Good day, ladies and gentlemen, and welcome to the Northrop Grumman's First Quarter 2014 Conference Call. My name is Glenn, and I will be your operator today. [Operator Instructions] I would now like to turn the call over to your host, Mr. Steve Movius, Vice President, Investor Relations. Mr. Movius, please proceed.

Thanks, Glenn, and welcome to Northrop Grumman's First Quarter 2014 Conference Call. Before we start, please understand that matters discussed on today's call constitute forward-looking statements pursuant to safe harbor provisions of federal securities laws. Forward-looking statements involve risks and uncertainty, which are detailed in today's press release and our SEC filings. These risk factors may cause actual company results to differ materially. Matters discussed on today's call may also include non-GAAP financial measures that are reconciled in today's earnings release. We will be posting updated company and sector overviews that provide supplemental information on Northrop Grumman and our 4 sectors. You can access our updated company overview and the sector overviews on the Investor Relations page at www.northropgrumman.com. On the call today are Wes Bush, our Chairman, CEO and President; and Jim Palmer, our CFO. At this time, I'd like to turn the call over to Wes.

Thank you, Steve. Good afternoon, everyone, and thanks for joining us. Our team is off to a good start for the year, with a solid first quarter set of results. We continue to focus on superior program execution, affordability and innovation in our drive to achieve strong sustainable results. We're proud of our team's performance and the continued focus on delivering value for our customers. First quarter earnings per share increased 30% to $2.63. Excluding this quarter's tax benefit for the partial resolution of the IRS examination of tax years 2007 through 2009, earnings per share grew 18%. Strong operating performance, favorable pension trends and the reduction in share count were the primary drivers of this quarter's results. We were also pleased to see the increase in awards relative to the first quarter of last year. First quarter sales were consistent with our guidance for the year. We continue to see lower volume for programs associated with in-theater troop withdrawals, program ramp-downs and program transitions. Growth in our international business is partially offsetting these impacts. We expect these trends to continue with declines in domestic programs being partially offset by higher volume for international programs, which represented 14% of our year-end backlog. First quarter segment operating margin rate increased to 12.9%, primarily due to strong program performance. Total operating margin rate was 14.4%, reflecting operational strength and favorable pension trends. During the quarter, we repurchased 4.8 million shares for $564 million. Share repurchases reduced weighted average shares outstanding by approximately 9%. As of March 31, we had repurchased 25.6 million shares or more than 40% toward our goal of retiring 60 million shares by the end of 2015, market conditions permitting. Cash from operations was a use of approximately $400 million, principally due to higher working capital, and we ended…

Thanks, Wes, and good afternoon, ladies and gentlemen. As Wes said, just another solid quarter. Our team continues to execute in a demanding environment, and I also want to express my sincere appreciation to them for their continuing dedication. My comments will focus on sector results and our cash outlook for the year. So starting with the sectors. Aerospace, where sales declined by $65 million or 3%. The volume decline was largely in space programs and unmanned systems, with the unmanned volume decline primarily due to lower production activities on Global Hawk and Fire Scout. These declines were partially offset by higher volume on the NATO AGS program. Operating income increased by 20% due to strong performance and a $48 million increase in net favorable adjustments. The higher level of adjustments was across several contracts, none of which were material on an individual basis. For the year, we continue to expect sales to range between $9.7 billion and $9.9 billion, and we expect AS will have a margin rate in the high 11% range, versus our prior guidance of mid to high 11%. Turning to Electronic Systems, first quarter sales declined by 4% due to timing of deliveries for various combat avionics programs, as well as the lower deliveries of navigation and maritime systems. Declines in these areas were partially offset by double-digit growth in international activities. Operating income declined 9% and operating margin rate declined by 90 basis points. You might recall that last year's first quarter benefited from the reversal of a $26 million non-programmatic risk reserve. While this year, ES had favorable adjustments of $57 million, which were $23 million lower than last year. So for the year, we continue to expect sales of $6.8 billion to $7 billion, with an operating margin rate in the low…

Thanks, Jim. [Operator Instructions] Now with that, Glenn, we are ready to begin the Q&A session.

[Operator Instructions] Your first question will come from the line of Myles Walton with Deutsche Bank.

It's actually Amit Mehrotra here for Myles. Had a quick question on share repurchase. You're executing well to your plan to retiring 25% of the shares by the end of next year. But it'd be helpful to get your thoughts on how you're thinking about share repurchase beyond that. Should we expect a shift in strategy, maybe from cash allocation away from share repurchase more to M&A? Can you just offer some thoughts on that? And where does acquisitions also rank, when you look out beyond 2015 as well?

Somewhere in April of 2014, and our plan, as we have announced, really carries us through 2015, so I really wouldn't want to today speculate what might be going on in our environment and how we might be thinking about things at the end of 2015. All I would say is, if you kind of look back over the last number of years, and look at how we've been approaching cash deployment, our priorities remain the same. We like investing in our business. We want to make sure we're doing a good job of managing our balance sheet. And of course, we're wanting to make sure that we're doing a good job of returning cash to shareholders. So I would say we're a fairly predictable crowd in that regard.

Okay. And just a quick follow-up with respect to the backlog. Could you just offer any color on where you see that shaping up by the end of the year, and maybe provide some of the major awards out there that we can expect in the coming quarters?

We don't guide on awards for the year. As I noted in my remarks, we clearly had a, I think, a respectable quarter in terms of awards. And as I think about the set of opportunities that are in front of us, predicting the exact timing quarter-to-quarter is always a little bit of a challenge, given how things are tending to move around a little bit with the RFP dates and the rest. But we see ourselves well positioned, as I said in my opening remarks, across each of our sectors for a number of important opportunities that are both the remainder of this year and in the next year. So many of those are competitive opportunities that I mentioned, but it's a -- also an important perspective to understand about our company, that much of our sales in year derive from our current backlog. In fact, we expect that about 80% of our revenues this year flow directly from our backlog in the company.

And your next question comes from the line of Noah Poponak with Goldman Sachs.

I just wanted to follow up on some of the color you gave in the segments. In aerospace, where you cited lower unmanned, can you quantify how much of that came down? And can you paint when the total unmanned revenue contribution bottoms? I know some things are moving higher, some are moving lower. And then in IS, when you're citing in-theater reductions, can you quantify what that total contribution is to the segment at this point, and how it progresses from here?

Yes, no, Jim, obviously. As we said, IS sales, for example, were down roughly $100 million, the in-theater stuff is less than half of that. So again, in IS, you get --

In terms of the change?

Pardon?

In terms of how much it changed?

Yes. And then in terms of unmanned, basically, unmanned is largely flattish on a year-over-year basis. Some small -- it's a little bit greater declines on, as I mentioned, the 2 programs, Global Hawk and Fire Scout, and then growth in NATO AGS and [indiscernible] down. It's phenomenal.

Is the unmanned business growing, once you're out of 2014?

I believe so.

Yes, I think if -- when, if you look back at the remarks I made about the set of opportunities that we have in front of us, clearly, getting Triton into production is the, I would say, the biggest lever, the biggest step, and we're going through the test program today, and that's doing well. But the international side of unmanned is also quite intriguing. I mentioned earlier about the step forward in Korea with the LOA, and the growing interest that we're seeing around the globe in our High Altitude Long Endurance programs, what we call our HALE programs, both Global Hawk and Triton-based platforms. So we see a lot of opportunity in unmanned in front of us.

Okay. And sorry, just so I'm clear on IS, with the in-theater revenue, what is the absolute dollar number, not the rate of change, but just how much it still is, on an absolute dollar basis?

Well, across the company, we're looking at about $800 million, as I recall. Steve, is that right? Yes.

It's a $300 million reduction.

$300 million over -- from last year.

Year-over-year, but $800 million for the year.

Yes, across the company.

And how much of that is in IS?

2/3, 3/4, something like that.

The reduction is probably -- 40% is IS.

Yes.

And your next question comes from the line of Cai Von Rumohr with Cowen & Company.

So I think you said, you expect your foreign business to go from roughly 10% to 13% of the total. I mean, it's a little tough to tell exactly what that is with rounding, but it looks like that implies a gain of about 25%. And you've mentioned several times the opportunity of HALE, F-35. Can you give us some color on where we should see that going next year? And where do you see this in like 3 to 4 years as a percent, maybe give a range?

Cai, it's always difficult to time the exact point when all these international opportunities occur. For me, what's positive is that increasing interest across a number of countries in our High Altitude Long Endurance platforms. So again, I'm not going to call to exactly when that will occur. Getting Korea done will be an important first step. I believe that is important not only because of the opportunity, but it serves to facilitate the next move behind it. So again, we're working very hard on Korea. We have a Letter of Offer and Acceptance, and the next step is to get that under contract. That's what our team is working on.

And Cai, I would just add, in addition obviously to kind of a newer story for us, in international being our unmanned opportunities, as well as potentially some manned opportunities of the platforms like E-2D, we continue to have a robust international business and set of opportunities through our Electronic Systems organization. And in fact, all 4 of our sectors are focused on a set of international opportunities. Jim's point about the predictability of timing, it is a very important one in the international business, but we are very focused on this, and are working it broadly across the entire enterprise today.

Right. And while I realize it's always difficult to pinpoint the timing, it certainly looks like F-35 clearly is going to be a plus there. HALE clearly will be a plus. If you look out 3 to 4 years, so that we're not timing it exactly, I mean, could this be 20% to 25% of your sales? Or any rough range you could give us?

It again is kind of hard to say, so much of what we do on export also depends on the nature of export control restrictions. And I'm delighted with what I see happening today with the administration working hard to move things ahead as extensive commitment in DoD to step out and help through our policy changes that will enable the U.S. to better support its allies around the globe. But there are a lot of factors in the mix here that make it difficult to put a number or even a range of numbers on at this point. But the vectors seem to be aligning in a very positive direction.

And your next question comes from the line of Jason Gursky with Citi.

So a big picture question that kind of follows on the heels of the spirit of Cai's questions as well, in trying to get a sense of timing that, as you suggest, the exact timing is always difficult. But in looking at the fiscal '15 budget, the program decisions that were made within that, and putting OCO aside, and into your revenue streams that you've had, and then just looking at your base domestic business, do you have a sense of, the fiscal '15 budget's implemented, when you might see a trough for domestic revenue streams. But Cai's looking at the long-term trajectory of international, and I'm just kind of curious, given what you see in the fiscal '15 budget, when you think the domestic budget, the OCO aside, stabilize.

Yes, the way I would characterize that is, first and foremost, obviously, we're all delighted to be operating right now under a real appropriations. This is a big step forward from where we had been in terms of predictability and the ability to plan and with the Bipartisan Budget Act that came together at the end of last year, it does, and I think this was a part of your question as well, it does offer a better outlook in terms of predictability and stability for '15 as well. So yes, I think the real question is what happens after that? And there are a range of possibilities, and sequester budget is a real possibility. I think the President rightfully put forward to the Congress in the longer-term outlook, a very strong message about what's really needed to support the security of our nation. And the budget profile that came forward in the plan that the President submitted is above the sequester level. How all that will work out through the politics over the next couple of years, and I think it would be foolish to speculate on that at this point. I do think it's rational to expect that the U.S. budgets will eventually stabilize, and clearly, investments in security are going to need to start growing again. But at what rate and exactly when, I wouldn't want it to be in the spot of trying to predict that right now. So we'll have to stay tuned. I think there's a lot of work to be done to get the budgeting process in the right place to support national security as we work our way through '15 and really take on the challenges associated with that range of possibilities in '16 and beyond. And I know a lot of folks have tired on the discussion around the sequester. But I think we should all be realistic and understand that they're still an important set of policy decisions and budgetary decisions that are out there in front us that we're going to be taking on as we go through this year and next year.

And your next question comes from the line of Doug Harned with Sanford Bernstein. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: I'm interested in how 2 things might affect your F-35 margins, and the first one is volume. And as F-35 quantities are down in the President's budget, particularly for the C model, and then a sequestration in 2016 would lead to some further reductions, I'm interested in how, and knowing that you do have volume considerations in pricing, that could affect your margins? And then second, over the past year, the program office has made a point to try and look beneath the prime into costs in the subcontractor community. I'm just interested in the volume question, and then the change in the way the program office is looking at the program. Does this impact you at all, in terms of what your margin expectations are?

Doug, the volume's, is a very important contributor, probably the most important contributor to our ability to drive down the learning curve. So volume is really important. We've been coming down a very healthy learning curve already. But as you point out, volume is critically important to being able to continue driving down that learning curve.

Yes, and let me maybe talk about the perspective on the program office side of it. I -- the way I would frame this is, Lockheed is, I think doing a very good job as the prime on this program. This is a team, and so we have a big part to play as other companies, in making the program successful. And so naturally, the program office is very interested in what the major teammates are doing and how that's going, so I don't see anything unnatural in the process that has been underway. I think it's sort of a natural step here, particularly as we are, together, very focused on, to Jim's point, how we deal with the volume challenges that are out there in the near term, and maintain an appropriate path forward on driving down the curve and driving the affordability that we know is so important for this program, both domestically and internationally. So I would characterize it more as the framework of the team environment that we need clearly with Lockheed on the front as the prime, and doing the things that are very, very appropriate for the prime to be doing. But I could see -- I continue to see a very good team environment on F-35, and I think that's part of what is contributing to enhancing the success of the program that we're having now. So I'm positive about the way we see F-35 operating today. Douglas S. Harned - Sanford C. Bernstein & Co., LLC., Research Division: So given that performance improvements that you and others in the program have made, if you balance that off against some of these other pressures, such as volume, would you say, as you look forward, you're more or less optimistic on your ability to get a good margin progression going forward?

Well typically, as we move forward in a program and move into the production phases, that's where the industry has an expectation of making margin, is in production. We've all made substantial investments in this program, and continue to make investments in the program, and that is sort of a natural cycle. So I don't have any different expectations and what experience would tell us should be the outcome.

And your next question comes from the line of Sam Pearlstein with Wells Fargo.

Was wondering if you could talk a little bit more about Aerospace Systems and you threw -- you put out the $48 million worth of adjustments. Can you just talk about, is there any particular program that's a bigger percentage of that? And what was, I guess, contemplated in the earlier guidance that might've just been later in the year versus something that was new performance?

You hit on an important point, and that is timing. Many times, our EAC adjustments are tied to specific events as they occur. We did have some of those events occur in the quarter that affected the timing of adjustments. As our guidance would indicate, the 13.4% for the quarter is not what we would expect aerospace to land for the full year. So there are clearly some of those items affecting the first quarter. As I said in my prepared comments, none of the adjustments on an individual contract basis were material. As I think that's a pretty good summary of what happened in the quarter, just a good, strong underlying operating performance and then some events that were tied to those timing aspects of the -- managing the programs.

Okay, and if I can follow up, something unrelated, is May, is typically when you look at some of your annual dividend, and I know that you typically have very payout-focused, but I'm just wondering, is there anything about the capital deployment strategy that would change the way you look at that and the type of decisions you might make?

Sam, it's Wes. You guessed May is typically when we look at that. That is a board level decision. I would not want to get out in front of that level of decision. I would simply say what I said earlier, our approach to capital deployment and priorities in capital deployment have not changed.

Your next question comes from the line of Robert Stallard with Royal Bank of Canada.

There's been some talk recently about the recent green book that came out, and what the DoD is projecting for outlays this year? I was wondering if you looked at this, and how it tally with your revenue forecast for the year, particularly on shorter cycle areas?

Yes, Rob, we've of course, looked at it, and I will tell you, we did not see anything in the green book that altered our outlook for 2014. I think I mentioned earlier that over 80% of our 2014 revenues tend to flow from our backlog. And when you look at what's in the green book, clearly, there's a lot of work done to pull that together. The green book forecast really do not represent contractual ceilings and outlays, which are typically quite a bit lower than Budget Authority. The Budget Authority does represent kind of what the limit is, so you need to be looking at the BA aspects of things. So the short answer to your question of whether or not we saw anything in the green book that changed our outlook, the answer's no.

And obviously, the green book came out after we gave our forecast for the year, outlook for the year, and haven't changed our sales guidance.

And just an unrelated follow-up, the acquisition you made in Australia this quarter, I was wondering if you can give us some of the background there of what this adds to the portfolio, and whether we can expect further bolt-ons going forward?

Rob, we look routinely across the board at opportunities such as this. We've not been a very major acquirer for quite a few years, and I think that reflects the discipline that we have in looking at potential opportunities. This was like a very nice fit, and I think it's going to be a very nice fit for us. It dovetails with the work that we're doing in our Technical Services organization, both domestically and internationally, Australia is a very important ally of the United States, clearly a very important market for Northrop Grumman. And so the fit, from a portfolio perspective and a geographic perspective and a market perspective, we found to be very attractive.

Your next question comes from the line of Howard Rubel with Jefferies.

I'm going to, kind of go in a different direction. I mean, there is an expression, Willie -- I think Willie Sutton, they said, wherever Willie Sutton was, he's going to rob a bank, or where the money is, he'll go rob the bank, and your guys are banging your head to some degree against the wall with some of the difficulties that exist either in foreign sales or in DoD, and not to say that's not your expertise, but then there's these guys in Silicon Valley that are trying to spend billions of dollars solving problems that you've solved many times over, Wes. And so why aren't you approaching some of those companies, or doing something to take advantage of all that money that's sloshing around, solving problems you've addressed before?

Howard, I do appreciate your question, because it's a good, kind of a sanity check sometimes to look at all the things going on in the world around us and try and test what makes sense. One of the things that I think we've learned, I would say in our company, and I think generally across our industry is that, we are quite good at what we're good at, and we tend to want to stay focused on that. And periodically, we do look at what other companies are doing and market access that they may provide to see if there are reasonable partnership opportunities and we explore those from time to time. We've had, I would say, across our industry, some notable successes in that regard, as well as some abysmal failures in that regard. So I think it's just prudent to be very careful and thoughtful about how you go about doing those things. But we are a very technologically oriented enterprise. I have mentioned a number of times, our -- of our 65,000 employees, more than 30,000 are degreed scientists, engineers, mathematicians. This is a very, very capable enterprise when it comes to advancing the state-of-the-art on technology. And we have both an interest in partnering where we see that it makes sense. But also, we have, and we take this very, very seriously, an obligation to our customer community to very carefully protect the technologies that are utilized from a national security perspective. And so we're careful and diligent about balancing that out.

So should I take that to mean that some of these things that are percolating in the commercial -- I mean, I get it, how should I say it? It's hard to sell into a market that's got different requirements than what you're selling into now. And it's your point on testing your comfort zone, though these rewards might be fairly lucrative and they change the valuation of the enterprise. And they -- I mean, as you know when you were TRW, periodically, there were great successes, but also there was --

There were.

There were also some "oops."

And I think we've all learned from both of those sides of the experience curve, and recognize that there are value-creating opportunities periodically. You simply need to select your partners carefully. You need to have a very clear view of what the real channels to market are, and you need to be ready and willing to turn things off if it's not panning out. And that guides a lot of our thinking, and how we approach these things.

So I'm just trying to draw you into an answer that is that some of these things have some appeal, or we tested them and no, thank you very much, we're very comfortable in our space?

I would say that part of being a good partner is to protect the privacy of your partnerships. And so we're very careful about anything that we would say about that too broadly. But the one thing that we do say, when we get out on campus to young folks that are thinking about their options, and there's an incredible competition for talent in the technical space these days, if you really want to work at leading edge technology and advance it, our industry is the place to be.

Our next question comes from the line of Joe Nadol of JPMorgan. Joseph B. Nadol - JP Morgan Chase & Co, Research Division: So Wes, I have a question for you that's been kind of brewing for -- since the last quarterly call, which is on your CapEx plans, because you guys have been pretty tight-fisted, I think in a good way, in terms of your spending in all kinds of ways, including CapEx, the last couple of years. You've talked about aerospace centers of excellence as really kind of the key driver of the plane going forward. And I wondering if you could maybe take a couple minutes and give a little bit more on what you're doing and why you're doing it. Is it about more of a productivity or business capture? Is it programs that you already have, or ones that you're chasing, just a little more on the investment?

Yes, Joe. I appreciate the question. Aerospace Systems is certainly a big part of our enterprise. And as you've heard us talk today about the set of opportunities that we see in the future, from our perspective, that set of opportunities is adequately robust to merit investment, to make sure that we're doing the right things to be able to pursue those opportunities, as well as to execute on those that we've already captured. If you turn the clock back quite a few years ago, we are a company, like many in our industry, built through acquisition, and that had not necessarily resulted in the most efficient structure and architecture for how to get things done. So as we have worked hard to clarify our strategy, to make decisions in our company about what markets spaces we're really going to pursue and invest in, versus those that we are not, it's become clear, had become clear over the last couple of years that we needed to re-architect our footprint to better align with that strategy. And the benefits that we see from these centers of excellence are really severalfold, and I think you touched on them in your question. One is, our ability to better align the human capital that makes these things work, into centers of excellence where the people who are working on similar things are more closely co-located, and we can better share the knowledge as well as to create new opportunities by having individuals more closely working together on a day-to-day basis. Secondly, the efficiency of the facility infrastructure itself has the opportunity to be dramatically enhanced with the investments that we're making. And so we see that as very, very meaningful and important, from a competitiveness standpoint, as we take on some of these new…

Joe, I would say it's going to be a combination of improved efficiency to sustain margins, and the potential for higher sales as the new program opportunities materialize. Joseph B. Nadol - JP Morgan Chase & Co, Research Division: Okay. I just had one quick one for you Jim, also, the EPS guidance went up. It may be up a little less than one might think, since you raised your margin guidance and also had the tax benefit that wasn't fully incorporated. Were there any offsets, or is this just a Q1 conservatism?

No, actually, the guidance raise essentially is about half tax rate and half guidance. When I looked at our raise in guidance, in terms of segment operating margin rates, roughly 10 basis points or so, that's about $0.07 to $0.08, $0.09, dependent from up where you are, and the tax rate is about another similar amount. So essentially, that's the adjustment to guidance.

Your next question comes from the line of Robert Spingarn with Crédit Suisse. Robert Spingarn - Crédit Suisse AG, Research Division: A couple of different questions here. Just first, Jim, a clarification, because it didn't get caught in the transcript here. On the mortality comment you made earlier in your opening remarks, did you say there was no impact or did you not quantify it? I can't quite tell.

Well, what I said is this mortality discussion has been ongoing for a while. We do expect that we should see some updates to mortality assumptions later this year. If that occurs, it will be in effect for year-end measurement of projected benefit obligations, which then affect 2015 expense. Robert Spingarn - Crédit Suisse AG, Research Division: Right, yes, next year.

You can guess a range of what that may mean, because obviously all of us are trying to understand what will be the updates to mortality assumptions, whether or not or how directly they apply to our circumstances. So frankly we're going to have to have a little bit more information and a little bit more time to study what it means. Robert Spingarn - Crédit Suisse AG, Research Division: Okay, I think the expectation and maybe incorrect, was that given that one of your peers actually threw a number out there, which was probably subject to change once things are finalized, you're just not in a position to that.

Well I think we can all speculate on what it may mean. But I think as I said, I think that it's, in all confidence, I can say that over the long term, projected benefit obligations will increase, that FAS and CAS expense will likely increase. And dependent upon the funding status of your plans, funding may be impacted as well. The exact timing, exact timing and in exact amounts at this point, are a little bit of an unknown. Robert Spingarn - Crédit Suisse AG, Research Division: Unknown, okay. Two more. This one, Wes, is for you, and it's a little bit of a budget discussion again and on M&A, but you talked about the differences in fidelity, perhaps, between Budget Authority and outlays. And given that sequestered budget authority in '16 would seem to be about flattish with Ryan Murray, Budget Authority for '15, is it fair to say that on the domestic business, you have really reached a trough, or you can at least see it, and what should that invite perhaps earlier M&A activity now that visibility's improved a bit?

I would continue to say that visibility has improved for '14 and '15, projecting the political dynamics between now and the appropriation cycle in '16. It's not something I would want to be speculating on. And if you just turn the clock back, that amount of time, instead of looking forward, turn it back that amount of time backwards, and try and predict exactly where we would have been today, given where we stood then, you would have been wrong. So I think we're going to have to see how this plays out. And I am concerned about it, as I said in my earlier remarks, and as I know our customers are concerned about it. Anytime we're in a place where the President, despite all of the challenge that we all recognize, we're facing from a total budgetary authority perspective, the President, in putting forward a budget, has to be as clear as I think the clarity was provided in this round that the current budget at sequester level just doesn't do it for national security. But you have to see the pushback that initially came off of the Hill on that, to me is a very strong signal that we've got a lot of political dynamics still in front of us. Where it actually lands, we're going to have to see. Robert Spingarn - Crédit Suisse AG, Research Division: So is this to some extent because of your exposure to the programs they've already talked about, if sequester comes through in '16?

It's not. My commentary is not so much about our particular company's situation on this. I'm speaking more broadly about the investment accounts and the O&M accounts that our industry relies on, and as a source of domestic revenue, and related to that obviously, what it means for core structure and the rest of it. So those are all things that are bound up together, the set of decisions that translate from the total budget levels into what actually gets invested in equipment, in maintenance and the rest of it. There's a lot that goes on in the world between now and 2016. Robert Spingarn - Crédit Suisse AG, Research Division: Okay. And just lastly on margins, and this is really for either of you. But you've done a great job, and many in the space have, in terms of getting ahead of revenue declines with your costs. And certainly, I think this translates well in the short-cycle contracts. On the long-cycle side, where would we be, in terms of repricing to the new cost structure, in terms of how much turnover have you seen where you've already re-upped the contracts or signed new contracts that have pricing that reflects your new cost structure, and how much is left to do?

Rob, you can pretty simply do the math, frankly. If you look at the run rate of revenues in each of the sectors versus the backlog, and that kind of tells you how much of...

Term.

Yes, the term is. Obviously, aerospace is a little bit longer than the others, and IS is a little -- it is shorter than the long-cycle business. It essentially goes with the comments that we've been making all along about the longer-cycle businesses and the shorter-cycle businesses. Robert Spingarn - Crédit Suisse AG, Research Division: Yes, but then there's the other, the contract nuance that's not easily detected from outside.

I was just going to say that, that is the nature of this business, is continually repricing contracts every year when new contracts come up, and continuing to manage cost on a, day in, day out basis. That is the business.

The thing, too, I would add is, be careful about a static kind of approach to thinking about the cost equation. Yes, we and others in our industry have made some good progress on managing cost and doing what I would describe as sort of a tough blocking and tackling approach on headcount and infrastructure and that sort of thing. No one should assume that the game is up on cost management. That's a constant focus, certainly in our company and I think even more broadly than our company. And as we look at all of the levers involved in that, whether it's technology or architecture or the other elements of affordability, and we all have to continue to be on the cost agenda, if you will. So it is not sort of a static model where you can say, okay, we've taken cost out now, all go-forward contracts no longer get any benefit of future cost reduction. If that were be the model, we'd be in trouble.

Your next question comes from the line of John Godyn with Morgan Stanley.

I wanted to follow up on 2 topics from earlier in the call. First, on international sales and the growth opportunity there. I was hoping that you could just elaborate on how to map that to some of the segments, to the extent that Aerospace and Electronic Systems maybe have greater exposure to it than some of the other segments? And the second topic, just to follow up on the last question that was asked. I'm curious, with the improvements in cost and productivity, and you've certainly been differentiated in that right as well as the well-positioned pension, have you found that to actually lead to any competitive wins? Or an ability to kind of position yourself as a lower cost provider and turn it into maybe a little bit of a better revenue trend?

So on international, the breakout that I would see, if you're trying to map it to sectors, clearly, Electronics has our biggest footprint internationally, has done so for many years, run, sort of in place on the range, 20%, 25% of its sales, as international, and sees continued, very meaningful opportunities around the globe, ranging from upgrades to radar systems to new sensor suites to both the airborne side, the ground-based side. And it is, I think, a very well-positioned and robust international business for our company. Aerospace Systems is a little bit more, if you will, of a new story. It's largely associated with the unmanned system capability, and as well as, I mentioned earlier, we do see some manned potential around the globe, in terms of our E-2D platform and potentially some others. So it is more of an emerging international business, has some footprint today in that regard that is I think rapidly growing. With respect to Information Systems, clearly, the awareness and understanding of the importance of Cybersecurity is growing around the globe, and we have a very important and well-established position here in the U.S. and we are exploring the options for continuing to grow that. IS has, for some time, participated, I would say, at a smaller level, but in a growing way, in the C4ISR domain for some international business. So those are really the pieces. Tech services, by the way, as well, does a fair amount of training and maintenance support around the globe, too. So those are good opportunities for us that I think we're going to just continue to push on and see the opportunity expand. Now with respect to your final question on cost, clearly, yes. And it's important that we continue to work on the cost structure. I would put it in the inverse manner, that if we weren't doing it, I'm sure we would be losing. So hard to attach individual wins to a particular cost structure but we know it's vital to the competitiveness of our business.

Glenn, I think we're out of time. So at this point in time, I'd like to turn the session over to Wes for final comments.

Okay thanks, Steve. As he said at the start the call, the first quarter really is a good start to the year to us, and I am just delighted that we were able to raise our EPS guidance, based on the performance that we've seen in the first quarter. So thanks, everyone, for joining us on our call today, and thank you for your continuing interest in our company.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect, and have a great day.