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Magna International Inc. (NYSE:MGA)

2013 Annual Meeting of the Shareholders

May 10, 2013 10:00 am ET

Executives

William L. Young - Chairman of the Board and Chairman of Corporate Governance, Compensation & Nominating Committee

Donald James Walker - Chief Executive Officer and Director

Jeffrey Owen Palmer - Chief Legal Officer and Executive Vice President

Joseph Cosentino

Louis Tonelli - Vice President of Investor Relations

Vincent J. Galifi - Chief Financial Officer and Executive Vice President

James J. Tobin - Chief Marketing Officer and President of Magna Asia

Seetarama Kotagiri - Executive Vice-President of Corporate Engineering & R&D

William L. Young

Hello. I'm Bill Young. The meeting will now come to order. As Chairman of Magna's Board of Directors, I wish to welcome everyone to this 2013 Annual Meeting of the Shareholders of Magna International Inc. Welcome also to those shareholders and employees who are viewing the webcast of this meeting.

Before proceeding with the legal formalities of the meeting, I would like to make a few general comments on behalf of the board. As you know, the last few years have seen significant change at Magna, including the elimination of the dual-class structure and the corporate governance renewal which followed.

Since last year's annual meeting, the board has had a stable, productive year in which to build on these developments. In that time, the board and management have worked diligently to position Magna for continued growth. For the board, this has involved an intensified focus on oversight of a number of critical areas, including corporate strategy, succession planning and risk management. Each of these remains a key board priority for 2013, and we will continue to work with management to ensure Magna drives sustainable, long-term growth through a disciplined approach to strategy, fosters the development of a pipeline of future leaders with the skills and expertise needed to manage a complex global company and promotes greater enterprise-wide risk awareness and decision-making.

While the results of Magna's effort in these areas may not be immediately visible, the board is pleased with the steady progress which has been achieved to date. More generally, the board is pleased with Magna's performance in 2012, as demonstrated by the company's strong financial results, solid operating performance and significant share price appreciation, the continued alignment between executive compensation and corporate performance, the continuing confidence demonstrated by Magna's customers and the outstanding efforts of Magna's dedicated employees, a number of whom are present here today.

In closing, I would like to thank shareholders for the confidence they have placed in the board, management for their stellar efforts in 2012 and employees for their dedication and hard work.

I now invite Don Walker, Magna's Chief Executive Officer, to make some introductory remarks. Thank you.

Donald James Walker

Thanks, Bill, and good morning to everybody. Hopefully, we're going to get some good questions at the end of the meeting. We've already had a number of them before the meeting started. And I had the pleasure of getting my picture taken with Bill Davis, Mike Harris and Ed Lumley, which probably won't happen again. So I appreciate them coming out to see how their stock is doing.

I've been with Magna for over 25 years now, and I can honestly say I've never been more excited about the future of the company. We went to a global operating structure 2 years ago, and we have a very focused and aligned vision for the company. We've got very defined priorities, and we are spending a lot of time focusing on what our long-term strategy is for the company. I'm going to be talking about that later on in the meeting.

I just like to review quickly our key accomplishments for 2012. It was another record-setting year for Magna on many fronts. We had record sales, record operating income, net income, earnings per share and record cash flow. And in our Rest of World segment, which is everything outside of North America and Europe, which we classify in the Rest of the World segment, we had our 10th straight year of increase in sales. We had record dividend levels, and we've had significant improvement in our European operating results, which we've been working very hard at. And we have a plan to continue the improved operating results there, but in areas of launches, quality, delivery and profitability are all improving, and we continue to expect to see that improve.

We've also had very strong share performance. If you look at the graph here, in 2012, our share price is up 50%, which was ahead of our automotive peers at 35% and well ahead of the Dow Jones average. And if you look at our performance so far this year, again, we're at 25% share appreciation, which is ahead of our automotive peers again and ahead of the Dow.

I want to make a couple of statements about our vision statement. We have set as an objective of ours to be the preferred global supplier partner for our customers. We want to be able to produce and deliver to them the best value, I'm going to come back and define what I mean by best value later on, with innovative products and manufacturing processes and all of our plants in a world-class manufacturing levels. We want to be an employer of choice, and I'm very happy to see a lot of employees here today at the meeting and who are watching over the webcast. We want to be an ethical and responsible corporate citizen and a superior, long-term investment for our shareholders.

So what you're going to hear today is that we're well positioned to meet the objectives outlined in our vision statement and capitalize on industry opportunities. We have an extremely strong balance sheet, and we're generating excellent cash flow. We have excellent product technologies and very strong inter-operational capabilities. We are a global company. We continue to expand our global footprint. We have excellent customer relationships. We have a very strong and experienced management team with a lot of tenure. We have very engaged and motivated employees, which is based on the culture, our Employee's Charter and a lot of things we put a lot of effort into to try and make sure we're an inclusive company, which -- having everybody think about how we can continue to grow our company and make it better. And we have a very successful performance-based operating culture.

So the agenda today, Jeff Palmer will be talking about the business matters of the meeting. Vince Galifi will then review our financial results, including our Q1 results and give an update on our outlook. Jim Tobin will talk about the market and some of our new business awards. I'm going to end up with talking about our priorities. We're going to show you a few of our innovations and talk about our future product strategy.

With that, I'd like to turn it over to Jeff.

Jeffrey Owen Palmer

Thanks, Don. As indicated in the agenda that appears on the screens, after confirming the proper calling of the meeting and presence of a quorum, we will deal with the following items: the approval of the minutes of the meeting of shareholders that took place on May 10, 2012, the presentation of the 2012 annual report, the nomination and election of directors, the reappointment of Ernst & Young LLP as Magna's independent auditor and related matters and the advisory vote on Magna's approach to executive compensation. After completing these items, the meeting will be formally terminated. We will then proceed with the management presentations, after which you will have the opportunity to ask questions. Please hold any questions until then.

Before we proceed, please note that only registered holders of Magna's common shares or duly appointed proxy holders are entitled to vote in person at this meeting.

With respect to the proper calling of the meeting, I wish to confirm that notice of this meeting was mailed on April 8, 2013 to each shareholder of record as of the close of business on the record date of March 26, 2013, as well as to Magna's directors and its independent auditor. Proof of the mailing, in the form of a statutory declaration signed by an authorized representative on behalf of Computershare Trust Company of Canada, will be kept with the records of the meeting together with a copy of the notice. The statutory declaration attests to the mailing of the notice together with the management proxy circular, the annual report and the form of proxy.

We're pleased to have the assistance this morning of Computershare Trust Company of Canada, which acts as Magna's registrar and Canadian transfer agent. Sophie Arcaro and Graham Sheward of Computershare have agreed to act as scrutineers for this meeting.

The detailed scrutineers' report on actual attendance will be ready later in the meeting. However, our scrutineers' preliminary report confirms that there is a quorum of shareholders present in person or by proxy at this morning's meeting. Notice of Meeting having been duly given and a quorum being present, with your consent, Mr. Chairman, I declare this Annual Meeting of Shareholders of Magna international to be regularly called and properly constituted for the transaction of business.

The actual results of each matter voted on by shareholders at this meeting, including the number and percentage of votes for and votes withheld in respect of each nominee, will be included in the minutes of this meeting and will be publicly disclosed by Magna promptly following this meeting. Those results will reflect the final report of scrutineers, even where votes are conducted by way of a show of hands.

According to scrutineers' preliminary report of the shares represented at this meeting, a clear majority of the votes cast in respect to each of the matters to be considered, including for the nomination of each director nominee named in the management proxy circular, have been cast in favor of such matters and nominees.

I will now deal with Items 2 to 6 under the Formal Business heading on the screens. To facilitate the proceedings, we have asked Joe Cosentino and Louis Tonelli to move and second the formal motions. However, this is not meant to discourage any shareholder or proxy holder from speaking to a motion. As I indicated, we have set aside time at the end of the meeting for general questions or remarks. I therefore ask that shareholders or proxy holders limit their comments to the resolutions before the meeting during the approval of the motions. If you wish to speak to a motion, please raise your hand at that time. When recognized, proceed to one of the floor microphones and indicate your name and whether or not you are a shareholder of Magna. If you are not shareholder, please state in what capacity you are attending this meeting.

The minutes of the May 10, 2012 Annual Meeting of Shareholders are available for review by shareholders at the corporation's head office. If there are no requests to read the minutes at this meeting, may I have the motion that the minutes of the May 10, 2012 annual meeting be taken as read and approved? Mr. Cosentino?

Joseph Cosentino

I move that the minutes of the annual meeting of shareholders on May 10, 2012, be taken as read and approved.

Louis Tonelli

I second the motion.

Jeffrey Owen Palmer

Is there any discussion on the motion? I will now call for a vote on the motion that the minutes be taken as read and approved. Would all those shareholders in favor of the motion please signify by raising your hand?

[Voting]

Jeffrey Owen Palmer

Are there any shareholders opposed?

[Voting]

Jeffrey Owen Palmer

I declare the motion carried. The next item of business is the presentation of the corporation's 2012 annual report, which includes the consolidated financial statements of the corporation for the financial year ended December 31, 2012, together with the independent auditor's reports to the shareholders on the financial statements and on internal controls. As mentioned earlier, a copy of the annual report, together with notice of this meeting, was mailed to shareholders of record as of March 26, 2013. A copy of the corporation's annual report is hereby tabled for the purposes of the meeting, and additional copies are available at the shareholder registration desk in the foyer outside this room.

Apart from the presentation at this meeting of the financial statements and the independent auditor's report, no further action is required. However, I note that Ernst & Young's report on the financial statements, which is in the form of a letter dated March 7, 2013 addressed to the shareholders of Magna, is without reservation.

Michael Hanley, Ivan Chittenden, and Jennifer Rogers of Ernst & Young LLP are in attendance at the meeting today.

The next item on the agenda is the nomination and election of directors. The 9 proposed nominees are listed in the management proxy circular, which was mailed with the notice of meeting. The names of these nominees are also shown on the screens. All the nominees were previously elected by the shareholders at last year's annual meeting. The meeting is now open for nominations. I would ask each nominee who is present today to stand and face the hall if you are nominated and to remain standing until all nominees have been named. Mr. Cosentino?

Joseph Cosentino

I nominate the following persons for election as directors of the corporation: Scott Bonham, Peter Bowie, the Honorable Trevor Eyton, Peter Harder, Lady Barbara Judge, Dr. Kurt Lauk, Donald Walker, Lawrence Worrall and William Young.

Jeffrey Owen Palmer

Are there any further nominations? As no further nominations have been received, I declare the nominations closed. May I now have the motion for the election of the directors as nominated? Mr. Cosentino?

Joseph Cosentino

I move that the persons nominated to be elected as directors of the corporation to hold office until the next annual meeting or until their successors are duly elected or appointed pursuant to the provisions of the corporation's bylaws.

Louis Tonelli

I second the motion.

Jeffrey Owen Palmer

Is there any discussion on the motion? I will now call for a vote on the motion to elect the directors as nominated. All shareholders in favor, please signify by raising your hand.

[Voting]

Jeffrey Owen Palmer

Any opposed?

[Voting]

Jeffrey Owen Palmer

I declare the 9 nominees elected as directors of the corporation to hold office until the next annual meeting or until their successors are duly elected or appointed pursuant to the provisions of the corporation's bylaws.

Now that the board has been elected, may I have the motion to reappoint the independent auditor and authorize the audit committee to fix their remuneration? Mr. Cosentino?

Joseph Cosentino

I move that Ernst & Young LLP be reappointed as the independent auditor of the corporation to hold office until the conclusion of the next annual meeting or until a successor is appointed and that their remuneration as independent auditor be fixed by the audit committee.

Louis Tonelli

I second the motion.

Jeffrey Owen Palmer

Is there any discussion on the motion? I will now call for a vote on the motion to reappoint the independent auditor. All shareholders in favor, please signify by raising your hand.

[Voting]

Jeffrey Owen Palmer

Any opposed?

[Voting]

Jeffrey Owen Palmer

I declare the motion carried. The next item to be considered is the advisory resolution on Magna's approach to executive compensation as detailed in the management proxy circular mailed to shareholders in connection with this meeting. The full text of the resolution is displayed on the screens. Mr. Cosentino?

Joseph Cosentino

I move that the advisory resolution accepting Magna's approach to executive compensation as disclosed in the management proxy circular dated March 28, 2013 be approved.

Louis Tonelli

I second the motion.

Jeffrey Owen Palmer

Is there any discussion on the motion? I will now call for a vote on the advisory resolution with respect to Magna's approach to executive compensation. All shareholders in favor, please signify by raising your hand.

[Voting]

Jeffrey Owen Palmer

Any opposed?

[Voting]

Jeffrey Owen Palmer

I declare the motion carried. That completes the formal business of the meeting. I will now ask for a motion to terminate the meeting.

Joseph Cosentino

I move that the meeting be terminated.

Louis Tonelli

I second the motion.

Jeffrey Owen Palmer

All those in favor?

[Voting]

Jeffrey Owen Palmer

Opposed?

[Voting]

Jeffrey Owen Palmer

I declare the motion carried and the meeting terminated.

Please note that the management presentations which follow and any answers or comments made by management during the Q&A period are subject to and expressly qualified by the cautionary disclaimers that are set out in our press releases and regulatory filings. In particular, please refer to our most current management's discussion and analysis of results of operations and financial position, our annual information form and our annual report on Form 40-F as replaced or updated by any of our subsequent regulatory filings. These documents, the management proxy circular for this meeting and various other corporate governance documents and securities filings are available for review at Magna's website at magna.com.

I would now like to call on Vince Galifi, Magna's CFO. Vince?

Vincent J. Galifi

Thanks, Jeff. Hello, everyone. Today, I will highlight our record investment spending in 2012 and other uses of cash, review financial results for last year, update you on another record quarter, our first quarter ended March 31, 2013, and then I will discuss our priorities for capital deployment and our view on capital structure. Finally, I will take you through our revised outlook for 2013.

Please note that all management presentations today will be in U.S. dollars. During 2012, we had a record level of investment spending totaling $1.9 billion. Our fixed asset spending hit an all-time high of $1.3 billion. That's up from the previous record level in 2011. This increased fixed asset spending mainly reflects our growing investment in a number of new facilities just built or under construction around the world. And 24% of that $1.3 billion was invested in facilities in BRIC countries, another year of increased investment in these countries.

In addition to investment for organic growth, we have recently made key acquisitions amounting to about $525 million. We acquired BDW, a business with high-pressure aluminum casting capabilities with operations in Germany, Poland and Hungary. BDW was recently given BMW's Supplier Innovation Award for outstanding achievements in innovation and development. BDW complements our metalforming capabilities and provides further opportunities to capitalize on the trend towards vehicle mass reduction.

In 2012, we also acquired 2 automotive pump companies, ixetic, which supplies vacuum, engine, and transmission pumps with locations in Germany, Bulgaria and China, as well as the remaining interest in STT. STT supplies transmission and engine-related oil pumps in North America. These 2 acquisitions strengthen our position in the global automotive pump market, a market that is expected to further benefit from the trends toward fuel efficiency.

Lastly, we acquired the controlling interest in Magna E-Car during 2012. We believe we stand to benefit from the continued trends towards electrification of vehicle-powered trends and hybrid vehicle growth as a result of this acquisition.

In addition to the increased investment spending, we have been putting our balance sheet to use to grow dividends to shareholders. Following 3 consecutive dividend increases in 2010, we have been increasing the dividend on an annual basis in the fourth quarter of each year. This is consistent with our objective of growing dividends over time.

Lastly, we have bought back 13.7 million shares since December 2010 and have room under our normal course issuer bid expiring in November of this year to purchase an additional 10 million common shares.

Before reviewing the financials, I want to mention the meaningful improvement we showed in our results in Europe in the past year. The results reflected a turnaround in certain underperformers, the launch of new business and new facilities, as well as the achievement of some price increases from our customers. We expect further improvements in 2013 and beyond in our Europe operations.

Turning now to our financial results for 2012. You're going to hear me talk a lot about new records because we really had a good year. Vehicle production volumes improved in North America and declined in Europe. For the year, North American vehicle production rose 18% while Western European production declined 7%, each as compared to 2011. Our consolidated sales for 2012 increased 7% to a record $30.8 billion. The sales growth largely reflects increased vehicle production in North America, the launch of new programs around the world and additional sales related to acquisitions completed.

We posted record earnings per share from operations, excluding unusual items, of $5.36 for 2012 compared to $4.53 for 2011. We also generated record operating cash flow of more than $2.1 billion. Continued strong cash flow generation has allowed us to maintain our financial flexibility and strong balance sheet and grow our dividend. We also generated improved returns for the third consecutive year, just shy of 20% return on funds employed in 2012.

I'm now going to review the first quarter ended March 31, 2013. Vehicle production increased 1% in North America to 4 million units. European vehicle production declined 9% in the first quarter to 4.8 million units. Beginning this quarter, we will report total European light vehicle production rather than just Western Europe. This change reflects our growing business in Eastern Europe. Consolidated sales increased 9% to a record $8.4 billion. This was largely due to the launch of new programs around the world, additional sales related to acquisitions completed and higher tooling sales. These were partially offset by lower production on certain programs and programs that ended production.

Earnings per share for the first quarter were $1.59. That's up 9% from $1.46 in the first quarter of 2012, excluding unusual items. We generated operating cash flow of $607 million in the first quarter of 2013. That's up 14% from the first quarter of 2012. And we continue to generate strong return on funds employed, reaching 20.4% in the first quarter of 2013.

Despite our heavy investments in our business recently, our balance sheet remains strong with $1.2 billion of cash or $864 million cash net of debt. In addition, we have available committed credit of $2.1 billion. Our ample liquidity allows us to continue to invest for the future.

Next, I'd like to talk to you about uses of cash in our balance sheet. We intend to continue to deploy capital in 3 broad areas. First, organically, to support growth initiatives in our traditional markets and especially in emerging and developing markets. In addition, we are investing in research and development for new technologies. Second, acquisitions that complement our current technologies, allow us to expand to new markets or assist us in broadening our customer base. And lastly, we intend to continue to return capital to shareholders both through growing dividends and through the repurchase of shares. Between now and the expiry of our current normal course issuer bid in November of this year, we intend to repurchase the remaining shares available under the bid. At current prices, this amounts to over $600 million.

We have a strong capital structure, and we expect to remain conservative given the cyclicality of the industry and our desire to maintain flexibility to grow our business. We also want to maintain high credit ratings to ensure continued access to debt markets. However, over time, as we continue to deploy capital, our capital structure will evolve, and we will move to a more appropriate capital structure for our business.

Next, our revised 2013 outlook. Our outlook is built on key foreign exchange rates at approximate current rates for the remainder of 2013, light vehicle production of 15.9 million units in North America and 18.4 million units in Europe. Total sales are now expected to be in the range of $32.6 billion to $34 billion for 2013, and that's up from our previous outlook. This compares to $30.8 billion in 2012.

We expect our operating margin, excluding unusual items and $158 million in amortization associated with the acquisition of E-Car, to be in the mid to high 5% range for 2013 compared to 5.5% for 2012. And capital spending is expected to be approximately $1.4 billion for 2013 versus $1.3 billion in 2012. This investment in fixed assets includes support for new and replacement business in our traditional markets and expansion in high-growth regions.

Let me now turn to some of the vehicle launches that are important for us this year. We're launching cars and a number of exciting new high-content vehicles in North America. These include the Chevrolet Silverado, Jeep Cherokee, Honda Accord, Nissan Pathfinder, Ford Fusion and Nissan Rogue. Vehicle launches ramping up in Europe in 2013 with high Magna content include the MINI Paceman; the Skoda Octavia; Ford Transit; Ford Kuga; Mercedes-Benz CLA and Volkswagen Jetta.

Launches ramping up in other regions in 2013 with high Magna content include the Fiat Viaggio, Audi Q3 and Qoros 3, all in China, and the Chevy Onix in South America.

In summary, we have been utilizing our balance sheet through a continued investment spending to expand our business and footprint globally and by returning capital to shareholders. We continue to be a strong performer in terms of generating earnings, cash flow and appropriate levels of return on our investments.

And while our capital structure will evolve over time, we will continue to maintain a strong balance sheet to support our growth. These elements lead us very well positioned for long-term growth.

Thank you. And now let me introduce Jim Tobin, our Chief Marketing Officer. Jim?

James J. Tobin

Thank you, Vince, and hello, everyone. As Don and Vince indicated, this is a very exciting time for the industry overall, as well as for Magna. Let's start with global production.

Following the significant decline in 2009, global vehicle production has bounced back, and the industry is expected to experience continued strong growth. In total, global production was 81.5 million units in 2012 and is expected to grow to more than 103 million units by 2018. With strong production growth, it's important to note 2 things. One is the majority of that growth is going to take place in developing markets like China, Brazil, Russia and India, and we have activity in all those markets which help support our growth. Number two, by 2018, the top 20 platforms are expected to make up 37 million units compared to approximately 31 million units in 2012.

We continue to improve our footprint to support these global platforms and to capitalize on this trend in our traditional markets, as well as the developing markets.

Looking specifically at our traditional markets, in North America, we continue to capitalize on the rebound in production after 2009, supporting our key Detroit 3 customers and continuing to benefit on the localization with the Japanese, Korean and German OEMs.

In Western Europe, we continue to respond to the shifts in the manufacturing footprints of our key customers and anticipate the market to stabilize in the next few years.

Now let's take a closer look at some of the developing markets. First, with China. The Chinese market, already the largest, continues to experience significant growth. We are well represented in China across our capabilities and have new greenfield locations underway to support the 25 manufacturing facilities already established. We expect to more than double sales in China from now through 2015.

The South American market is also expecting considerable growth in vehicle production, and we have a lot of activity taking place there, more specifically in Brazil, where we have a strong position in closures, seating and metalforming. And we are now seeing steady growth in our mirrors business since adding this capability in the region.

Our investments in Russia, which started in 2008, has positioned us well to support the localization of vehicle manufacturing, service OEMs like Volkswagen, Hyundai, Nissan, GM and Ford supplying metalforming, interiors, exteriors and seating.

We continue to look at a very focused product strategy for the vehicle segments to be built in India. With already established engineering, as well as production with powertrain enclosures, we are now ramping up metalforming plants in the areas of Pune and Chennai, which includes our first major full frame line in Asia supplying Mahindra & Mahindra. In addition, we are growing with seating and expanding our footprint in the northwestern part of the country near [indiscernible].

Summing up the developing markets. It's expected that these markets in the future will produce, in total, over 57% of the world's production. Therefore, our strategy is to continue to invest in key areas of these markets to support not only our traditional customers but also to continue to grow with the Asian-based OEMs and leverage the continued implementation of global platforms.

From a customer standpoint, I'd like to highlight 3 key advantages that Magna has over the competition. The first is our significant coverage and knowledge across multiple product areas. This is a key differentiator for Magna. We use it to our advantage to have a better understanding of the overall vehicle architecture and uses in strategy deployment. Leveraging our diversified product capability and having cross group coordination helps us in delivering affordable solutions to our customers.

A great example is the partnership we have with Chrysler, where we work jointly on the front end module for the newly launched RAM truck. Historically, we would only supply the front fascia. However, on the new RAM, we have several different facilities involved in supporting a complete module, an increasing trend in the industry.

We have Magna facilities supplying the metal crossmember, headlamps, Active Grille Shutter, fascia and other associated components which we assemble and sequence into the Chrysler assembly plant. This increases our content per vehicle while assisting our customers in reducing complexity in their so many plants and increasing throughput.

This leads to the second Magna advantage, which is taking our combined customer knowledge base and using it to support our global growth. This helps us ensure we are making the appropriate investments to support our customers, whether it is a stand-alone facility of one of our operating units or multiple operating units supplying the customer out of a single facility, like we are doing in many areas of the world. A good example would be our combined facility in Russia to support Volkswagen, supplying seats, interiors and exteriors all under one roof, optimizing our investment.

The third Magna advantage is the added value we bring to our global customers through our wide range of capabilities, from complete vehicle development and system-level engineering, component and subsystem production to complete vehicle production. By engaging our experience in early concept and design, our customers can experience optimized engineering and production solutions for their products. A great example was with PACCAR and their 2012 introduction of new Kenworth and Peterbilt trucks. Through early engagement in the concept and design and with manufacturing feasibility integrated into the program from the start, Magna provided a world-class product solution optimized for manufacturing and assembly.

What started with a multimillion dollar engineering contract, Magna supplied at the end with a new customer a lightweight aluminum cab in addition to interior trim, body exterior and seating with the total annual sales exceeding $200 million.

Next, I want to comment on some new business awards we have received from our customers around the world. First is our steady growth in the hot stamping process. We continue to support all our global customers with this technology, adding new business with Honda and Hyundai in both the North American and the China market.

Second, on Nissan future-generation pickup truck, we will be supplying the full frame in North America and the transfer case on various Nissan trucks in multiple locations. We were also awarded interiors business with Jaguar Land Rover under a future full-sized luxury vehicle in the U.K.

And lastly, with General Motors, on their new future full-sized luxury vehicle, we will be supplying lightweight solutions with aluminum castings for key areas of the body architecture and transfer cases for both the North American and the China market. Additionally, we will be supplying the complete seats -- seat structure and mechanisms on the future Acadia, Cadillac SRX and Enclave, generating $400 million in annual sales. As you can see, this is an area that we continue to increase year-over-year as we execute our growth strategies.

Before I conclude, I would like to thank our global customers for recognizing our contributions in the area of technology, quality, launch and delivery, all critical factors in our efforts to achieve consistent, world-class manufacturing levels globally in all our divisions.

Although I don't have enough time to present all of them, I did want to highlight just a few, as Vince has indicated: the BMW Innovation Award, Ford's Silver World Excellence Award, Volvo's Quality Award of Excellence, Nissan's Quality Award, Honda's Service Parts Supplier Award and GM's Supplier Quality Excellence Award. Job well done to all the Magna employees for all their efforts and contributions.

I would like to close by reiterating the growth we are seeing in the global automotive industry offers a tremendous amount of opportunity for Magna. That is why we continue to expand our global reach in sales, engineering, program management and manufacturing to align ourselves with our customers. And then when we combine that with our deep capabilities, great employees, innovative products and processes and world-class manufacturing, Magna is poised to continue to provide value to our customers, our shareholders and our employees.

I'd like now to turn it back over to Don. Thank you.

Donald James Walker

Thanks, Jim. So let me start by stating the obvious. For Magna to survive and grow over the long term, we need to continue to win orders from our customers. And to do that, we need to be providing them with the best value. And the way we define best value in technical terms: It's the function of what we're providing them divided by the cost. And for a commodity, we need to be competitive on cost, which obviously we're focused on doing. But what we really want to be doing, and Jim just gave some excellent examples, is use our process and product ingenuity, our tooling expertise, our engineering expertise to design bigger parts, systems in the vehicle that will do the job, lighter weight, more functionality, less energy to provide more functionality. And our customers are happy to give us the orders if we can provide them that because it's a win-win.

So how do we do that? We have 3 key priorities. I'm going to touch on each one of them pretty briefly. First is world-class manufacturing. Second one is our leadership development system. And then we're going to talk and show you a few of our innovations.

I'm going to start with world-class manufacturing, and that can mean a lot of things to a lot of different people. We have a very clear definition of what world-class manufacturing means. It starts with innovation. So we have an innovation development process that basically is capturing any ideas we can get from anywhere, universe, these employees, our customers. And then we go through a gate process to say, can we commercialize that? Does it solve problems for our customers? Let's focus people and money on getting the best ideas into the market. Once we get it so it's a salable product, then it goes into our program management or our PDP process. Again, it's a gate review system that says once we've received an order, how do we optimize the design? How do we design the best tooling? Then we can produce the part and we track our cost through that process, we know our profitability levels.

So it's a very disciplined approach to make sure we have flawless launches It incorporates all of our quality systems. It makes sure that we have designed and optimized the cost and functionality of our tooling and our capital equipment. So we can have continues improvement in the future. We do make buy decisions based on understanding our costs through our world-class manufacturing and then selecting suppliers to ourselves that our cost competitive and also give us quality and delivery and are financially stable.

Look at logistics, materials management, racking, tonnage, cubing out of trucks, everything through the supply chain to us, to our plants and to our customer to optimize the cost and material handling. And ultimately, it's in manufacturing. It's in all of our plants. We have a system called MAFACT, Magna Factory Concept. And a lot of people would think, well, world-class manufacturing is in the plant. It's certainly the plant, but its everything.

So we have been putting a lot of effort here, and I am very passionate about this. And I could talk about it for 8 hours. And I see, we have John Farrell here, Frank Seguin, Tom Skudutis, Marc Neeb. Any one of them could come up, any of our senior management, because we all believe this and we're going to get there. So we haven't got all of our plans to world-class manufacturing levels yet, but we know where we're going. We have a vision of how to get there. We're sharing best practices, and we are seeing and we're going to continue see significant operating leverage as we get all of our plants at this level.

And you can see in this next slide, as we spend our $1.4 billion in capital -- and a lot of that is on new program capital and launching our new plants. You can see, we have 37 here we're launching around the world between 2012 and 2015. We need to get these right in our launches, competitive and make money.

So that's how we define world-class manufacturing. So why are we so passionate? Why do we have so much energy around it? Basically, we need to know we've got the best price. We need to know we're competitive. So when we're quoting, we know what to quote. We need to make sure we have flawless launches because that's where our customers expect and that's how we also get our profits to the bottom line. And we need to be optimizing the design and the cost of things like tooling, capital, minimizing our launch cost, making sure we're getting the best prices on purchase components in our production facilities. If we do all this right, we know our cost. We use something called activity-based cost, and so we know what things cost. We know we're going to be profitable when we quote business, and we know we're going to hit our return on funds-employed targets. So the result basically is strengthening. What we want to be known as is a key part of the Magna brand in the eyes of our customer. And ultimately, it's the best way for us to grow our profitability and our sales growth and our bottom line growth.

Let me just touch very briefly on our leadership development system. Magna has a very unique decentralized entrepreneurial culture. That what's made Magna great over the years. We're known as being fast, hard-working and very customer-focused. So I believe we have the right structure. We have great people in the company. We put a formal system in place because the challenge we have is to identify where the people are in our company that we can develop, we can grow into senior management. So we can launch these facilities all around the world, and we can handle the spending of the $1.4 billion on new equipment every year. So it's a succession planning tool inside the company. But probably just as important, we can attract, keep and develop people so they can see they have a career path within Magna. We're a huge global company, and this is going to be critical to our success in the future.

I'm going to talk about innovation very briefly. Innovation, in our minds, is -- can be product innovation, something that you can see, it's a functional part in a vehicle. It can be process innovation. And Jim talked about a couple the -- that the contracts we landed, a lot of that is through process innovation and new materials.

So rather than me talk about it, because you've probably heard me talk enough, I'd like to introduce Swamy Kotagiri, our Executive Vice President of Corporate Engineering and Research and Development. Swamy has been with us for over 12 years and, most recently, has been heading the engineering portion of our Cosma systems. And Swamy, if you can come up on stage here. I'll ask Swamy just to go through a short introduction of what we're doing for innovation. We could talk all day. And then we're going to have a couple of examples for you. Swamy?

Seetarama Kotagiri

Thank you, Don. Good morning, everybody. First of all, it's my pleasure and privilege to be representing the technical engineering, research and development committee of Magna. What I'd like to do is just go over the basic framework, how we look at innovation. And then we get into some examples, and we have the team presenting some of the projects here.

The first point, as we look through the industry, we're at a point where industry -- the automotive industry is changing. And I think it has been mentioned several times, we are at very interesting times. What we try to understand here is the mega trends overall in terms of the buying habits of the people, which is the demographics; the macroeconomics in terms of urbanization, in some cases, and what does it mean; you have city centers where your conventional vehicles will not be allowed, so the architecture changes, the way these vehicles will be driven, the way these vehicles will be designed will be different.

We talked a little bit about globalization. Same vehicle, built in several countries, with different types of materials but has the basic architecture, so you need to have the coordination and understanding of the vehicle architecture. We talk about the other factors, like the miles per gallon. We talked about fuel efficiency. We talked about environment, how to make manufacturing processes more energy-efficient. And obviously, also the consumer requirements in terms of comfort and convenience and what is expected as we go forward.

We take all these things into account and try to broadly categorize the innovation or the projects that we have across groups into smarter, cleaner, safer or lighter. Anything that is categorized into the smarter is the comfort and convenience to make the drive pleasurable, both for the passenger and the driver. When we talk about cleaner, we're talking about reducing emissions, optimizing the power requirements for manufacturing. And safer and lighter are both driven by the legislative requirements, whether it's the miles per gallon, whether it's the emissions reduction. At the same time, in conjunction, we want the vehicle to be safer for people that are using them. Across the bottom, when you talk about innovation, at the end of the day, it has to be affordable. It has to be able to be commercialized. So that factor kind of goes across through all of the categories here.

This is a famous and well-known S curve of innovation. The intent of showing this here is to keep an eye on the product, process and materials that we use across to see where it stands in the S curve. Is it something that is emerging right now and will have an exponential growth? Or is it something that has gone through a significant growth and is in the plateau?

And as we go through this process, there is always a constant change. There is technologies or whether it's in product or price or materials that is coming that will disrupt what we have today and will change the market.

If you take that into consideration, we need to have a good balance. When we talk about world-class manufacturing, as Don mentioned, we look at the analysis of the whole cycle, whether it be design or manufacturing, whether its materials, and understand what is the bottleneck. So as we go through this, we are constantly improving, which we call the incremental improvements or the incremental R&D projects that are absolutely essential to become the world-class manufacturing and to retain the edge that we had in the market.

But at the same time, we need to keep an eye on what's emerging because of the trends that are happening in the industry. So that is the game changer that will get us to the next level. So it's a good balance between the 2 that's going to keep us as an innovative company.

I think this was mentioned, a clear definition of what innovation as a term means to us is having an idea is one thing, but to be able to commercialize it and bring it into production is really the key of innovation.

Last year, we talked about a few projects. I think we saw awards in casting process in terms of the active aero grille and so on. So in the team, today, we have 4 projects that will be mentioned here.

So with that, I would like to introduce Stacy Burrows [ph] to talk about the first project. Thank you.

Unknown Executive

Thank you, Swamy. Hello, my name is Stacy Burrows [ph], and I work wit the Magna Closures group. I am that Business Development Manager for our Engineered Glass division. I've been in the automotive industry for 21 years, and I've been with Magna for the past 9. And I'm here today to showcase our new technology called Sun Blade.

We all love when we get a new vehicle, especially because we can't wait to get inside the vehicle and try out some of the new features. Well, Sun Blade is truly one of those features. It's not only going to excite the vehicle owner, but it will differentiate the vehicle with this truly innovative window technology.

Sun Blade is a glass module that uses a coiled films between 2 glass panels. When a voltage is applied, the film unrolls to cover the glass. When the voltage is removed, the film retracts. Magna has taken this base technology to the next level by developing a truly unique window shade within a class module. We've done this using bonding and encapsulation processes that we've been doing for over 35 years. This product offers customers a solution for shading the glass when the sun roof is in an open, closed and tilted position. It also allows individual shading for the front and rear rows of the vehicle. This system is completely silent and functions at a much faster speed than other competing technologies. This class module provides extra insulation, which improves the vehicle cabin temperature, and it also offers an increase in headroom over traditional shade systems.

Sun blade will revolutionize how we use windows and glass panels across many industries. It's a perfect fit for a global company with its eye on growth and market diversification.

Now I'd like to introduce my colleague, Jason Davis.

Unknown Executive

Thank you, Stacy. Hello. As Stacy mentioned, my name is Jason Davis. I have 10 years of experience in automotive product design, including the last year as a product engineering specialist for Magna Seatings Research and Development group. I am proud to introduce our new Safety View innovation that we believe will be a breakthrough in automotive seating.

Safety View is a rear-seat hydro strength system that automatically deploys upward when the occupant sits into the seat. This passive action ensures that the hydro strength is in the best location to minimize neck injuries in the case of a rear-impact collision. Additionally, when the occupant is no longer present, the hydro strength automatically returns down to its still position ensuring best-in-class rear visibility for the driver. These improvements in safety and visibility differentiate Magna's Safety View innovation from the competition.

Magna has resolved consumer needs through this creative execution by addressing relevant concerns, which includes improving safety and visibility. Safety View has a potential 30-million vehicle market where this innovation could be introduced in the second and third row. We are pleased to say that multiple OEMs have expressed interest in being first-to-market with this breakthrough technology. We are confident Safety View can deliver value to customers and our customers, bringing pride to employees who continue to innovate.

Thank you. And next, I would like to introduce my colleague, Greg Highland [ph].

Unknown Executive

Thank you, Jason. My name is Greg Highland [ph], and I work for Magna exteriors and interiors. I'm the Director of Business Development for Exteriors and Modules, and I'm proud to say this is my 29th year with Magna. The technology I'm going to highlight is Magna's new composite rear step bumper. The key to the success of this product was the development of our resistive implant welding process. The process fuses 2 plastic components together by passing electrical current through a screen wire mesh while applying pressure. The end result is a seamless interface where the 2 materials become 1. The bumper consist of thermal plastic step section which is fused to a thermoplastic backplate, then the painted or chrome-plated plastic covers are mechanically fastened to the bumper to give the vehicle manufacturer the look they desire.

Let me tell you about the benefits of the composite rear bumper. There is more than 10-pound weight savings compared to the current chrome steel bumpers. It is a corrosion-resistant product. Bumper corrosion has, in a long time, end customer dissatisfied and the significant warranty cost to the vehicle manufacturers. And in the event of a low-speed crash, our bumper will absorb more impact energy without permanent damage. If the impact is significant enough to damage the covers, the covers can be replaced without replacing the entire bumper. The composite rear bumper has created a new product area for Magna while providing a better solution for the vehicle manufacturers and the vehicle customer.

Next, I'd like to introduce my colleague, Joe Mueller [ph].

Unknown Executive

Thank you, Greg. Hello, my name is Joe Mueller [ph], and I represent Magna Powertrain. I worked in the Magna family since 1991 when I started as a co-op student, and my current role is Senior Manager of Engineering Product Definition for the Driveline Systems group. I'm here today to showcase Magna Powertrain's innovative new green transfer case, the next-generation, highly efficient all-wheel drive system that actively manages torque flow to the secondary axle.

The green transfer case will be the first-to-market to utilize drive friction clutch technology, reducing drive losses and improving traction while being preemptive and seamless to the driver. It will contribute to the OEM's ability to meet future fuel economy and CO2 emissions regulations, and its simplified design prevents a more cost-effective 4-wheel drive solution.

The green transfer case was developed through our structured innovation and development process, utilizing cross-functional expertise of product development teams located in Troy, Michigan; Lannach, Austria; and Poonang, India. While it is not in production yet, we expect with the positive discussion that we're having with our customers that we could see some significant business in this area.

This innovation response to the market demand to increase fuel economy, to Powertrain efficiency and strengthens our position as of the world leader in 4-wheel drive systems. As we further direct our innovations to respond to this market demand, we prove our ability to deliver solutions to our customers most challenging requirements.

Thank you.

Donald James Walker

Well, I'd like to thank the presenters. And Stacy, you didn't actually run the model. So before the meeting is over, I want you to go over and run the model. It's quite exciting to see that, the Sun Blade.

As CEO, I look at my job as charting the course of the future for the company. And if you look at a couple of charts, I think everybody is pretty familiar with Magna. But if you look at the size of Magna, 315 production facilities, and you can see where they're located there. We are a global company, 121,000 people work in the company and a lot of engineering or sales or R&D offices.

If you look at the next slide, it shows relative there, customer split with their key customers. We have a lot of smaller customers who aren't shown there. But we have a good split of business with some very strong growing global OEMs. And if you look, finally, our product area, and Jim touched on this so I won't spend a lot of time here, we have a lot of different products. We're more diversified on a product basis than any other supplier in the industry today. And if you look at the capability of Magna's tire in designing and manufacturing complete vehicles by sharing our ideas there, you can see that we can continue to win business and major modules that Jim had talked about.

We've been spending a lot of time over the last year and have been very engaged with the board, quite frankly, on where we're going to be in the future. We call it our product portfolio road map. But we're trying to assess where do we have the strength in our products, in our technologies, where are we geographically so we can grow in some of the -- with some of the emerging markets, but also be able to support our customers when they have global programs. Because if we can get business everywhere, we win them back in our core markets. So if we're not global, we can't win the business for any of the locations. And which customers are the most open to our new ideas who have a win-win point of view, so we make money, they make money; we have a handshake, and we're really working on future concepts.

So we -- I spent a lot of time looking at what is the vehicle of the future going to look like? And Swamy talked about some of the mega trends. And the trends are going to be coming from a lot of different areas: consumer behavior, regulatory environment. So we want to understand what's the vehicle look like and where do our products and processes fit within that vehicle 7 to 15 years down the road. And then we're going to emphasize on those products that have the greatest opportunity for growth and sales and profitability. And that's where we'll put our money when we're looking at doing R&D work, when we're looking at our acquisitions, when we're spending capital. So we want to be focused on areas that we can growing.

So we want to understand the opportunities and the reach of those product areas. And then, as I say, we're going to be focusing our investments, specifically in R&D, on the products that we think have the biggest opportunity.

So we've been preparing a 7-year strategy cash plan that also includes what are we going to do with the balance sheet. And Vince talked about how we're going to be using our cash to the best benefit of all of our stakeholders, for our customers, for our employees and also for the shareholders.

So we want to be known ultimately as the responsive go-to supplier by our customers around the world. We want them to understand we are great in manufacturing. We have expertise in tooling and engineering that can deliver the best value. We want to be sharing best practices. So if we have an issue somewhere, we solve it. And it's a learning organization, so we transport that information around the world through all of our operations.

We want to be a leader in innovation. We're going to be -- we talked about a few innovations today. We're going to have an Investor Day in November, and we're going to focus a lot of that on new product innovations. It's always a fine line what innovations we show because our competitor is also looking at it. But we do have a lot of activity, and we've really ramped that up in the last year or 2.

We want to be a leader in sustainability in our manufacturing and also the products we produced. And ultimately, we want to be a company where all of our employees are proud to be associated with the company. And we want to be acting honestly, ethically and with integrity in everything we do.

So in closing, I would like to thank our customers for continuing to have faith in us and giving us new awards. I would to thank our employees, and there's lots of employees here today. We'll be having a session afterwards for their hard work and their ingenuity because we're all part of the same family, we're all part of the same company. And ultimately, our shareholders for having faith in us. And hopefully, we can continue to deliver good results like we have in the past. Because together, we all share in the success of the company going forward.

I'd like to thank the Board of Directors. We have a number of new members at the Board of Directors, and we've been very engaged over the past year. And looking at this long-term strategy, we've had a lot of issues to deal with over the past number of years. And we're really focused on where we're taking the company in the future.

I'd like to take the opportunity to thank Frank Stronach, who stepped down from the board this year. Frank's got a lot of new entrepreneurial ideas he is pursuing, but he spent over 50 years building this company and really was the architect of our culture, of our structure, of a lot of things. And a lot of thanks has to go to Frank for everything he did to build this company.

I'd also like to, I guess, close by saying -- I started off by saying I'm very excited. I think we have a very bright future for the company. If we can execute on world-class manufacturing, on innovation and look after the people and do succession planning for the future, and we combine that with a good long-term product strategy, I think we're an unstoppable company.

So with that, I'd like to open the floor to any questions anybody may have.

Question-and-Answer Session

Donald James Walker

Okay. If you have a question, you can either go up to a mic or just put your hand up. Go ahead.

Unknown Attendee

Does the slowing pace of growth in China concern you at all?

Donald James Walker

Interesting discussion, we were discussing that at the board yesterday. It's always interesting when somebody says Chinese is slowing. I think China will continue to grow at about 8%. I'd note just Peter Harder and I were just at a launch with a senior person from China. You can't tell what they want to do. But I would say their strategy to be at 8%, not 10%, not 6%. And they have lots of reasons for that. So if they continue to grow at 8%, that's pretty healthy growth. So we think there's huge opportunities in China in our industry, and there's huge opportunity for Magna because we're relatively late getting there. As you can see in the slide, we're going to be about $2 billion of sales. We can grow a lot faster over there. So I think it's a great place to do business, and it's going to continue to be a power in the world. So if they can continue 8%, I think it's quite healthy. I hope everybody else can get to that level one day.

Unknown Attendee

With all the talk about government regulation around the world in terms of improving future fuel efficiency standards, how well is Magna positioned to capture on these trends?

Donald James Walker

Well, I think it's a trend that's not going to stop. If you look at all the talk about global warming in the past, and you don't hear a lot a lot about it, but it's certainly an ongoing concern in fuel efficiency. So for sure, the demand for better fuel economy is going to continue to go up everywhere in the world. If you look -- and Swamy talked about some of the mega trends. We are very focused in a number of years. Lighter weight is a big help to get better fuel economy. If you look at the electrification of some our components, we can -- especially in the Powertrain area, we can be using less power when we're driving things through the Powertrain, productive new innovation, which will use less power. So there's lots of opportunities to develop new products, get lighter weight to help our customers meet those demands. And the good news is whenever there's a change required, the most innovative will win the business and will grow the company. So that's why we're focused on exactly what Swamy was talking about to try and help our customers meet the fuel economy improvements that are going to be demanded of the governance, as well as the end consumer. I don't think that electrification or electric vehicles is the be-all and end-all. But I think the hybrid vehicles and fuel efficiency and better more fuel-efficient powertrains, the combination of solutions there are all opportunities for us to grow.

Unknown Attendee

With the stock repurchase that's happening in -- by November at this year, will it or how will it affect the employee 401(k) portfolios?

Donald James Walker

With the stock repurchase that Vince talked about?

Unknown Attendee

Yes.

Donald James Walker

Do you want to answer that?

Vincent J. Galifi

Sure. The stock repurchase is actually good for our employees 401(k) and RRSP plans. As we continue to buy stock out of the market and there's fewer stocks available, that means earnings per share for the outstanding shares increase, which should result in higher stock price. So that's good for everyone.

Donald James Walker

And there's -- we had a long debate at the board meeting about this yesterday as well. We want to be -- we want to be a growth company. So we are looking at spending $1.4 billion in capital. We're looking at mergers and acquisitions. But we do -- we are generating a lot of cash. So I think it's -- this is a win-win for the shareholders, and all employees are shareholders as well. We're not going to risk of the company by getting too levered, but I certainly think this was a good decision to announce the completing our buyback.

Unknown Attendee

Do you see the North American automotive market remaining as strong as it has been over the past few years?

Donald James Walker

Well, I wish I had a crystal ball. I wouldn't have guessed back in '06 that we're going to go down as low as we did, and I'm surprised pleasantly that we've come up as fast as we have. However, if you look at the demand for vehicles, which is driven by a lot of different things, looking at demographics, the aged of the fleet, there's a lot of data to support that the levels right now are sustainable over the long term. So I think the North American market, barring some major problem with the economy of the world, I think it will maintain pretty healthy levels. And quite frankly, for a company like Magna and the industry, it's better to have continuous slow growth like we're having rather than wild swings up and down. Part of the question will be, who has -- which customers have what percentage of the market. And we look at that very carefully as well because we want to be -- obviously, have a high content with customers that are selling well. So I think, I guess, the simple answer is -- Jim showed a slide that showed we're going to be going from where we are today to about I think it was 103 million vehicles per year produced in 2018. It's a staggering number when you think about it. 103 million vehicles are built somewhere every year so -- and that's a pretty defendable number. So North America, I think we'll stay where we are. As a percentage of the total production, it will go down because of the emerging markets. But it's still a very healthy industry to be in, in North America. I think at some point in time, Europe will come back again once they get through some of their problems. And we're going to continue to see other growth. But we're very big North America. We're almost twice as big as the next biggest supplier, and I think it's a good opportunity for us to continue to grow our business profitably. And we need to do that for lots of reasons, the least of which is to make sure we're supporting the employee base that we have here; the same thing in Europe.

Any other questions? Well, we've probably gone on long enough. Just before I wrap up...

Unknown Attendee

Excuse me, we were talking about investing in India, in China, in other worlds. But what about the North America, is there anymore investing in North America?

Donald James Walker

Good question because we get asked that a lot. And we're looking at where do we deploy our capital, where do we spend our money around the world? And I know there's a lot of people here from Magna who are working in Canada and the United States. If I take Canada as an example because we are in Canada, between 2010 and 2013, we're spending about $500 million of new capital. So we're not increasing the number of divisions we have necessarily because we already have a good footprint here. But we are -- we'd only spend money if we win business and it's got to be profitable business. But that's a good indication that we are continuing to win business in Canada, same in the U.S. So we're going to support the growth in Canada, the U.S. and Europe. But we need to also be taken advantage of the growth in emerging markets because it's a good business to be in, and we also need to be able to support global platform, as I said early. So as we talk about the emerging growth, we're not forgetting about our core markets because that's where we can continue to make good returns, and it's important to support our company there.

Okay. There's no other questions. I guess, I don't want to end in a sour note. I just want to express my sympathy and condolences. Royden Richardson, who was on the board for many years, I think a lot of people knew him, was in an accident last weekend and died. His funeral is happening right now. I think that's why some of the people have gone there. So I just want to express my condolences to his family. He was a great supporter of Magna and a great person.

So I appreciate everybody just spending the time coming out here today. As I said, I think we got a great future ahead of us. We're going to be having the press conference the next quarter coming up, I guess, as soon as we can get organized there. Thanks for everybody's time. Look forward to another great year, and thanks for the attendance today.

Oh, Stacy, just before you leave, just go take a look at this Sun Blade because It's quite exciting. It's soon to be in one of your future cars. And I hope it's going to work out before I put you on the spot. Cycle it a few times, make sure it works. Okay. Thank you.

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