Good day, ladies and gentlemen, and welcome to the Huntington Ingalls First Quarter 2014 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Dwayne Blake, Vice President of Investor Relations. Please go ahead, sir.

Thanks, Jamie. Good morning, and welcome to Huntington Ingalls Industries first quarter 2014 earnings conference call. With us today are Mike Petters, President and Chief Executive Officer; and Barb Niland, Corporate Vice President, Business Management and Chief Financial Officer. As a reminder, statements made in today's call that are not historical fact are considered forward-looking statements, and are made pursuant to the Safe Harbor provisions of federal securities law, actual results may differ. Please refer to our SEC filings for a description of some of the factors that may cause actual results to vary materially from anticipated results. Also, in their remarks today, Mike and Barb will refer to certain non-GAAP measures, including certain segment and adjusted financial measures. Reconciliation of these metrics to the comparable GAAP measures are included in the appendix of our earnings presentation that is posted on our website. We plan to address the posted presentation slides during the call to supplement our comments. Please access our website at huntingtoningalls.com and click on the Investor Relations link to view the presentation, as well as our earnings release. With that, I will turn the call over to our President and CEO, Mike Petters. Mike?

Thanks, Dwayne. Good morning, everyone, and thanks for joining us on today's call. I am pleased to report strong first quarter 2014 financial results that are right in line with our expectations and keep us on the path for our target of 9-plus percent operating margin in 2015. For the quarter, sales of $1.6 billion were up 2% from last year, and segment operating margin was 8.6%, up from 7.7% last year. Operating margin at our Ingalls segment improved from 4.4% last year to 7.9%, continuing a trend of improving performance while our Newport News segment continued to deliver solid performance at 9% for the quarter. Diluted EPS was $1.81 for the quarter, more than double last year. Additionally, we received $2.2 billion in new contract awards during the quarter, which increased our backlog to $18.7 billion of which $13 billion is funded. Regarding the defense budget, there is continued uncertainty about whether sequestration will remain, and it becomes clear each day that this is not the best way to run our government. The debate over performing a refueling and complex overhaul or inactivating CVN-73 George Washington remains unresolved and this midterm issue could become a near-term issue. We are concerned of the lack of funding in the FY '15 budget proposal for the CVN-73 RCOH will impact the planning necessary execute the RCOH in accordance with the current plan of record. Now this is not the ideal situation as it creates unnecessary churn and makes it difficult to plan and schedule the work on all of our other contracts. However, our team remains engaged with the navy and congressional leadership and our suppliers to ensure that potential implications to the industrial base, our workforce and other programs are communicated and understood. Now I will hit a few highlights of…

Thanks, Mike, and good morning to everyone on the call. Today, I will discuss key highlights from the first quarter and as a reminder, starting in January, our CMSD and AMSEC businesses were realigned under our Newport News segment and prior year results reflect this change. Moving to consolidated results shown on Page 4 of our presentation, we had a relatively straightforward quarter with modest sales growth and strong operating margin performance, which was primarily driven by risk retirement at Ingalls. Total revenues increased 2% for the quarter due to increased sales at Newport News. Total operating income was $159 million, up 67% over prior year, which was mainly driven by increased operating income at Ingalls and a favorable FAS/CAS Adjustment. Consistent with prior years, we were cash users in the first quarter. Cash used in operating activities was $214 million, bringing our quarter-end cash balance to $742 million. During the quarter, we made $39 million of our $123 million qualified pension contribution for 2014. We expect to contribute the remaining amount in the second quarter. Capital expenditures of $24 million were $6 million less than the same period last year. However, we continue to expect capital expenditures for the full year to be in the 3% of sales range. Under our share repurchase program, we purchased approximately 250,000 shares on a cost of $25 million. Before I get into segment results, I want to give a quick update on the Avondale restructuring proposal. We recently submitted an updated proposal to the navy, which included total restructuring cost of $284 million, up from the previous total cost of $256 million. The primary driver of the increase is the exclusion of potential recovery from the sale of assets in line with customer guidance. Now moving on to segment results on Page…

Thanks, Barb [Operator Instructions] Jamie, I'll turn it over you to manage the Q&A.

[Operator Instructions] The first question comes from Robert Spingarn from Crédit Suisse. Robert Spingarn - Crédit Suisse AG, Research Division: Mike, as we think about Ingalls and the strength there, you've now essentially delivered all of the 0-margin ships, so congratulations on that. Are we, as we go forward, going into positive cum cash territory, now that you're focused on the more profitable clean sheet ships?

Well, I think what you'll see is that Ingalls will start to behave as everyone else in the industry from a financial perspective as the ships that we have mature and we get back to our blended rate of more than 9%. So it shouldn't be -- the 5 underperforming ships created an outlier situation for Ingalls there fore the last [indiscernible] it's good to be behind us. Now we need a little bit of time to get the newest contracts we have matured so that we're performing just like -- basically what everybody else in the industry does. Robert Spingarn - Crédit Suisse AG, Research Division: Okay. And given the way -- the ramp that you've previously characterized as conservative on these newer ships, it would seem to me that the 9% target is actually not a final point because at the 9% target you have for next year has these ships still in the early stage margins. So I essentially am asking you what the upside or is there upside to that number as those ships mature?

Well, I mean, I think we talked to this before, Rob, and it's actually the 9 -- my view is that shipyards that are operating well, operate especially when you have multiple platforms and multiple maturities, basically operate somewhere north of 9% and less than 10%. I mean, that 9% to 10% band is kind of where you are. And our view is that, that will be in that -- will be kind of in that band with the right blend and the right maturities next year. And the idea, the hope would be that we'd be able to sustain that. We've got some challenges in terms of sustainment right now around our MFT program that we've been pretty vocal about. And so you see us being very vocal about pushing for a bridge between LPDs and LXRs and what's really driving that, first of all, is that's the most efficient way for the taxpayers to get the ships that they want to buy. But secondly, that's -- the effect of that is that, that creates a sustainment bridge for us and we're able to sustain the performance at Ingalls. And so... Robert Spingarn - Crédit Suisse AG, Research Division: When does this bridge -- what's the timing on the bridge, when do you have the volume issue?

Well, it's starts to play out over next 3 -- probably the next 3 to 5 years. So it's a midterm issue for us, which is why we're on it right now. Robert Spingarn - Crédit Suisse AG, Research Division: Okay. And then just -- I was going to ask you the same question on carrier overhaul and maintenance, the bridge question you brought up, that the overhaul, the RCOH on 73 could be a near-term issue. As we think about 72 and the inactivation of 65, given the uncertainty on 73, at what point do we to start to see a hole?

I'm -- you could argue that there's a bit of a hole right now because we're not really planning for -- we're doing a little bit of planning on the 73, but we're not really planning for an RCOH or the inactivation. We're kind of caught in between right now we'd really like to get on with it a little bit. So there's a little bit of a decline -- you probably can't see much of it, but there's a little bit of decline on the planning side right now. But this thing pushes out more than a year, and it starts to become a problem relative to how it effects the rates in the yards, as well as the volume in the yards. So I think this is a 12-month decision for us really for how we're going to proceed.

The next question comes from Omear Khalid from Goldman Sachs.

Apologies if you already discussed -- but wanted to ask a little bit about M&A here. I understand that the M. Stoller acquisition adds the nuclear servicing capabilities at Newport. I want to just focus a little bit on any potential commercial opportunity, especially as it relate to you like in Avondale. Have you guys seen anything, are you guys actively looking on that front?

Well, we're not going to comment on any of the activity. I would just say at this point that what we said before is that our aperture is wide open as we think about the capabilities that we have and how best to deploy those in a moderately risk -- moderate risk environment. So our balance cash flow strategy remains intact.

Understood. And just as a brief follow-up on the margin front to the prior question. Now that you have delivered LHA-6, how should we think about the quarterly margin profile here in Ingalls in the near term or at least for the back half of this year?

Well, if you're thinking about quarterly margin profile about this business, you're not really looking at the business the right way. I mean, it's just -- we are not a quarter-to-quarter kind of business. We have products that take 4 to 8 years to build and we've a customer that puts out a 30-year plan. What we've said is that, wherever we are today, we're on track to get to something in the 9-plus percent range next year, and that's our path.

Understood. On the EAC profile, there's nothing specific on the EAC that can be released in the back half here or anything along those lines that you guys are looking at?

We have our normal course of risk retirements and that's about all I'm going to say.

The next question comes from Myles Walton from Deutsche Bank..

This is Amit Mehrotra here for Myles Walton. First question is just on the update on Avondale that was provided last month. I'm sure there's not a whole lot you guys can offer given the study is ongoing, but maybe you can give us some color on just how you're thinking about the scope of the company's potential participation. Is there potentially completely new business opportunity there for the company or is there something more -- actually less capital intensive like a lease? Can you just offer some thoughts there on how you're thinking about?

Well, I think the first thing is, obviously, Kinder Morgan is a very credible partner to be working on this with. These are folks who have of a wide range of interest and capabilities. And so they clearly bring a very wide aperture to possibilities around that site. And we're open to that. And so the point of this is to actually try to turn over. As we said all along, we want to turn over every rock and see what we can find. Our effort to do that now is really with Kinder Morgan, and we'll see where it takes us over the next several months.

Okay. And if you were to find an alternative for the shipyard, how would that impact the recoverability of the closure cost? And I guess the most relevant with respect to that is the costs that are already capitalized. Can you just offer some help there in terms of how we can think about that?

Yes, I'll let Barbara answer that.

Okay, sure. The resuming capital cost that we've incurred in everything would still be recoverable under restructuring. What would happen is we would contribute the assets into a -- potentially contribute the assets into the JV. Any assets that wouldn't go into that JV would also be recoverable under restructuring.

Okay, that's really helpful. I just have one question, sort of high-level margin question. And I know you sort of talked about this before, but you've done a remarkable job with respect to margins at Ingalls. You're pretty close to that 9% target, and even though I know it's going to be fluctuation from a quarter-to-quarter basis. But can you sort of talk about are you still thinking about the longer-term operating margin potential of business at 9% or are you seeing some incremental opportunity given the performance to date that there's some opportunity go beyond that on a sustainable basis?

Well, I think that on a sustainable basis, a shipyard that has many product lines and many maturities has a blended rate in the 9% to 10% range. And that's my experience for many, many years. And that's what the industry has told us and I think that that's where we've been trying -- Ingalls has been an outlier to that for many years and they're moving back into that range. And we're very proud of the work that they've done. We think that's what that businesses is capable of.

No, that's really clear. I just thought I'd ask that question. Just the third and last question for Barb. Can you provide some cash flow expectations for the year? Either an absolute number, I guess, maybe more from a conversion of net income basis?

No, we don't give guidance on our cash unit. And part of it is because of the lumpiness, and I know you don't like that word, but a lot of it has to do with timing of collections at the end of the year. So if I gave you a pinpoint number and I miss collections by 1 day and I can be off $200 million on 1 day collection. So not going to provide that.

The next question comes from George Shapiro from Shapiro Research.

Barb, I wanted to pursue the cash flow from a different angle. I mean the free cash flow conversion last year was pretty poor, like 37%. And I know you're talking to K about a lot of it being higher pension contribution. But the thing that has struck me is you've also seen a big increase in receivables, up $176 million in Q1, up $218 million last, last year. So if you could pursue a little bit more what's causing that because I also know in the K you mentioned that some of these receivables aren't collected until '15, some more not until '16. So if you just kind of explain what's going on there.

Sure, no problem. So, George, down at Ingalls, our contracts have retention clauses. So it's not performance related, it's just part of the contract. And depending on what ship, the retention clause calls for 1.5% to 7% of billings to be withheld on your contracts. So for example, LHA-6, the retentions on LHA-6 got to be about $200 million. And so until you deliver those ships, those high retentions aren't released yet. So you'll start seeing a little bit of that change, and in addition to that, you have some pressure related to Gulfport closure that you're not billing. And you have pressure related to issues from Katrina that we still haven't resolved, that we're not billing some of the rates. So those are the types of things that you're seeing. But the biggest drivers in the end are really just AR timing.

When you say like in the K that you'll get $150 million of receivables in '16, that's when whatever ship that's related to where you -- withholding these billings gets delivered?

Yes, yes. But -- and it's constant pressure though because as the ships are maturing, those retentions increase. So part of shipbuilding.

So over time, we'd expect this disparity between cash and receivable or a weaker free cash flow conversion to continue effectively?

Well, I think 2 things will happen, George, and I've said that before. As we resolve restructuring, as we resolve Gulfport, and we resolve Katrina issues, and I expect them to make significant progress by next year, that all that will come out of AR. And so you'll see a pickup there. So I've been saying that, I've said it last year, in 2015, you'll see some improvements there.

And one last thing on that. Could you provide the cash reimbursement you are expecting this year?

The cash reimbursement on -- for the pension side.

Right.

Lets see, I cannot remember that number off the tip of my head, and I'll have to get that for you.

The next question comes from Doug Harned from Sanford Bernstein. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: I'm interested in the Ohio-class replacement. You've been a GD contract, but as you look forward, I don't know if you have -- what extent you're involved in it today, but do you see a likely path here that this could come out to be something like Virginia-class, that it could be good contract ultimately when it goes into production. And so what's the path on that?

Thanks, Doug. I'm not sure that there is a path at this point yet. I think that the best way to think about Ohio replacement program and the industry is that today, there is a submarine industrial base comprised of our friends at Electric Boat and the folks here at Newport News and all of the suppliers that are out there. Today, we are supporting the Virginia-class program. At some point in the future, that submarine industrial base will be supporting the Ohio replacement program and the Virginia-class program. And I think there's going to be a lot of discussion around how's the best way for the industrial base to do that in an efficient and effective way. And I don't think it's clear yet, whether you're talking about capital investment or technology investment or any of that. It's not quite clear yet how that's going to sort itself out. And so we remain committed to supporting these important programs and we'll see what the path -- how it plays out. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: And then just moving on to Newport News. I'm just interested in, to some extent, risk profile. When you look at CVN-78, you're 75% complete, how do you look at -- and I should say, at the same time, you're being funded on CVN-79 on an incremental basis in a sense. How do you look at the risk profile going forward here? Are we heading into a higher risk at the -- for the final stages of the completion of the Ford, or is harder to perform well when you're being funded on an incremental basis on 79. How is this working?

Well, that's a great question. The -- 78 is a lead ship. And so we have moved -- now that the ship has launched and is here at our pier 3, we are moving in to the test program for all of the new technology that we put on to the ship. The ship has come together very well. I've said it before that it's, from a construction standpoint, it's the best lead ship I've seen ever come together. But now we have to go test it. And I think that while we have a lot of confidence about that, I think the proof is in the test. And so given that, I think that everybody kind of walks through a test program on a lead ship with a whole lot of awareness of where things can go. I think the challenge is that as you're -- when you think about the follow-on ship, the 79, I think everybody has been struggling with how do you go to a price-type contract on the second ship when you haven't gone all the way through the first ship. I think the navy was struggling with how to budget for that. I think we have worked our way through what we think the risk of the test program is on 78 and how we could accommodate that in a pricing package for the 79. But the decision that's been made is let's hold off and retire some more of that risk before we go to that final contract. Now doing that classically adds cost to the second contract and adds -- you're not able to cut everybody loose, you're not able to kind of turn the entire supply chain loose. The navy's worked with us very well to try to minimize that cost. And so that's why you've seen some pretty substantial incremental funding both from a supply chain and from a unit construction phase to try to minimize the effect of the delay in a pullout detail designing construction contract because I don't know that anybody's smart enough to know where the crossover is between the extra cost of delaying that contract and the risk retirement of -- that you get because you delayed it. I mean that's been the dance that we've been working through here for the last -- really for the last 18 months. And we're going to be working our way through that for the rest of this year. But given that, we're very confident about where we are on 78, and we're excited about the chance to move out and get moving on 79. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: I believe you'll have -- it's really -- is it 2014 -- you'll have more clarity, you think, by year end on the...

Well, certainly the test program on 78 will have come through some of the bigger items in that program by the end of this year. And our ambition is that we would get to the detail, design and construction contract by the end of the year. I would say that's probably not carved in granite, but that's the plan. And I think that's the navy plan, that's our plan. And I think we have to see how the year unfolds to see whether that still makes sense or not.

The next question comes from John Godyn from Morgan Stanley.

Mike, I wanted to ask a broader question about commercial opportunities. I appreciate some of the earlier questions and the reluctance to talk about any specific opportunity. But we continue to see some progress with the Kinder Morgan deal. I'm just curious, from where you stand today, should we have more confidence that commercial will be a apart of this business as we look out the next couple of years? Is that how we should be interpreting what we're seeing here?

Well, I think that what we've said all along is that we're going to look for ways to achieve the full potential of this business. One of the things that we've come through since 2010 is that in 2010, we were part of Northrop Grumman. We announced that we were going to close Avondale, and we began a very detailed engagement with folks who could talk to us about the redeployment of that site and ways to go use it. We have a very mature risk management process and as of -- at this point, we still haven't found the right way to redeploy that. But in the course of that work, what we've come to understand is that we have a significant engineering capability that complements our pretty significant manufacturing capability, and the risk profiles of engagement in those areas are a little bit different. If we're able to engage in an area where our engineers can lead our manufacturers into that space, we think we can do okay with that. If we are trying to engage an area where our manufacturers are going to try to lead our engineers into that space, that can be real problem for us. And I think that in the history of navy-only shipyards trying to do commercial work, I think that's what you've seen is that the commercial business becomes a real challenge when the manufacturing side is leading the equation. It gets to be possible and achievable if the engineering side is leading the equation. So we're thinking really hard right now about how do we take better and fuller advantage of the engineering capability that we have to lead our manufacturing capability to achieve the full potential of the business. And I think you can think about Stoller as an example of that. Stoller is a company that has tremendous access to a couple of dozen DOE sites. We have tremendous depth of capability with no access. The marriage of Stoller to our engineering and technical support at Newport News creates potential for us in a space that we were not in before. We were there but we were not able to really break through. And so we're excited about that possibility. If we can find other opportunities in other spaces where we can do things like that, we will seriously consider it. And I think you see in our industry today, I think you see everybody wrestling with how do we create growth in an environment where the Pentagon is not advertising a lot of growth. Some folks are talking about international, we're not talking about international. Some folks are talking about commercializing and leading, we are cautious about that, but we do believe that there are some things that we can do and some customers that we can engage with that would enhance the value of this business. And so we're going to keep our eyes open for that moving forward.

That's very helpful. And when we define commercial broadly to include shipbuilding, energy and any other opportunity, how do we or how should we think about capital allocation in that context, investments in potential commercial opportunities over the next few years versus maybe rising capital returns?

I think it just depends on the opportunity at this point. Again, we're interested in the access to the markets and bringing the depth of our capability towards that. Depending on a particular opportunity, we would then take a hard look at whether that capital investment made sense or not.

The next question comes from Carter Copeland from Barclays.

Just a couple of quick ones. Mike, with respect to the post delivery work, I think you mentioned on LHA-6, can you just kind of give us some color on the scope of that and if that has any kind of implications for risk or risk retirements?

No. This is just routine. After we deliver the ship to the navy, the navy will -- they actually -- the crew will work the ship, take ownership of it, if you will. And it's just -- it's kind of the normal course of business that -- we stay engaged with them because as they come on board the ship and they -- kind of like when you move into your new home and they find that something is not the way they would like to have it or they figure out something, we're right there to support it. But there is no issues along those lines. This is just a normal course of getting the ship ready to sail away.

Okay, great. Not anything nonrecurring in nature. And then on the delayed delivery on the first Block for Virginia-class, does that have any, from your vantage point, any impact on you guys or is it are you too far removed for that to have any sort of financial implications or planning implication?

Well, I think the financial implications are less than the thickness of the pencil, so I wouldn't say there's any issue there. It has had an impact on us in terms of the way that we can -- we found this issue. We're working our way through all of the other places and risks pieces of our supply chain to make sure that, in a classic nuclear submarine way, you find the one problem so convince me that you don’t have the problem somewhere else, and we're doing that. So in that sense, it has had an effect but not in a financial or operating way.

Okay. Okay, great. And lastly, Barb, on the pension mortality comment you made, is there anyway you can help us sort of conceptually understand how to think about what some of these impacts might be? I mean, maybe comment on what sort of vintage mortality assumptions you've got baked in today or how we should think about -- how that impacts the liability. Any color you can help us with there?

The only thing -- I mean we looked at it and we haven't come to our complete study with the actuaries and everything. I mean basically, if the mortality tables go up, your costs are going to go up, okay? I think that everybody's in a kind of panic stage that it's going to be a big number. It doesn't appear to be a huge number. But I think what happened was, with everybody looking at cash harmonization as this huge opportunity, it will eat a little bit into that, but it's not material.

The next question comes from Darryl Genovesi from UBS.

So my question is on Ingalls. Should be -- the revenue run rate there now hold pretty steady at kind of this $550 million a quarter kind of level now that the underperforming ships are all out and Avondale is mostly playing a support role, or is there kind of another leg down on low -- kind of on the overall level of effort as Avondale eventually gives up that support role and Gulfport gets closed?

I think that the overall I think will go back to the original issue of we're trying to make sure we have some sustainable effort there around the amphibs. And so whatever fluctuations you might see quarter-to-quarter over the next couple of years, I think the big issues are going to be how do you bridge from the LPD-27 to the LXR and how is that going to work through in terms of the size of Ingalls and the scope of the work that they have on. And so I don't know if you want to add anymore to that, Barb, but I think that's kind of -- that's why that transition is so important to us.

Okay. Yes, I guess I was just thinking maybe a little bit nearer term than that, but if that's the way you're kind of -- if you just -- I guess the way to think about it is kind of what we're seeing now is making sure that you don't hire too many people or drive the yard to too high of a level in front of a potential hole on the LPDs. Is that kind of the message?

Well, I think, part of the boat -- the work that's being done in Avondale, we use that as a bridge to continue looking at opportunities there and to help with the workload at Ingalls. So in terms of it going away, Ingalls will still have steady workload. There will be at tiny bit of pressure related to the Gulfport closure though.

Okay. And then also, I guess, I just wanted to also ask you on Virginia-class. It's been about 4, 5 years now, I think, since you began the ramp up to 2 a year. Are you actually producing and I'll say recognizing revenue at the full 2-year rate now?

Well, it's hard because the material and how we buy material. So if you want to go try to do a run rate, there are fluctuations based on material. I mean we long lead material funding and things like that. So if you're trying to go in and calculate the run rate, we're probably close, but it's -- again, it fluctuates.

Okay. Because I was just looking at this contract award from a couple of weeks ago, and I know there's some price escalations in there. And that sometimes, these headline numbers can be a little bit misleading. But if I just take that $18 billion RSO award for 10 boats at 2 a year and say your 50% share of that should be about $1.8 billion. It seems to me based on the pie chart that you put into your 10-K that your revenues run rate is still kind of 30% or 40% below that level. So just trying to figure out what the gap is and if it might close.

I think you're just looking at timing.

Okay. Okay, so I guess the implication is that there's -- that there is still a ramp -- a little bit of a ramp ahead?

Well, I think trying to straight line that is fraught with some challenges, because you do buy lot of material on the front end of these contracts, and so that starts to -- that skews the program around a little bit.

The next question comes from Jason Gursky from Citi.

Barb, you mentioned in your prepared remarks that the amount that you're going to try recover on Avondale increased in range level, $35 million or $30 million?

Yes.

Based on your lack of ability to sell some assets in line with customer guidance, can you provide a little bit more color on what exactly that means?

Okay, I didn't say lack of ability. That's your words. So when we put that proposal together, the original proposal for $256 million, in there, we had assumed we were going to sell some assets, okay? So when -- during our customer negotiations and discussions on the proposal, they recommended that we look at the whole -- all of the assets and everything associated with the closure of Avondale, and then we would negotiate from there. So they didn't want us putting an estimate on asset sales. So that's what we agreed to do.

Okay. And then just a quick follow-up to that. Where are we in this process? You've got a proposal together. When should we expect, at this point, for the negotiation on that proposal to come to an end and for you begin raising your billable rates and recovering some of that?

So I don't want to give away any strategy on that. But it would be very difficult for me to predict an end. When I think that we'll get in very deep discussions will be when we finish the units at Avondale and make a decision from there. I mean, it is both to our benefit and our customer's benefit to find a redeployment approach. We all make out better for that. So we're balancing that right now. And we're balancing that in this negotiation process.

And can you remind us when the last units will leave that yard?

They'll leave that yard in the third quarter.

Third quarter.

Third quarter of this year?

Yes.

The next question comes from Joe Nadol from JPMorgan. Christopher Sands - JP Morgan Chase & Co, Research Division: This is actually Chris Sands on for Joe. Just wanted to follow-up a little more on Avondale, particularly as it pertains to the timing of the study. Do you expect that will be complete before those units go out in Q3?

About the same time.

Yes

It's about the same time. It's a 6-month study. And so we don't have a direct linkage there and we're not going to force the study to finish early if it's not ready. But they're on 2 different paths, they just happen to be kind of coming -- probably come together about the same time. Christopher Sands - JP Morgan Chase & Co, Research Division: So if the study comes back and says, yes, we think there's a good use for this but it may take us a year to really start generating business, is it possible that you would do other support work for Ingalls in the meantime or would that not be satisfactory, would you just go ahead and close at that point?

Well, you never say never. But I -- my -- I think it's most likely that once this production work is done, we'll be done. Christopher Sands - JP Morgan Chase & Co, Research Division: Okay. So you would need the study to have a positive outcome and a very near-term contract?

Yes. Or an approach. I mean I think it's -- that's why we don't want to try to prejudge what the outcome would be here, but the part of what we would see is a path to a market and then what's that path look like and play it out from there.

And value the economics of it.

Right. Christopher Sands - JP Morgan Chase & Co, Research Division: And -- I mean, you just -- in your last response, Barb, you mentioned that it obviously bodes the navy to redeploy the asset as well. Have they offered any kind of support to kind of bridge you to another use, revenue?

No.

The next question comes from Pete Skibitski from Drexel Hamilton.

I just wanted to verify on the Virginia Block IV award that was mentioned, the $18 billion award. So you guys will book half of that, roughly half of that in the second quarter, is that fair?

Well, we'll book our portion of it in the second quarter.

Okay, okay. And then, Mike, one for you. I missed your opening remarks so I'm not sure if you mentioned this but to HASC, I'm looking to in detail, but it looked like the HASC was fairly supportive of shipbuilding. I think there was some language on the George Washington and on LPD-28. Did you read the same thing and do you have any insight into how HASC was thinking?

Well, the political process of -- is a pretty convoluted one. We are generally overall pleased with the way that the HASC came through their mark. The process from here is a full contact sport through the end of the year. And so -- or through the end of the fiscal year. And so this, we'll continue to stay engaged in that at this point. I don't know that there's anybody who can actually handicap how any of the other committees are going to go forward. And so I think I'll join them and not try to do that.

And I show no further questions.

Okay. Well, thank you all for joining us this morning. It was a great quarter. It's actually -- this now marks 3 full years as an independent company and the things we laid out at the beginning that we had to do. The delivery of LHA-6 is a major milestone in terms of moving down that road. We continue to look forward to achieving the full potential of this business, working on the programs that we have and moving ahead. So we look to see you around and I'll be talking to you soon. Thank you very much.

Ladies and gentlemen, that does conclude the conference for today. Again, thank you, for your participation. You may all disconnect. Have a good day.