million and $300 million on our productivity will offset that. The issue, obviously, is the material cost increases, and we now see it as $450 million to $500 million, which makes the task obviously much harder. I would say also don't forget that is just raw material costs. It does not include logistics costs, which globally is probably with fuel is another $150 million to $200 million, and what I would say it's a very high inflation, particularly in emerging markets on salaries, benefits, basically everything. So and again I won't have an exact number, but if you put all those together you will have over $1 billion of inflation across all parts of our business. So what I said was our productivity -- it is fairly well evenly distributed. That our productivity will exceed this inflation by the fourth quarter. So we've had high levels of productivity, simply just not been enough to offset this inflation. So it's impacted our margins. What I would say, we peak in Q3, we cross over positive to positive territory productivity exceeding raw material costs and inflation in Q4. So it will become a positive addition to our margin then, but for the first 3 quarters, it's net negative.

So maybe we can take a step back, $450 million to $500 million on a quarterly basis. So 1Q, 2Q, what you're seeing so far and then I can do the math on what's in the second half, and I would make the assumption that, that 3Q is harsher than 4Q. What are those numbers?

For raw materials?

Yes.

I'm sorry I missed the question.

So we had $94 million in Q1, as you know, Josh. $133 million this quarter, and we would project, again these are round numbers, okay? We peaked out about $140 million and then come down to somewhere around $125 million in the fourth quarter. That will get you to $490 million, but those back half are round numbers, Josh.

Okay. And then your cost initiatives, can you give those by quarter as well? Because I think that's where really your investor base is struggling to get a sense. How these things will shape up?

Yes, Josh, again we don't give out productivity by quarter. I would just say let's talk about this quarter and then let me talk a little bit about year-to-date and then as a point of reference, maybe I'll point back to Jeff's comments to last year. First of all, this quarter, if you look at sort of everything Jeff talked about x the materials, we had about $100 million of benefit in the margin in Q2 or just over 200 basis points, Josh. Now, the bad thing, as Jeff referenced is, we have $133 million in material or 280 basis points on material. So if you look at this year-to-date, again, the material number is just about 250 basis points almost spot on with the productivity at about 200 basis points. So again, we're tracking, but we're still beneath the headwinds that Jeff referenced. Again, while we won't do it quarterly, in his comments, you saw it play out last year where we ended the year with roughly 350 basis points of productivity for the full year. And then of course, as you know Josh, that allowed us to expand on margin because it more than offset what we experienced with pricing and more than offset what we experienced with materials. That, for a local corporation, is fairly traditional because of the way we build the pipe and execute the pipe over the course of the year. And we always get stronger productivity in the back half. In terms of specificity on back half, we don't provide that.

Again, I would just say that the price mix will, we said, will add at least 2 points to our margin in the second of the year versus the minus 2 points in the first half. We said that raw materials will stay high, but stabilize and our productivity will exceeded this oil inflation by the fourth quarter, which means it will be positive to the fourth quarter. So that's the -- those are the 2 big levers we see with demands still being the most variable of those factors.

Okay. And I just want to make sure that when you say it will add 2 points to margin that's relative to the first half of 2010 or is that relative, that's correct?

2011.

Yes, you're right, Jeff. 2011.

Our next question comes from the side of Michael Rehaut with J.P. Morgan. Michael Rehaut - JP Morgan Chase & Co: First question, just to look at the 200 bps of benefit from the price increases for the back half of the year. How much of that do you expect from the price increases that you've already announced and implemented versus the ones that you are going to be implementing from today through October?

Yes. You know, let me kind of give you a macro view. We took what we thought at that the time appropriate pricing increase in the U.S. in April. Then we saw the higher inflation, and Marc can tell you that I think he did tell you the quarter-over-quarter benefit we've already seen. So that would carry through and then the additional one is the one we did in August. In Brazil, we took, and we're seeing late in the second quarter already the benefits of what was implemented, announced in May and implemented. They'll be fully implemented through June, July. And Europe is largely being implemented between now and October. Mike said, 5% to 7%. So we would expect to net a high percentage of that. And then in places like India, we've done it every month or every other month and you can see, and we've been able to fully offset inflation in places like that, and we'll do that as needed. So our run rate of margin improvement is improving. But it's a combination of that and the new ones that gives you the 2 points. Michael Rehaut - JP Morgan Chase & Co: Right. I guess you have obviously a lot of experience in price increases over the last year or 2, but I guess what people particularly in the U.S. are looking at is the continuation of that trend amid a weaker-than-expected demand environment. And so I guess is the price, the confidence from achieving those price increases, does it stem from some new products or from just your gauge on how your big customers will react or if there is anymore color on that perspective?

Mike, it's Marc Bitzer. I'm trying to answer your question now. We're not trying to speculate about expectation of future price increases or how much it will stick or not. Let me maybe first as the, in retrospect, what we saw in Q2 in what was an exceptionally weak market environment. Our prices increases are fully executed, and we delivered exactly what we internally had in mind. The confidence about what would happen is very simply that we have a very strong innovation pipeline. We have this number of [indiscernible] leading consumer magazine ratings, which are exceptionally strong and a couple of innovation, which gives you confidence in the marketplace, yes you can execute certain market places price increases. And with confidence up in Q2 and that would also carry into Q3.

Mike, I'd only add that, I mean, again, I want to put this in percent, a record level of inflation globally across our business, not just raw materials, but logistics costs, other costs. And the reality is without a price increase, the comparison between the price increase and some volume, clearly favors a price increase, and because selling products that you don't make any on doesn't really create any value. So we made a strong commitment around the world with what we've announced where we intend to execute them and recouped a small portion of the material inflation, another inflation that we've already experienced. The rest were offsetting completely with productivity. Michael Rehaut - JP Morgan Chase & Co: Okay. I appreciate that. Last question, in Latin America if you strip out the BEFIEX contribution, your core margins were down about a little over 200 bps sequentially. And so it seems like that is, I believe, you identified as due to both material cost and price mix. I was wondering if you could kind of break out which, with material cost, half or 2/3 of that, I think you said was primarily due to material. And on the price mix side, what's driving that? Is it just more due to mix or is there increased competition there?

I'd say Michael, on the price mix side, let me just take that. It's -- we have seen some mix erosion, but it's really is a combination of both. We've also seen some like-for-like. Again, that's why we executed the price increases that we did. And in Brazil, it was 4% to 5%. And we are already saying that we are able to net that. In terms of the inflation and material headwind, I'd say that it's about 50-50 I mean, I'd just put it in those terms. So that's kind of what the breakdown is. Michael Rehaut - JP Morgan Chase & Co: Okay. And BEFIEX balance at the quarter end, Roy if you have that?

Sure, Michael, we'll talk to you this afternoon, it will say 474.

We have time for one more question.

Our last question comes from the side of Ken Zener with KeyBanc Capital.

You said you expect a 2% increase in price around the second half. Can you highlight perhaps different regional swings, and second, does that imply for your April price perhaps only 25% to 35% of its stock or can you talk about the difference between your back half price and what was talked about in terms of the April in the U.S. at least?

The 2% is global. So it does vary by region and the timing of that. But it's the net margin contribution, which is different, could be very different than what is implemented in the marketplace. So in the April 1 in North America, we executed what we said we're going to do, and we see those prices in the marketplace.

Okay, and then I guess with the slowing in playing field, like using Europe as an example, but it could be for Brazil as well, which I think you were talking about, the volume that you've talked about. The mix you said in Brazil, you expected to be recovering it. In Europe, could you maybe kind of talk about that and should we think about mix having a downward impact relative to slowing demand or is that really just volatility you would not have any inside into kind of the back half of the year?

Yes, I would say that this is much volatility. I think we feel pretty confident that we can both recover mix. Remember, mix is also new product introductions to help drive that, innovations help drive that. So that's not something that we're concerned about. We think we can do it. Well, listen everyone. Thank you for joining us today, appreciate your comments and we look forward to talking to you next time.