North America Operating Margin
Peter Nesvold – Jefferies: So, I was hoping we could start with the 11.5% operating margin in North America, which was certainly significantly better than what I was anticipating even for the next year or two, and you still talked about North America getting – or Automotive profit getting better in the back half versus the first half. When you think specifically about North America, is this sort of as good as it can get over the next year or two, or do you see a continued upward trend from here?
Investing Insights: Ford Receives Restrictor Plate from Europe>>
Robert L. Shanks – EVP & CFO: We expect North America to be a significant contributor to the total Company pre-tax results this year, which we mentioned is going to drive it, it’s going to be up significantly year-over-year, the margin will be up significantly year-over-year. This is a fantastic result in the quarter. But you know our quarters vary quite a bit. It will be very, very strong year-over-year and we expect North America to continue to perform well in the future and still on track to achieve margins of 8% to 10% on the decade. So, fantastic results by the team and we expect that engine that’s pulling the Company ahead to keep on pushing us along.
Alan Mulally – President and CEO: Peter, as we noted, we expect Asia Pacific operating profit to be positive for the year, also including South America.
Peter Nesvold – Jefferies: Now just to be clear, I mean as the SAAR gradually grinds higher over the next couple of years, your market share gains or your market share stabilizes to past levels, your expanding capacity. There’s no reason to anticipate that you wouldn’t get further operating leverage from current levels, correct, in North America, specifically?
Robert L. Shanks – EVP & CFO: Well, as you see more volume coming on stream, I mean, obviously, there’s going to be opportunities for leverage, but you’ll also have to add in capacity which North America is doing this year to the tune of about 400,000 units. We also are going to be investing in additional products. We’re going to see segmentation shifts, away from trucks and larger vehicles to small over time. As you know, we’ve also guided that we expect commodity costs to continue to increase on a trend basis over the period. So, there will be some headwinds, but there’s no doubt that the North American business is very, very strong. We expect this to stay very strong and we think it provides even more opportunity for us in the future.
Itay Michaeli – Citi: Just a question on structural cost. I think you had about $300 million impact in Q1 globally. Is that a good run rate to think about going forward? If it would be, it sounds like maybe you would only be up about 1.2 billion, 1.3 billion on the year. I just want to get a sense of the cadence of structural costs in 2012?
Robert L. Shanks – EVP & CFO: This is Bob. It’s a good question. As you’ll recall that we’ve guided the full year to be somewhat less than $2 billion and we think we’re still on track to that. Most of that is to support higher volume and to support investments in growth, both for this year and in the forward years. It’s going to be pretty much across all the business units. I think it’s pretty light this quarter in terms of what we’re seeing, because we’ve got a lot product launches coming, capacity launches coming, continued investment in engineering for products that will come beyond this year. So, I think we are still comfortable with the guidance that we have given, so you will see increases in the quarters coming ahead.
Itay Michaeli – Citi: Quick follow-up on the pension de-risking. One, could you share the size of the salaried U.S. pension liability; and then two, would this also be a potential option down the road for the hourly U.S. pension liabilities?
Robert L. Shanks – EVP & CFO: This is a really significant step forward for us because it’s really important that we improve the risk profile of the company and we announced some actions earlier this year to do that in terms of how we are going to manage the assets, but this is a huge step forward in terms of actually eliminating some of the obligation altogether. The total pension obligation we had globally were $74 billion at the end of last year, the U.S. pensions both salaried and hourly and also some of the unqualified plans – the plans that we don’t fund, about $49 billion and this is about a third of our obligation. So, it’s a significant number. We don’t know the take rates because this has never been done before by a company certainly of this size and certainly ongoing pension plans. So, we don’t know what the take rates are. We have assumptions, obviously, but we prefer not to share them out because we don’t know how good they are. So, what we will do is we’ll give you an update every single quarter as we come along and I’ll let you know what the reaction is. But this is a big step forward and we are very, very excited about it. I didn’t answer your question, I am sorry, on the hourly side. This is only for salaried. It’s something that could be done with our hourly employees, but that would be subject to discussions with our UAW partners and of course those are private conversations and we have nothing to say on that at this time.