Magna International Inc (MGA) 2007 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

Welcome to the Magna International first-quarter 2007 results conference call.

During the presentation, all participants will be in a listen-only mode.

Afterwards, we will conduct a question-and-answer session.

(Operator Instructions).

As a reminder, this conference is being recorded, Friday, May 11, 2007.

I would now like to turn the conference over to Mr.

Vincent Galifi, Executive Vice President and Chief Financial Officer.

Please go ahead, sir.

Good morning and welcome to our first-quarter 2007 conference call.

Joining me here in Aurora is Don Walker, our Co-CEO, and joining me from Detroit today is Mark Hogan, Magna's President.

On Wednesday, our Board of Directors met and approved our financial results for the first quarter ended March 31, 2007.

Our board also declared a quarterly dividend of $0.24 per share payable on June 15, 2007 to shareholders of record on May 31, 2007.

This dividend has been determined on the basis of the dividend formula we announced last month.

We issued a press release yesterday for the first quarter of 2007.

You will the find the press release, today's conference call webcast and a slide presentation to go along with the call all in the Investor Relations section of our Web site at www.magna.com.

Also yesterday, we held a fairly long annual shareholders meeting in Toronto, which I'm sure many of you attended in person or via or webcast.

As a result, we will keep our formal comments today brief, allowing us more time for questions.

This morning, I will briefly comment on the proposed transaction with Russian Machines that we also announced yesterday.

I will then review our financial results for the first quarter and update our outlook for 2007.

Upon completion of our formal remarks, we will be pleased to answer any questions.

Let me first say that we reported solid results for the first quarter of 2007.

The decline in our North American segment results is largely related to lower production levels, operational inefficiencies and other costs and were largely offset by strong European segment results.

The improvements in our European results were related to strong production and assembly sales and earnings in the quarter.

Before we get started, just as a reminder, the discussion today may contain forward-looking statements within the meaning of applicable Securities legislation.

Such statements involve certain risks, assumptions and uncertainties which may cause the Company's actual our future results and performance to be materially different from those expressed or implied in these statements.

Please refer to yesterday's press release and attached MD&A for a complete description of our Safe Harbor disclaimer.

Yesterday morning, we announce the strategic investment in Magna by Russian Machines, a wholly-owned subsidiary of Basic Element, which is beneficially held by Oleg Deripaska, a successful Russian businessman.

Russian Machine owns an interest in Group Gaz, Russia's second largest automotive company and seventh largest commercial vehicle manufacturer in the world.

The proposed transaction will assist Magna in its strategy to capitalize on the growth opportunities in the Russian and other automotive markets and align the interests of Russian Machines and the (inaudible) press with respect to Magna.

We are excited by the opportunities for growth in Russia and other nearby markets that this strategic investment will help us to capitalize on.

Next, I'd like to review our financial results for the first quarter ended March 31, 2007.

As a reminder, all figures are in U.S.

dollars.

I would first like to mention that effective January 1, 2007, we have adopted the Canadian Institute of Charter Accountants' recommendations for comprehensive income, financial instruments and hedges.

As a result, on January 1, 2007, our accounting for financial instruments and hedges complies with US GAAP in all material respects.

There is no restatement to prior periods except to classify the currency translation adjustment as a component of accumulated other comprehensive income.

Please refer to the MD&A attached to the press release we issued yesterday for further details.

Appendix A in the slide package accompanying our call today includes a reconciliation of certain key financial statement lines between reported results and results excluding unusual items in the first quarter of 2006.

There were no unusual items reported in the first quarter of 2007.

In the first quarter of 2006, we recorded restructuring and rationalization charges of $10 million related primarily to noncontractual termination benefits for employees at a facility in Belgium.

The charges resulted in a $9 million reduction in net income and an $0.08 reduction in diluted EPS.

The following quarterly earnings discussions exclude the impact of unusual items.

In the first quarter, consolidated sales increased 7% to any quarter record of $6.4 billion.

North American production sales grew by 2% in the first quarter to $3.2 billion in spite of a 7% decline in production from the comparable quarter to about 3.8 million units.

The North American continent was strong, increasing 10% to $832 (technical difficulty) for the quarter.

Key drivers of the growth and content were the launch of new programs and strong volumes on the Chrysler Minivan.

New launches contributing to content growth quarter-over-quarter included certain new CUVs hitting the market, the Ford Edge, GM's [Landa] platform and the BMW X5, as well as GM's new full-size pickups, the Jeep Wrangler and the following new Dodge products -- the Nitro, Caliber and Avenger.

Partially offsetting these were high-content programs that experienced lower volumes and/or content, including the Dodge Ram pickup, Ford Fusion and Explore, Chrysler 300, GM's Minivan, GMC Envoy and the Chevrolet HHR 00 programs that entered production during or subsequent to the first quarter of 2006, in particular the Ford Freestar, a decline in reported U.S.

dollar sales due to the weakening of the Canadian dollar against the U.S.

dollar.

Incremental price concessions also negatively impacted North American content.

European production sales grew to $1.7 billion, representing an increase of 21% over the comparable quarter.

The strong sales reflect a 6% increase in European production volumes to 4.2 million units and a 14% increase in European contents to $390.

The strengthening of the euro and the British pound against U.S.

dollar, the launch of new programs, including the MINI Cooper and Mercedes C-Class, the acquisition of two electronics facilities from [Prosec] and increased production and/or content on certain programs, including the Opel Astra Twin Top, all contributed to content growth in Europe.

These positive contributors were partially offset by programs that experienced slower volumes and/or content in the first order of 2007, including the Nissan Micra and the Mercedes E-Class, as well as incremental OEM price concessions.

Rest of World production sales increased 58% to $87 million due to both the launch of new programs an increased production sales and/or content on certain programs in Korea, China and Brazil.

The acquisition of the mirrors facility in South Africa during 2006, as well as the strengthening of the Korean and Chinese currencies against the U.S.

dollar, also increased Rest of World production sales.

Complete vehicle assembly sales increased by $64 million to approximately $1.1 billion despite a 5% decline in complete vehicle assembly volumes.

This is primarily a result of the strengthening of the euro against the U.S.

dollar in addition to higher assembly sales for the BMW X3.

Partially offsetting these were the end of production of the Mercedes E-Class formatics at our (inaudible) facility in the fourth quarter of 2006 as DaimlerChrysler is assembling the vehicle in-house and lower assembly volumes for the Saab Nitrate convertible and the Mercedes G5.

In summary, consolidated production and complete vehicle assembly sales increased approximately 8%, up $432 million in the first quarter.

Global content growth and the strengthening of the euro and the British pound each against the U.S.

dollar were the primary reasons for the increase.

Tooling, engineering and other sales were $388 million for the quarter, a decline of $28 million from the comparable period.

Some of the programs for which we recorded tooling, engineering and other sales in the first quarter were the Saturn Vue, GM's full-size pickups, the MINI Cooper, Chrysler's Minivans and the Ford Flex.

Programs that drove Tooling revenues tooling revenues in the first quarter of 2006 included the MINI Cooper, BMW X5, GM's full-size pickup and SUV platform and the Ford Edge and F-Series Super Duty pickups.

The strengthening of the euro against the U.S.

dollar also positively affected tooling, engineering and other sales in the first quarter of 2007.

Gross margin in the first quarter was 13.1% compared to 13.8% in the first quarter of '06.

The change primarily relates to continue under-performance at certain of our big interior systems facilities, operational inefficiencies and other costs of certain facilities and incremental customer price concessions.

These factors were partially offset by incremental gross margin earned on program launches, productivity and efficiency improvement to certain underperforming divisions and the end of production of the Mercedes E-Class formatics at our [Cross] assembly facility since this program was accounted for on a full-cost basis.

Magna's consolidated SG&A as a percentage of sales was modestly higher at 5.4% in Q1 '07 from 5.3% in the comparable quarter.

As a result of the lower gross margin percentage, higher depreciation and slightly higher SG&A as a percentage of sales, our operating margin percentage declined from 5.3% in the first quarter of 2006 to 4.7% in Q1 '07.

Our effective tax rate declined to 29.1% in the quarter from 30.9% in the first quarter of 2006.

This relates primarily to a change in the mix of earnings whereby more profits were earned in jurisdictions with lower income tax rates and a decrease in losses not benefited primarily in certain interior systems facilities in Europe.

Net income was $218 million in the quarter, only slightly below the $221 million in the first quarter of 2006.

Diluted earnings-per-share were $1.96 compared to $1.99 in the comparable quarter in 2006.

The slight decrease in diluted EPS was a result of the decline in net income combined with an increase in the number of weighted average shares outstanding during the quarter.

I will now review our cash flows and investment activity.

During the first quarter of 2007, we generated $436 million in cash from operations prior to changes in non-cash operating assets and liabilities and invested $171 million in non-cash operating assets and liabilities.

The investment in non-cash operating assets and liabilities reflects an increase in Accounts Receivables due to higher production sales, particularly for the month of March relative to December as all of the timing of cash collections from customers in the quarter.

Partially offsetting the increase in receivables was an increase in Accounts Payable and accruals due to a general increase in production activity.

For the quarter, investment activity amounted to $191 million, comprised of approximately $125 million in fixed assets, $46 million to purchase subsidiaries and a $20 million increase in other assets.

Next, I would like to turn to our 2007 full-year outlook.

We have lowered our production expectation in North America to 15.3 million units primarily related to lower-than-anticipated production in the first quarter of 2007 and recent low U.S.

sales figures.

Our European production expectation is expected to be 15.5 million units, unchanged from our previous outlook issued in February.

We moved up our range for expected North American content per vehicle in 2007.

North American content is now expected to be between 785 and $815 for 2007.

The increase largely reflects improved mix relative to our previous outlook.

We also moved up our range for expected 2007 content in Europe.

Content per vehicle in Europe is now expected to be in the range of $390 to $415.

The increase mainly reflects improved mix and the strengthening of the euro and British pound relative to our U.S.

dollar reporting currency.

We expect complete vehicle assembly sales to be between $3.7 million and $4.0 billion, up slightly from our previous outlook, primarily as a result of an increase in expected assembly volumes.

We now expect total sales to be in the range of 23.5 million to $24.8 billion, up from our previous outlook.

This reflects the impact of increased North American and European content per vehicle and increased assembly sales, partially offset by lower expected production volumes in North America.

For the full year 2007, we expect fixed asset spending to be in the range of 800 million to $850 million, consistent with our previous outlook.

This concludes our formal remarks.

Thanks for your attention this morning.

We will now open up the call for questions.

(OPERATOR INSTRUCTIONS).

John Murphy, Merrill Lynch.

Just a question on the share buyback, the 20 million that you're going to buy back.

Have you guys thought about a time frame for that or is that sort of in an open-ended authorization that we're looking at?

Well, John, I guess it is conditional on a couple of things.

First of all, we need to -- it is conditional upon the completion of the Russian Machines transaction, and it is going to be subject to regulatory approval.

But once we get that, then Magna tends to conduct substantial issuer bids to repurchase up to 20 Million Class a voting shares.

So we need to first get the transaction approved.

Our intention, at that point, is to then proceed with a substantial issuer bid.

Okay.

If we think about your theory or your thinking on being a public company and access to the capital markets, I mean, given that you're getting this 1.5 billion infusion from a strategic partner and given your cash flow generation, are there any thoughts or changes in whether you need to be a public company to have access to the capital markets or is there a possibility that you could go private?

John, if you go back over time, we have accessed the capital markets to raise equity as well as debt to fund our acquisition strategy, to fund our capital expenditure program.

We view the transaction with Russian Machines as a strategic alliance, something that is going to help Magna accelerate its growth opportunities in Russia and other markets, at the same time minimize the risk of moving into new markets.

So we think this is a good transaction.

In terms of our structure, being a public company I think of all of the advantages if we need to in the future to access the capital markets to raise equity or debt financing.

When you think of this transaction and the strategic tie-up here, do you view this as more an opportunity on the assembly side or as on the parts side?

Where is the big opportunity?

I think the big opportunity for us is to replicate some of the capabilities we have in North America and Europe and Russia.

Whether that is metal stamping, whether that is on the plastics side, whether that is on the powertrain side of the business (inaudible) continue on and on our capabilities.

But the supply base in Russia is developing but it says it's early stage, so we believe, if we can move into Russia, which is a high-growth area, with a partner that is going to help us grow in that region, if we get into Russia with some critical mass right away, we're going to be able to take advantage of that to grow not only with the local OEM but with our traditional customers that are also expanding assembly capability in Russia.

Certainly, from Magna [Star's] perspective, we do have some engineering contracts right now with the Russian OEM.

So Magna (inaudible) continue to work in that area, which they do today globally.

If there's an opportunity, at some point, to do some contract manufacturing that made sense for us, we would consider that as well.

Then lastly, is there any change in your philosophy or your thoughts with unionization of your plants?

Are you becoming more receptive to that or are you sort of the same stance as you've always had?

John, Don Walker will answer that.

We have had discussions for quite a long period of time, as Frank Stronach had mentioned at our last year's annual meeting, with the unions on a framework of fairness, both in Canada and the United States.

We have invited the union and on some what we call model contracts.

For the most part, they have been working well, so we continue to have discussions with both the UAW and the CAW.

Whether that comes to conclusion or not we will be seeing but let's say, on both sides, the discussions have been good.

Whenever we do have would have to be voted on by the employees in our divisions.

The whole intent of doing this is to try and come up with a model that makes the whole industry more competitive.

But certainly in our case, it would make us -- certainly not make us any less competitive but we would have a working relationship with labor as well.

So talks continue, nothing imminent at this point in time.

Actually, let me sneak one last one in.

Is there any change in the bidding environment you're seeing on pricing from your competitors?

I'm sorry, from your customers or anything that is going on as far as programs things, you know, programs that you're seeing, that you are seeing the same cadence of programs you've been seeing in the past?

Let me take a shot at that.

This is Mark Hogan, John.

We really have not noticed a distinct change in the way that the Tier 1s are quoting relative to new product programs.

Clearly, everybody is still thinking about potential upward pressure on raw material costs.

That is something that we always think about in the bid process but by and large, I would not say there is a change in the atmosphere on that.

Mark, if I can just add to that, the one thing which I think is healthy for the whole industry, there's so many supply bankruptcies (inaudible) interest in financial planners coming in and buying up companies bidding low to build an orderbook in the hopes of flipping it at a profit has for the most part gone away.

Some people may still be doing that but four or five years ago, we saw an awful lot of people buying up companies, overpaying for assets, underbidding what was realistic.

We could see it; I think the customers probably saw it as well.

In many cases, they would accept the quote and then when the company went into bankruptcy, it hurt the customer.

So I think that on a go-forward basis, I'm hoping that most of the supplies are capable suppliers who know what they are doing, can quote intelligently, launch intelligently, because every time somebody goes bankrupt, it not only hurts the car company, in hurts us, the rest of the industry, because programs are delayed.

Thank you very much, guys.

Patrick Archambault, Goldman Sachs.

Good morning.

Just to follow-on a little bit on one of those questions, I understand the value of doing a JV in Russia with a partner, a strategic partner.

But can you tell us a little bit about what the motivation is or the need is for that partner to take a 20% stake in Magna?

I think when you look at sort of the history of how we got to know each other, the Magna (inaudible) had entered into a number (inaudible) understandings with both Auto Gaz and Gaz.

Through those interactions, we got to know the Gas Group; we got in particular Russian Machines.

As we continued our discussion and we started to understand what they were going through, what their visions were, what their challenges were, thought we could certainly help, help them and help the Russian industry.

They began to understand what our vision was, how we operated.

There was discussions about forming a closer alliance.

As they got to learn more about Magna, their interest actually was more than Russia but also to participate in a bigger away in Magna's success globally.

From our perspective, if we were going to perform an alliance with Russian Machines, it made sense for us for Russian Machines to have a substantial equity interest in Magna to ensure that everybody's interest were completely aligned with Magna.

As we continued the discussions, they were very much interested in making an investment in Magna but as part of that, they wanted some changes in the control structure of Magna and (inaudible) ultimately agree.

And where we ended up was the creation of a new company where the Stronach Trust will transfer its controlling B shares into this new company.

Russian Machines will invest some cash in the new company, about $1.5 billion, which will be used to make an equity investment to Magna.

Stronach Trust and Russian Machines will jointly control the new co.

The new co.

will have control of Magna and the ability to nominate 100% of the Board of Magna.

So it all started off with a bunch of discussions and ultimately it ended up with an alliance with an equity investment by Russian Machines indirectly into Magna, alignment of interests between Stronach Trust, Russian Machines and Magna.

If I can just summarize, we've been having discussions for longtime with shareholders.

We tend to trade a multiple that is lower than many of our peers.

I think a couple of the big picture items here is that this deal is completed, the Stronach Trust is aligned with the A shareholders, which we have been asked about many, many, many times in the past year; we have a partner who is very focused and very successful and wants to build up the automotive business.

It gives us a very strong partner to help us succeed and enter Russia and potentially is also a customer over there -- potentially have sort of an inside track or preferred supply arrangement and is also very well connected in India.

That is something that we really entered and then Mark Hogan has been talking a lot in the past about the potential in India internally.

So I think it may give us a kick start in both Russia and India.

In terms of the shareholder -- or I'm sorry the Board seat structure, which I guess is now six and two, right, in terms of -- how was that before?

How many board seats out of the 14 did the Stronach Trust have before this alliance?

The up Board was selected yesterday and today there's nine Board members.

Remember, we had three members that retired from the board, so we had 12 members or 11 members prior to yesterday's meeting (inaudible) four retired, that's right, three outsiders and Mr.

[Gingo].

So we were at 12; we're now at 9.

The intention is, once this transaction is completed, is that the Magna Board would increase to 14 members and Newco would nominate the 14 members but behind (inaudible) the Stronach Trust would have the right to nominate 6 of the 14 member board; Russian Machines will have the right to nominate 6 of the 14 member board; and both the Stronach Trust and Russian Machines have agreed that they're going to nominate both Co-CEOs to the Board of Magna.

So that is 14.

Keep in mind that Magna will continue to be a public company and the six nominees of Stronach Trust and the six nominees of Russian Machines, four out of those six for each party need to be independent directors for purposes -- for independent (inaudible) on the New York Stock Exchange (inaudible) Toronto Stock Exchange rules.

So ultimately, we are going to end up with a Board at Magna over time and it's going to take some time before we move there.

There will be at least eight independent directors and the balance will be dependent directors; it will be a majority of independent directors on the Magna Board.

Today, the Stronach Trust basically has voting control, so they can place the whole board if they wish.

Okay.

Just quickly on that, do the Board members have to be Canadian?

Under the Canadian rules, Magna is incorporated in Canada.

It is a requirement that a majority of the Board be Canadian residence, so that condition continues to apply.

Okay.

One quick one, just on the operating results, if I may?

You saw margins in North America improve quite materially on a sequential basis.

You know, they are still down year-on-year.

I was wondering how much of this was seasonality just from moving from fourth quarter to 1Q and how much of it was an actual run rate of profitability tracking at a better pace?

(inaudible) here.

It is really a combination.

Seasonality certainly had an impact but we had a lot of noise in the fourth quarter as you can recall from our call.

Some of that, if you look at interiors, for instance, we had a lot of stuff in there.

So we have some seasonality impact and some of it is really is just some noise that we had in the fourth quarter that really isn't there in Q1.

I guess specifically what I was trying to get to is, on a year-on-year basis, are the fixes that that you have implemented at some of these underperforming divisions, are they tracking ahead of the incremental headwinds from the deterioration of some of these businesses?

I think we've made some progress in some areas in our interiors group.

Particularly Europe continues to underperform.

So I'm just going to go back to what Louis said.

Q4 to Q1, we've certainly seen improvement in margins.

As Louis said, there was a lot of noise in the fourth quarter; there was some shutdown costs.

There was year-end adjustments and so on.

What we've seen in the first quarter was the benefit of some of the launches, the new programs.

But keep in mind that, if we go back to last year in the first quarter, we are still down 0.5% on margin.

What we're seeing the impact quarter over quarter is continuing operational inefficiencies in interiors, particularly in Europe, pricing pressure and operational efficiencies as well as lower volumes in North America.

So we're happy with the improvements of Q4 to Q1 but from Q1 to Q1, we're still not performing at the level we were a year ago.

In North America, if you look at our segment results year-over-year, they are substantially down.

A big part of that is volumes and a big part of that is startups and launches as well.

I would say, in North America, we're making headway.

However, it is still a very difficult industry.

We have reduced some (inaudible) divisions but the pricing pressure on everybody still continues across the board and it's something we're going to see a huge shake-out in the supply base.

So long-term, hopefully we have healthy, sustainable business but in the short-term, we certainly are fighting an uphill battle, given the pricing pressure and everything else going on in the North American industry.

Is that pricing pressure concentrated in certain business lines or is that just kind of across the board?

It is across the board.

Interiors is probably the (inaudible) but is still the weakest area, I'd say, across everybody in that area but it is across the board.

Okay, great.

Thank you, guys.

Chris Ceraso, Credit Suisse.

Thanks, good morning.

A few things, (inaudible) up on that comment about North America with the startups.

Do you have a round number of what that cost you in the quarter?

You had an awful lot of programs that were ramping up.

Chris, I don't have the exact number but certainly there were some costs associated with startups in the quarter.

Does that get better in Q2 or do you kind of roll into startup costs related to the Minivan?

The programs that are launched in the first quarter are going to get better but as you know, The minivan is launching later on in the year, so that's going to impact us negatively in the quarters to come.

But net/net, is it getting better or is it going to be about the same?

We are expecting to see some, you know, overall probably a little bit better.

We're expecting to see some substantial improvements in startup costs (inaudible).

The [lion's] share of the GMC 100 did some damage to us in the first quarter.

That should get better, offset by some other cost on the Minivan.

Overall, it should be -- we should be saying neutral to positive improvement as the quarters move on.

Okay.

What is your content like on the upcoming Minivan relative to the current one?

Do you have more dollar content on the new one?

(inaudible) about $2100 on the new Minivan and 1900 plus on the current one.

Okay.

You mentioned, in Europe, that part of the improvement in EBIT was increased assembly, which I found a little bit odd because I thought, typically, assembly was kind of a margin diluter.

Can explain that comment and maybe give us a little more detailed rundown on some of the elements of the EBIT improvement in Europe?

From an EBIT percent or EBIT dollars?

Maybe that is the difference.

That might be the difference, Chris.

Is it that you just had so much of an increase in assembly sales that it was positive from a dollar standpoint but not from a margin standpoint?

Yes.

That's correct.

We had an increase in (inaudible) assembly volumes and that is a fully (inaudible) program so that is going to negatively impact margins but as volumes improve in any program, that should generate more EBIT for us.

What is the latest on the X3 in terms of keeping it or not keeping?

When does it end for you?

End of production is estimated to be July 2010.

As we have said before, there is a possibility that the version of the X3 will be built by BMW and we know that BMW is looking at this as an option.

However, there has not been any definitive decision communicated to us from BMW on the assembly, the next generation X3.

We continue to, obviously with any facility, including Magna Star, explore a number of opportunities.

So we're confident that the capacity of Magna Star will be (inaudible).

But in either case, is your still July 2010.

That's correct.

Okay.

One last one maybe on the outlook, can you give us a feel for the backlog of business over the next two or three years maybe just in terms of content per vehicle?

Chris, we're not going to go on beyond -- or give any guidance beyond 2007 in terms of content.

And our outlook.

Is that something you look to get back To?

I think, in the past, you did give kind of a two or three-year view on where you thought CPV was headed.

Chris, it's something we will consider as we get to the end of this year into next year's business cycle.

As you know, there's been a lot of discussion at the Board level of the level of guidance.

We're confident -- looking out a year to 2007, we (inaudible) looking out three years, especially with some of the industries (inaudible) in North America in particular.

Okay, thank you.

Himanshu Patel, J.P.

Morgan.

Is there any government ownership of either Russian Machines or Gaz?

Russian Machines is a wholly-owned subsidiary of Basic Element, and Basic Element is beneficially owned by Oleg Deripaska.

Gaz is a public company.

I'm not sure if there is special ownership.

I know it is a public company in Russia and Oleg Deripaska, through Russian Machines, controls Gaz.

For Gaz itself, I understand it is a public company but are there any other strategic shareholders there, aside from Russian Machines?

I don't think so.

My impression is that Oleg makes all of the decisions there, so if there is somebody else there, we're not aware of it.

Okay.

Then one last question, as you look across the products you participate in right now and some of the ones that you do not, any thoughts on the attractiveness of the axle business?

Mark, do you want to deal with that one?

Yes, we have got some high-end axles that we produce in our European facilities, but I would consider that more for high-performance vehicles.

For core axle business, we really don't view that as mainstream potential for Magna.

You don't, an d I realize that but any thoughts as to whether that business would be attractive to you in the future?

At this time, I would say no.

Okay, great.

Thank you very much.

Rod Lache, Deutsche Bank.

Good morning, everyone.

Can you update us on how you think about the appropriate leverage level for the Company in the long-term?

What is your comfort level with leverage as you look at strategic opportunities?

Long-term, I would say, when you look at the level of cash on our balance sheet, we probably have -- we probably would be operating with less cash on the balance sheet.

Our overall philosophy still is to be relatively debt free as a company and having the flexibility to capitalize on opportunities, whether they are new production programs or acquisitions.

However, given where the industry is today, we think it is prudent to have more cash on our balance sheet rather than less cash on the balance sheet.

So what would be the sort of normal level of cash that you would find appropriate just to run the business and manage working capital, things like this?

We're talking about the future because we are in today's -- but the Company had doubled in size.

I think that the level of cash -- would I think would be appropriate for the size of a $25 billion company versus a $50 million company would be different but (multiple speakers) $25 million company we had cash on the books of between sort of 500 to 750.

I think that would be an appropriate amount to have.

Okay.

So I guess you have plenty of room to get down to that level, but if there were some opportunities that would require more substantial investment, at least initially, you would look more at financing that with equity as opposed to debt?

Am I reading that right?

Could you repeat that, Rod?

If there were a larger opportunity, you would be -- what I'm hearing from you is that beyond bringing the cash level down to 750 or so, you would be looking to finance that more with equity versus debt at this point?

That's a hypothetical question, Rod.

I'm not going to be able to answer that.

We are going to have to obviously look at what the opportunity is, what the general industry, how it is performing, where the economy is heading.

Ultimately, it is going to be a decision that the Board is going to have to make based on management's representation.

So, it's really hard to deal with a hypothetical situation.

Can you also just explain a little bit, on the North American content per vehicle, the Q1 is higher than the average for the rest of the year.

So what is the mix issue that you see that would be primarily affect that?

Well, it is generally mix.

I wouldn't get into the program specifically.

The one that stands out most obvious would be the Chrysler Minivan where you see very very strong production in the first quarter and less so in the second and beyond.

So that certainly has an impact on our overall numbers; it was very strong in the first quarter.

There's a couple like that where we see, relative to the overall changes in volumes, we are going to be hurt on the negative side.

One last one -- on the interiors business, you have commented over the last couple of quarters about the under performance.

Can you put any quantification around that, either how it is doing now or what kind of improvement we would see if you get it back to the kind of levels that you expect?

What is the status of -- you commented last quarter that some of those operations were under review.

Right now, our interiors business globally is in the red, so if we move that business to breakeven, it would have, I would say, a positive ,very positive impact on bottom line.

We're working hard to get there.

In North America, I think, in some of our existing facilities, we are seeing some progress.

We do have a number of launches in North America.

So as you see some improvement in operations, we're faced with substantially higher launch costs.

In Europe, we continue to have difficulties.

We're launching the new MINI, so we are hoping to see things improve as the year progresses but historically, over the last couple of years anyway, our interiors group has overpromised and underdelivered.

So we're just going to continue to focus and monitor that as the year progresses.

Can you quantify the losses there or put any kind of metric around it?

I would say, Rod, that the losses are large.

Why don't we leave it like that?

Just as far as strategically, Europe, we think we have a healthy business they're going forward, once we can deal with some of the issues we're dealing with on losing divisions.

We've got some good, new product coming to the market.

In North America, everybody is aware of what is happening in the market, the financial position or condition of a lot of our competitors as well as ourselves.

I think there's always going to be a need for interior suppliers.

There's overcapacity.

Raw material has had a huge negative impact on everybody in the business.

We always looked at what is the best solution going forward but our plan at this point in time is to focus on operations, get through some of the launches, get where we pricing issues, try and get the pricing issues resolved.

We will just see how the industry shakes out.

We're not actively pursuing growing or getting smaller in the interiors business but I think, over the next couple of years, things will shake out somehow and there has got to be a couple of healthy interiors players and so we're certainly analyzing it.

Great, thank you.

Peter Sklar, Nesbitt Burns.

Back on the European operations, you had quite a significant improvement in your operating profit; it went from about 40 million in the fourth quarter to 120 million in the first quarter that you just reported.

I presume some of it is due to seasonality as a result of higher automotive production volumes.

So I am just wondering if you can throw a little bit more flavor on what is going on there.

Obviously, there must be some underlying positive developments.

(technical difficulty) some of that is also related to that noise that we had in the fourth quarter.

Some of it certainly is related to volume, volume (technical difficulty) strong in the quarter.

So as you recall the last quarter (inaudible) we had a lot of noise that affected the numbers and certainly some of that is gone in the first quarter.

Were there any unusual events that occurred in the first quarter that --?

No, the first what was pretty clean, Peter.

(inaudible) we've been asked for years (multiple speakers) is Europe ever going go get to the margin level of North America?

Unfortunately, I think it's going to meet somewhere in the middle because Europe is slowly coming up.

We are dealing with some the issues; we've made a number of acquisitions which we are improving.

Unfortunately, the margins in North America are coming down.

So over time, you would expect that they should both be at the same level or close to it.

Right.

Just to clarify, is Europe interiors overall still losing money?

Yes, it is Peter.

Okay, but is it improving?

Is that some of it?

Peter if you look at sort of Q4 to Q1 in Europe, some of the benefit is at Magna [Star].

We talked about the higher assembly sales in particular.

We are seeing some improvement in interior reserve quarter over quarter.

In the past, we have talked about Tacoma Europe as an example being an issue and quarter over quarter, we are seeing some improvement in Tacoma Europe.

So I would say, generally, as we have said, there was a lot of noise in the fourth quarter but we are making progress in some of the areas we're been focusing on.

We need to continue to make substantial improvements in interiors Europe.

A couple of questions on the strategic transaction -- on the hold co., you have not said anything in the press release about, in this new holding company that is being formed, what the ownership and economic interests are.

Can you flush that out a little bit?

Let me start by saying that Hold co.

is a special focus company that is going to hold the Magna shares.

So that is going to be a focus.

There's going to the three groups of shareholders.

There is Stronach Trust; it's going to have a 42% equity stake in the new co.; Russian Machines is going to have a 42% stake in the (inaudible); and a 15% stake is going to be held by certain principles who are also members of Magna's executive management team.

So what that means, Peter, when dividends are paid by Magna on the Magna shares, those dividends will flow up to Newco.

Newco will then distribute those dividends 42, 42 and 15% respectively.

Okay.

The other -- just in terms of there's a lot of details in this transaction that are really hard to just summarize it in a few words.

But if you think of it as sort of as long as the structure stays in place for the long-term, that is what happens with the overall dividend -- but there is a situation where both Russian Machines and the Stronach Trust has the ability to exit from Newco.

At the end of the second year, if Russian Machines chooses to exit from Newco, what ends up happening in is the 20 million Class A shares that were purchased are valued.

If they have increased in value, then half of the value increase belongs to Russian Machines; the other half of that value increase belongs to Stronach Trust and the principal.

The other is a management principle.

At the end of the third year -- and I'm sorry the B shares of Magna go back to Stronach Trust and the A shares of management, because management is contributing A shares into Holdco, the A shares go back to management.

At the end of the third year, the third year, past the third year, the Stronach Trust has the ability to exit this relationship.

If they choose to exit, then the B shares, the [726,000] B shares go back to Stronach Trust, management gets back its 605,000 shares and Russian Machines gets to keep the 20 million Class A shares.

So it is a little convoluted but going forward, things are working out (inaudible) the dividend and alignment of interest.

If, for some reason, one of the parties decides that they want to leave the party, no pun intended, there may be a sharing of economics on the upside of the increase in (inaudible) A shares if Russian Machines decides to leave.

If it's the Stronach Trust that decides to leave this relationship, there is no sharing of any upside for anyone; everyone gets to keep their shares.

Okay.

Sorry, just if the rations want to exit at the end of year two, the (inaudible) half the incremental value, who benefits from that?

The A shareholders or the Stronach Trust?

Let's say the 20 million shares increased in value $100 million for argument's sake, so 50 million would be Russian Machines' interest; 50 million would be split between Stronach Trust and management.

Now, Peter, you look at this and you say, well, why are you doing all of this when someone has got (inaudible).

It is every intent, going into this thing, that this is a great transaction for Magna and Stronach Trust and Russian Machines look forward to working together.

We always need to think about what happens if things don't work out.

That is why you have these clauses in there.

The intent is this thing is going to be here forever and ever.

What is happening here is there's a substantial alignment with the Stronach Trust and Russian Machines and certainly with Magna.

When you look at the Stronach Trust's interest now, their interest relates to 42% of dividend on roughly 21 million shares, but today, they are entitled to only dividends on 700,000 shares.

If the value of the stock goes up and Russian Machines happens to leave, then the Stronach Trust will benefit substantially from that increase in value.

So, we think it is a positive transaction from an alignment of interest standpoint with the eight shareholders of Magna.

Okay.

Lastly, could you explain the rationale behind the buyback of the B shares not held by the Stronach Trust?

Yes, Peter.

What we're trying to do, as part of all of this, is if we need any shareholders vote, it is going to be a [private] arrangement that is court approved.

There is going to be a separate vote of the B shareholders and the A shareholders, the disinterested Bs and the disinterest As.

We thought it made sense to achieve a couple of things.

One, why not try to clean up the structure?

There is dual-class share structure.

The Bs effectively do not trade at all.

What we're seeing with the Bs, when they've got a trade, they are converted into As.

So we thought we would go in and buy the Bs.

The overall cost, effective cost to Magna is C$25 million.

But the results of buying back the Bs, we the way did not want to increase the voting power that the existing controlling Bs have, i.e.

the Stronach Trust Bs of 726,000 Bs, because right now the Stronach Trust and our proxy, what we disclosed, Stronach Trust has effective control of about 71.9% of the Company.

Under our current structure today, if you look at all of the votes, there's about 655 million votes.

109 million are A votes; the balance are B votes.

So the As really have about 16% or 17% of the aggregate votes cast at a regular meeting.

Once we complete the buyback on the assumption that we are doing a substantial issuer bid and we repurchase the 20 million shares that were issued indirectly to Russian Machines, there will be the same number, roughly the same number of shares outstanding.

The total votes will drop to the 327 million.

(inaudible) them have 109 million votes so their true voting power in shareholder meetings improves from about 15% to 16% to about one-third.

So that is a substantial improvement, we believe, in overall voting power for the As.

They will be better represented.

But still not practically effective because they do not have control.

That is true but right now, control does rest with the Stronach Trust.

Keep in mind, Peter, we have a history of issuing equity to grow the Company.

If we continue to do that and we continue to issue A shares, then, over time, the voting power of the As is going to increase substantially more.

That would be the case if we did not change the structure that exists today with the B shares.

Okay, thanks very much.

David Tyerman, Scotia Capital Markets.

Good morning.

A quick follow-up on that -- what would happen to Russian Machines' [shares] if they exited?

Do you guys buy them back?

Who is we?

Magna, the other owners, meaning Frank I guess and the managers or --?

Well, Magna would not buy them back.

They would publicly -- they would be A shares that would be outstanding.

Potentially, the Stronach Trust and management could buy them, or potentially shares that trade on the open market.

I find it difficult to see how the Stronach Trust and management would be able to fund $1.5 billion.

The most likely scenario is that they would be sold in the open market.

Okay, so (multiple speakers).

The other alternative, David, you know, we've talked about the sale.

The more likely the situation is that Russian Machines is going to continue to hold its investment in Magna directly other than there won't be this relationship on voting control for Magna, joint voting control for Magna.

Okay, no, I'm just trying to clarify.

No one has any obligation on your end?

If they decide to exit, what did they say?

We're just exiting and we want half of the profit?

One possibility is that the shares, as we said, David, the shares -- what would end up happening, Newco would have to deliver that value to Russian Machines.

That value could be delivered in either in cash, which means the shares would have to be sold in the open market, or by transferring shares to Russian Machines.

Okay, that is helpful.

On the share repurchase issue, is there any term to renegotiate the price?

What I am thinking here is, if you guys really want to neutralize this issue, you are probably going to have to pay a premium in the market.

The stock is already up right now.

If you had to pay 15% premium, say, to get guaranteed naturalization, you are looking at diluting your shareholders anyway by spending more money than you are taking in from Russian Machines.

If the stock moved up a lot, it could get even worse.

So that can this be renegotiated, this price?

The price with Russian Machines can't be renegotiated.

That is what they have offered and the price was determined on a 20-day volume weighted average price for the period ending April 20, 2007.

We receive a proposal, we being the Magna board, received a proposal letter from Russian Machines on Monday, April 23.

They were basing this price on the 20-day price prior to submitting the proposal letter.

So that it fixed.

Your question about if we buy back stock and if we have to pay more than $US75.83 and we were to buy 20 million shares, what you are saying is we're going to be paying more money to buy back 20 million shares of the money you receive issued 20 million shares.

Right.

In that situation, there would be a difference.

All things being equal, that would, from a numbers standpoint, create EPS dilution.

But I think we are missing the bigger picture.

That is we believe that this is a value enhancing transaction.

By having Russian Machines as a partner beside us, we think that is going to be a way to increase Magna's profitability, which in the long-term more than offsets any dilution.

What we're hopeful is that our multiple does go up as a result of this transaction.

We think this is positive, one, from getting us opportunities in Russia; number two, to as we talked about earlier, aligning, better aligning or aligning the interests of Stronach Trust, Russian Machines with Magna.

I understand that.

Just some housekeeping -- the tax rate was relatively low in the quarter mix etc.

Is that 29% representative of the year as a whole then?

Well whether it is 29 or 30 or 30.5, it is going to come in around there, David.

It depends on the mix of earnings.

There has not been substantial movements in statutory rates.

It is just mix of earnings.

Our tax group has been pretty busy focusing on utilizing losses; you can see the losses (inaudible) benefited this quarter came down quite a bit.

As our operations, particularly in Europe with interiors, start to improve, we will see less (inaudible) benefited.

So whether it is 29 or 30, I think it is a pretty good run rate.

Okay, that is helpful.

Just on the CAD, on the Canadian dollar, in your guidance, your [CPV] guidance, what kind of level of Canadian dollar were you thinking?

You mean what do we have forecasted in '07 numbers?

Yes.

We said approximately at current rate.

Current rate, but does that mean it was as high as $1.17 or $1.18 in the last quarter (multiple speakers) below where it is now?

Or even lower.

I guess wondering.

It could make a difference I assume.

It could, I suppose.

We are looking more at -- it's been moving pretty substantially, as you know.

We trying to look at where we were around the time we were preparing our forecast, so it is probably not quite as strong as that.

Okay, so you may get a little bump here?

Okay, thanks.

This last question, on Asia, you are growing relatively quickly but it is still a pretty small number overall.

I think 350 million annualized right now or even less.

Can you give us just sort of broad strokes of how you see this unfolding?

Are we going to keep growing at 50, 80%, or is there some really large increase along the way that starts to make this a really material part of your business?

Mark, do you want to take that?

Yes, I'll take that, Vince.

David I say I would say it is going to grow at about the same pace going forward.

I do not see a breakthrough in, say, the (inaudible) structure of both Toyota and Honda, which means that we are limited in how much business we can go after.

Nevertheless, given the rapid expansion of the Japanese OEMs into other regions of the world, including Russia, we see some potential down the road.

Now, whether that materializes in '09 or '10 or '11 is yet to be seen.

So China does not make a huge difference?

Well, China makes a huge difference and we are there substantially already, so I think our continued, steady growth in China is going to be there for the foreseeable future.

Okay, so I'm steady driven by China less so by Japan it sounds like.

Right.

Great, thank you.

Mike Willemse, CIBC World Markets.

Thank you.

With your growth in Russia, the strategy -- I am assuming it is going to be more greenfield rather than acquisition.

Is that right?

It's too early to tell but I think that would be a good assumption.

I also think there may be some good opportunities to buy existing assets and just improve their productivity, maybe upgrade rather than building all new buildings.

In discussions with Russian Machines, they are very, very (inaudible) now, the OEMs and certainly Gaz and (inaudible).

Their strategy will be to try and build a supply industry, bring technology and manufacturing capability and engineering.

We'll just have too see what the best return on investment is.

Ideally, you want everything brand-new but if you can get a building that has some reasonable press lines or molding machines, they're willing to sell them often and we can had to that, that may be a better return over the next five years or so than doing all of greenfield.

Over time, it will probably be more greenfield than acquisition but I think we need to get in and have deeper discussions now that this has been concluded, because they're going to be very focused on getting a world-class supply base over there.

However, they're also going to be very focused on getting the return on investment.

Oleg Deripaska has got a very good track record on making money and making good investment decisions, and he will continue that way.

Don, if I could just add to that, we do have some property in the St.

Petersburg area who service the Western OEMs and Toyota that are in that region as well.

How would you compare the quality of the assets in Russia today versus, say, Europe, North America China?

I have not personally seen them but they are not up to standards of in North America and Europe for sure.

China, it's a mixed bag right now.

Most of what we're been doing in China is greenfield.

Most of what we've been doing in China is not large capital investment.

I was more talking about the industry in general rather than Magna facilities.

I think they have a long way to go in Russia.

I think that is where the big opportunity lies an I think that's why they're looking for people outside of Russia to come in and help them with their efficiencies.

I think they're making good headway and they do have some good assets over there but it still can use a lot of improvement.

I would say, in the BRIC countries, Brazil, Russia, India and China, I would say Russia and India often the most opportunity for the supply base to develop and grow.

What would be a typical time frame to launch a greenfield facility from initial planning stages to running the operations?

It depends on the complexity of the product.

The more capital intensive the product, the longer the leadtime in building the facility.

So you could assume that, for a major stamping facility, it could take as much as 18 months; for something that is more in terms of sequencing and assembly, that would be 12 months or even less.

Okay, thank you and just one last question.

If you could review the launches Magna will be doing in late '07 and in 2008?

I think you have the Ford F-150, the Chrysler Minivan.

Not long in '08 but in terms of '07, we talked about what is going on now with the GM pickup, new concepts going on right now.

The Chrysler Minivan (inaudible) have to shut down.

The Ford F Series (inaudible) going on right now.

The Ford Escape is going on right now and we have the Dodge Avenger and Jeep Liberty.

That is in North America.

Thank you.

Rich Kwas, Wachovia.

Hi, good morning.

Vince, I want to ask about revenue guidance.

For the year, you had a nice uptick here.

It seems to imply that the back half of the year could be flat or experience slight growth.

I would think that revenue growth would be a little bit more aggressive in the second half of the year, given some of your new launches here.

Can you just comment on that and provide some more color?

I thank the one thing you've got to keep in mind, Rich, is the Chrysler Minivan where we had a really strong quarter and as they did the changeover to the new minivan, that is going to have an overall impact on our mix, a negative mix -- a negative impact on mix.

We have brought down volumes.

Volumes were pretty healthy in the first quarter.

So based on our detailed analysis, that is where we believe content per vehicle is going to be.

That also may drive overall revenues in North America.

In Europe, we're still very bullish on Europe.

We've actually moved up revenue guidance both on the assembly side and on the production side.

So I don't think I'm being conservative in our guidance here.

I think I'm being realistic.

Is there anything other than the Minivan that, in the second half of the year, that is going to be a headwind, a major headwind?

Well, we're not going to get into a list of vehicles where we expect volumes to be down.

That is the most obvious because of the sheer size of the volume in the first quarter and the fact that they're going to be launching a new one, so actually there's going to be (technical difficulty) (inaudible).

Then on Europe, was first a above expectation in terms of production?

I think it was pretty close.

Do you mean our expectation?

Yes.

I would say it was pretty close to what we were expecting and that is why -- that' is pretty much volumes where we had anticipated per the guidance.

All right, thank you.

Brett Hoselton, KeyBanc Capital Markets.

Good morning, gentlemen.

Let's see.

Operating margins down a little bit year-over-year.

I'm wondering.

How do you see operating margins progressing as you move through the year?

I'm looking specifically at 2006.

You had a pretty significant decline as you moved into the third quarter and fourth quarter.

I'm wondering.

Do you see a similar pattern as you move through this year as a bit unusual in 2006 our do you see yourself maintaining operating margins more consistently through the year?

Brett, a big part of overall operating margin is going to be volumes and mix in North America and how successful we are in turning around or improving the performance of our interiors facilities and the magnitude of launch costs.

It is really difficult to say, in terms of how things are going to progress in the year.

Unfortunately, we're not going to give specific earnings guidance.

And margin guidance to me is giving some earnings guidance.

Our Board specifically wants us to focus entirely on revenue.

If I can just add to that, margins are dependent on a number of things.

Our profitability is -- if we (inaudible) commodities or foreign commodities that we're having substantial pricing, especially from offshore competitors, than margins continue to fall.

so what we have been doing is focused on manufacturing efficiencies.

I think we are making good headway fixing our losing divisions; we're making headway that we saw some losing divisions.

We have been looking at our -- the competiveness of our manufacturing footprint.

We have done some restructuring.

We are building up more operations in low cost jurisdictions for parts that are very easy to move around the world.

We are focused heavily on R&D and future innovations because, ultimately, if we all need to, then we 're not going to sustain reasonable margins.

I thank the greatest opportunities for long-term growth are, as Mark has been saying and he is focused is in the emerging markets.

I think the opportunity probably in Russia and India are going to be the best over the long-term.

There's already a lot of people in China; there's a lot of pricing pressure over there.

However, we are going to continue to push through China.

We're just going to have to keep on, over time, moving our footprint and trying to take advantage of some of the growth areas and keep our nose to the grindstone on operations.

The one positive thing is I think we are seeing, going to continue to see the failure of a lot of players in the supply-side.

I think Magna has the balance sheet to take advantage of that and we have the manufacturing expertise.

I think the offset to that is where does assembly capacity go over the next 10 to 15 years and what are the volumes in our core customers?

Right now, our core customers are still largely Ford, GM, Chrysler in North America, although they are expanding globally, and we have got BMW and Mercedes and Volkswagen.

So it is hard to tell what is going to happen with their marketshares.

There marketshares keep up, then great; if they decline, then we are going to have to realign our capacity.

Switching over to the Russian deal, it sounds like the voting interest of the Stronach family is not going to change dramatically, but it sounds like we are giving up some control in terms of control of the Board and Board seats.

I believe that is a correct assessment.

Is that right?

No, I think I would look at it a little differently.

When you look at the holding company, the voting control of the holding -- (inaudible) holding company is going to have voting control of Magna and when you look at a holding company, it is really joint control between the Stronach Trust and Russian Machines.

So there truly is a melting together of everyone's interest and there is joint control of Newco, which ultimately controls Magna.

So that is a big change for where we are today.

Yes, and I think that is my point, is that, previously, Frank Stronach controlled the Board seats.

Now, we're seeing a combination of Frank and Russian Machines Company.

Is that a fair assessment?

That is a fair assessment.

I guess what I'm struggling with a little bit here is this is a pretty significant tie-up with what appears to be a smaller automaker in a developing market.

You may have been able to do a tie-up like this maybe with another automaker.

I'm wondering.

This seems to also kind of preclude you from maybe doing other strategic things in the future.

Is this your play into the OEM marketplace?

No.

I want to make sure that people understand this is not a tie-up with Gaz.

The Oleg Deripaska Russian Machines own or substantially owns Gaz but they've looked at Magna as being a company where they think they can get value creation, which is complete alignment with the As and it also I think goes a long way.

To answer a lot of questions we've been getting for a long time and making sure that Stronach Trust is also -- I wouldn't say they weren't aligned with the As before but the they are much more aligned with the financial interests of A shareholder'.

This, I do not think, would preclude us from doing anything else with any other strategic investor.

However, I don't see a lot of people saying they want to do that particularly, but there are so many ties between all of the automakers on powertrains and hybrid technologies and joint manufacturing and sourcing each other manufacturing.

So, I don't think it will hurt us in our ability to get business with any other OEMs.

Certainly, I don't think, if we wanted to buy an asset from a car company, I think it is a nonissue with them.

This is not like we're linking up with Gaz.

We have a strategic investor that happens to own Gaz and is very influential in one of the markets we want to go after.

We also believe he has some [interest] in very good connections and India and his interest will be two-fold -- number one to make sure Magna is getting a good return, is making a huge investment, and also having Magna with their expertise, particularly in (inaudible) but also in parts manufacturing, help develop the supply base in Russia, which Gaz would hopefully get an advantage out of.

But we're not going to be making investments that benefit Gaz unless it benefits us.

Finally, any comments on Chrysler, timing or expectations of when something might take place or when Chrysler might decide to do something or any announcements, anything along those lines?

We really don't have much more information that is out in the public domain.

If we did, we couldn't talk about it anyway.

It is going to be very complex.

There's articles in the media every day.

I don't really know where they all come from but it is completely up to Daimler to decide what they want to do from a timing standpoint and we really can't say much on it.

Thank you very much, gentlemen.

Nick Morton, RBC Capital Markets.

Good morning.

I wondered if Russian Machines has an option to buy the shares held by the Stronach Trust.

No.

They don't?

No.

The terms of all of these transactions, will that be released in a document in the near future?

Nick, they will be in a couple of places.

We will have to file a proxy, which will have tremendous amount of detail on these transactions.

The Stronach Trust has to make a filing in the United States, a 13-D filing.

As part of that filing, my understanding is that all of the agreements that were signed up to will be publicly disclosed so that information will be available.

Thank you very much.

Gentlemen, there would appear to be no further questions at this time.

Thanks, everyone, for joining us today.

We're really pleased with our first quarter, particularly given the challenging production environment in North America.

We've more work to do to improve underperformers but we are making progress.

We're very excited about the proposed transaction with Russian Machines that we announced yesterday.

We plan on being on the road to visit shareholders over the next few weeks to discuss this transaction.

Enjoy the rest of your day.

Bye.

Ladies and gentlemen, that does conclude the conference call for today.

We thank you for your participation and ask that you please disconnect your lines.