Curt Riggle Ralph W. Shrader - Chairman of the Board, Chief Executive Officer, President, Chairman of Executive Committee, Chairman of Nominating & Corporate Governance Committee, Chairman of The Board of Booz Allen Hamilton Holding Corp, Chief Executive Officer of Booz Allen Hamilton Holding Corp and President of Booz Allen Hamilton Holding Corp Samuel R. Strickland - Chief Financial Officer, Chief Accounting Officer, Chief Administrative Officer, Executive Vice President and Director Horacio D. Rozanski - Chief Operating Officer and Executive Vice President Kevin Cook

George A. Price - BB&T Capital Markets, Research Division William R. Loomis - Stifel, Nicolaus & Co., Inc., Research Division Brian Gesuale - Raymond James & Associates, Inc., Research Division Timothy McHugh - William Blair & Company L.L.C., Research Division Carter Copeland - Barclays Capital, Research Division Edward S. Caso - Wells Fargo Securities, LLC, Research Division Robert Spingarn - Crédit Suisse AG, Research Division

Good morning. Thank you for standing by, and welcome to Booz Allen Hamilton's earnings call covering first quarter results for fiscal 2014. [Operator Instructions] I'd now like to turn the call over to Mr. Curt Riggle.

Thank you, Sean, and thank you, all, for joining us today for Booz Allen's First Quarter Fiscal 2014 Earnings Announcement. I'm Curt Riggle, Director of Investor Relations. And with me to talk about our business and financial results this morning is Ralph Shrader, our Chairman, Chief Executive Officer and President; Sam Strickland, Executive Vice President and Chief Financial Officer. We hope you've had an opportunity to read the press release on our first quarter earnings that we issued earlier this morning. We have also provided presentation slides on our website, and are now on Slide 1. As shown on the disclaimer on Slide 2, please keep in mind that some of the items that we will discuss this morning will include statements that may be considered forward-looking, and therefore, are subject to known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. Those risks and uncertainties include, among other things, general economic conditions, the availability of government funding for our company's services and other factors discussed in today's earnings release and set forth under the forward-looking statements disclaimer included in our fiscal 2014 first quarter earnings release and in our SEC filings. We caution you not to place undue reliance on any forward-looking statements that we may make today and remind you that we assume no obligation to update or revise the information discussed on this call. During today's call, we will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for investors. We included an explanation of the adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our fiscal 2014 first quarter slides. It is now my pleasure to turn over to our CEO, Ralph Shrader, and he will start on Slide 3.

Thank you, Curt. Good morning, and thank you, all, for joining us today. It's been just 2 months since our last earnings call, and therefore, the market conditions and financial drivers of our business are much like those we discussed at the end of May. While procurement delays and price pressure in our core U.S. government market have constrained revenue growth, we've been successful by focusing on productivity and cost management. This has enabled us to once again deliver on our bottom line earnings commitment. Sequestration is affecting our clients significantly. And in my view, there's no question it is impairing their mission to protect and serve American citizens. To date, the effect on our business has not been material from a financial standpoint. However, I believe great damage is being done to our country by this miscarriage of politics. The most significant news of the past quarter was the abhorrent actions of former employee, Edward Snowden, who had worked at Booz Allen for less than 10 weeks. I spoke to all of our employees at a town hall meeting the week following his announcement that he had leaked highly sensitive national security information. I'd like to share with you something I said to our people that day. I told our employees, Mr. Snowden was on our payroll for a short period of time, but he was not a Booz Allen person and he did not share our values. We cannot and will not let him define us. That is the most important message I can convey. You define us. The work we do for our clients defines us. Now in that regard, we continue to do everything possible to support our clients' mission and the United States government's law enforcement investigation. Within the firm, we're being vigilant and are…

As Ralph described a moment ago, we're entering fiscal 2014 retaining the important controls on our business that contributed to our success in the second half of the last fiscal year. Despite top line revenue that was down just slightly over the prior year, we continue to take pride in our ability to maintain growth and bottom line earnings while expanding margins and improving adjusted earnings. Our financial success relates to the conversation we had on last quarter's call about the need to maintain the proper ratio of indirect costs to direct labor. In the first quarter, we closely managed the labor capacity and deployment of our consulting staff to meet client needs while setting aside the right level of unbillable time for proposal activity and marketing efforts, such as our tactical selling program that has been so successful in the past. At the same time, we've managed indirect costs through necessary adjustments to compensation and compensation-related benefits to ensure our ability to invest and to enhance our competitiveness. As we've discussed in the past, our spending will fluctuate by quarter. Our goal is to manage spending on an annual basis to achieve the proper balance in this ratio by our fiscal year end. Generally speaking, our disciplined management of indirect costs in the first quarter positioned us well with more flexibility for the remainder of the fiscal year. With that backdrop, let's look at some of our key results in the first quarter and the factors that drove them. We could now turn to Slide 4. Gross revenue for the first quarter of fiscal 2014 was $1.42 billion, a decrease of 0.3% compared with the year-ago quarter, and organic revenue for the quarter was approximately $80 million. The slight decline in revenue was primarily driven by modest declines in…

Thank you, Sam and Ralph, and thank you, all, for listening to our summary of results and outlook. Our Chief Operating Officer, Horacio Rozanski; and Senior Vice President and Corporate Controller, Kevin Cook, are here with us as well to answer your questions. Sean, can you please provide instructions for the question-and-answer portion of our call?

[Operator Instructions] Our first question comes from George Price of BB&T Capital Markets. George A. Price - BB&T Capital Markets, Research Division: I just wanted to start off asking about profitability trends. I believe you guys tend to be better in the beginning and end of the fiscal year. I wanted to see if you kind of expected that pattern to hold this year. It seems like with the strong first quarter start, you're on a trajectory to hit or exceed the high end of your EPS guidance. So any color maybe you can give in terms of the assumptions around the rest of the year in terms of profitability would be helpful.

Well, George, it's a good question. And you're right. We do tend to watch our indirect costs very carefully in the first quarter of the year to make sure that those indirect costs don't get out of hand before we get too late in the year to do something about it. We were very careful in reaffirming our guidance. We took a look at the year. We see -- we have seen some impact from sequestration. We do believe that we'll start -- the government's fiscal 2014, which begins October 1, we believe that will be under a continuing resolution. And when we factored that in there, we felt that it was appropriate for us to maintain our guidance, which was, just to reiterate, low single-digit decline in revenue and adjusted diluted earnings per share in the $1.55 to $1.65 range. I was just going to say again, as I'd mentioned -- I think as I'd mentioned in my prepared remarks, we do manage the business on an annual basis, as a quarterly basis. Therefore, sometimes, we get quarterly fluctuations that send signals that we would just as not send, but under the circumstances that we feel like it's important then that we iterate our guidance so that folks know exactly what we're thinking and what we're planning. George A. Price - BB&T Capital Markets, Research Division: Okay, fair enough. And just staying on the margin theme and noting that you just told us that you're looking at this on an annual basis, not a quarterly basis, but GAAP operating margin close to 10%. And certainly looking forward, if you continue to trend well vis-à-vis your guidance, you're going to be certainly still doing well from a margin perspective and kind of getting close to that upper bound of historically what's been an upper bound for the sector. And I can't really think of too many companies, really 1 off the top of my head, that has done a 10% or better operating margin. So I guess, the question is where do you think you can top out in this type of environment, if we just kind of muddle along in this type of environment going forward, given the actions that you've already taken?

Well, George, just -- let's just review the typical patterns in our industry. If you take a look, and this was particularly true this year, there's not a tremendous amount of proposal and marketing activity in the June quarter. That tends to pick up in the September quarter, of course, as we get to the end of the government's fiscal year. That then increases indirect expenses, marketing, bid proposal and so forth, and has a tendency to dampen margins, for example. By the same token, when you get into the December quarter, you have lots of holidays. And when you're a staff-driven business, that tends to reduce your direct labor, which then tends to reduce revenue and margins a bit. And then you get into the September quarter, and the September quarter is generally long and everybody's working hard, so that tends to be a more profitable quarter. So that's kind of the typical pattern that we see and we factor that into our guidance. So when we provide our annual guidance in the $1.55 to $1.65 range, we've tried to take all of that into consideration. George A. Price - BB&T Capital Markets, Research Division: Okay. Just a quick housekeeping, do you expect DSES to still be $200 million incremental in fiscal 2014?

I don't know that we have provided that guidance for fiscal 2014 for DSES, and -- but we did make sure that we included that in our outlook.

Our next question comes from Bill Loomis with Stifel. William R. Loomis - Stifel, Nicolaus & Co., Inc., Research Division: Just continuing on the margin path, Sam, can you just talk a little bit about the level of margins? And one of the things I noticed is that more than half of your business is cost-type contracting. How does that relate -- I know this is going to be your highest margin quarter for the reasons you outlined. But to what extent, as you cut costs, can you actually keep those intact through the year?

Well, Bill, again, we've taken a good, hard look at that. As you'll recall, it is interesting when we went public, we were criticized a bit for having the lowest margins -- no, that's probably not right, among the lower margins in the industry. And we said, "Look, part of that goes back to our heritage of not worrying too much about markup on billable expenses and so forth." And we outlined at that time a plan to drive margins up. And we feel like, in typical Booz Allen fashion, we have paid attention to that. And when we pay attention to something, it normally improves, and we've certainly seen that. Clearly, if our percentage of cost plus contracts continues to increase, it makes it harder to do that, of course, because generally fees are less on those than on time and material and fixed price contracts. So we've tried to factor all of that into our guidance as we've laid out for the year that will keep us in that low single-digit decline in revenue and the $1.55 to $1.65 adjusted diluted earnings per share. William R. Loomis - Stifel, Nicolaus & Co., Inc., Research Division: And then on the sequestration impact, you said you're going to -- you expect and it's in guidance that you see a continued impact like you've felt so far. So with roughly 140 positions, 0.7% of your billable staff, is that the pace you're talking about? Because we are going to be -- based on the delays from appropriations converting to outlays and the government -- DoD being slow on effecting sequestration reductions, you don't think we're going to see more of an accelerated view, especially under -- if we go into it on fiscal '14, do you think it'll just be at that what you've seen so far since March 1?

Well, again if you look at the reduction in headcount, clearly it was more than 140. What we said about the sequestration impact was that actions -- staff that became available, that became unbillable specifically because of sequestration actions, that we were not able to place. Again there are -- even in this environment, there are elements of the business that grow and elements of the business that contract a bit. So we've tried to factor in specific sequestration actions, as well as specific trends within the government, both growth trends and contraction trends, as we put out our guidance. So we've tried to think through that. We wanted to make certain that everybody was aware that we had factored in everything that we're aware of that should be factored into our guidance at this point.

Our next question comes from Brian Gesuale with Raymond James. Brian Gesuale - Raymond James & Associates, Inc., Research Division: A few questions for you. Wondering if you can maybe talk about when we might see the core business ramp headcount again. I know it's been a static environment in a very dynamic way. But your best guess when you might start adding to the overall staff.

This is Horacio. Let me try and take a stab at that. I think the way -- our teams have done a great job of staying very close to the markets, staying very close to the clients and really patterning the capacity that they need to serve those clients. And so we're seeing inside of the business, as Sam pointed out a minute ago, some areas are growing and we're growing headcount, some areas less so, some areas we're transitioning people from one place to another, where they can have a bigger impact. And that's really the flow of the business. And so how all of that aggregates into how many heads we have at any point in time is interesting, but the real thing that you're seeing is us staying very, very close to what we look at in terms of the business. The other thing that is, I think, an interesting, important factor is our teams have done a great job at managing the match between capacity and demand to a level that, frankly, we had never been able to accomplish before. And so we can produce a lot more direct labor and therefore, a lot more revenue with fewer people. And we're take advantage of those opportunities, which both obviously create financial upside but as importantly, create more stability for the staff because we are in a position, where there's a lot of work around you, you start to feel a little bit more secure in this uncertain environment about your own personal future. And so that's really the way which we are approaching the business and managing the business. We're not trying to get ahead of demand. We're not trying to fall behind demand. We're trying to stay close to it and manage it at a very micro level. Brian Gesuale - Raymond James & Associates, Inc., Research Division: That's great. That's very helpful. Maybe a follow-up question on some color on the commercial business. A lot of CIOs on the enterprise side have really stated security as moving up the ladder from high concern to very high concern. Can you maybe talk to us about your business there and what type of dynamics you're seeing?

Cyber continues to be the core of what we're trying to do in both the commercial and international businesses. We get very good receptivity from clients about the quality of our offerings, what we have to say, how that compares to existing competitors and so forth. And it is clear that especially in some of the industries in which we've chosen to compete, such as financial services, network security and cyber in general, are not just CIO but CEO agenda items. And so -- and we don't expect that trend, frankly, to abate, which is why we're there and why we're investing and why we're working on building those businesses. Brian Gesuale - Raymond James & Associates, Inc., Research Division: Okay. One last one. Wondering if you can maybe talk about the kind of government's year-end budget flushes, as it's called. But maybe the impact, we haven't seen furloughs out there in this environment. Can you maybe talk about how that might affect the capacity or morale to really obligate a lot of funding by the end of the government's fiscal year?

I'll stay with it and give Sam a little bit of a break. The reality is that we're, once again, operating in uncertain territory. Everything we hear from our clients is that they are intent on obligating the funds and making full use of the budget that they have, not leaving money on the table, and they're trying to get themselves organized to do that. Clearly, in some parts, the furloughs are making it more difficult, and you -- we sit here and we worry, and I'm sure you do as well, about sort of trying to get all that funding through a narrowing pipeline. But we don't see, at this point, any -- other than just kind of -- you naturally worry about it because it's almost laws of physics. We don't see any indications that, that is really going to affect meaningfully the government's ability to obligate the money at this point.

Our next question comes from Tim McHugh with William Blair & Company. Timothy McHugh - William Blair & Company L.L.C., Research Division: Yes. First, can I just ask Sam or anyone else, I guess, to elaborate a little bit more on the G&A or indirect expenses? I know you've talked about the hoteling program and just more closely watching expenses. But can you give us some more color in terms of, I guess, where you're cutting back and what you're doing? And I guess, I'll leave it at that.

Well, just to build on what Horacio said, I think the biggest thing -- clearly, we have taken a look at the internal infrastructure costs, and we've always managed those pretty tightly. But again, we've got those screwed down pretty well at this point. I think the biggest area and the biggest improvement that we've made operationally is to get very focused on our ability to get staff, who become available, redeployed very quickly. So I will tell you back in the growth years, that was something that we focused on but not nearly as diligently as we needed to focus on in the environment that we're in. So we have been working that hard for, Horacio, about the last 2 years, something like that, to make certain that we become world-class in the ability to identify when somebody's coming available and get them redeployed in another job where they're needed. What that enables you to do is to, what we call, reduce the bench strength because you don't have lots of folks sitting around, waiting for jobs basically. So I think that's been a significant factor in our ability to control our indirect costs. We have also taken a look at our compensation at senior levels. As you recall back in, golly, I forget, February of -- was it just 2012? I think so long ago. February of 2012, you may recall, we took a fairly healthy restructuring charge as we took a look at the senior levels of the business. And clearly, that was something that was incredibly difficult to do. Those were all good folks, but it was something that was necessary in this environment as we took a look at what markets we're going to grow in the future and what markets we're not. So it's those combinations of things. It's not one big area. It actually was a concerted effort across all factors of the firm to say, "All right, let's get our costs, particularly let's get our indirect costs screwed down as tightly as we possibly can, and let's manage them very, very carefully in this environment," which is -- it is a difficult environment, but we feel like that we're fully capable of managing through this thing while continuing to provide returns to our shareholders. Timothy McHugh - William Blair & Company L.L.C., Research Division: Okay. And then just one follow-up. I guess, now that you're a couple of quarters into the DSES acquisition, I guess I'd be curious how you would, I guess, talk about your appetite for acquisitions and how that experience has either made you more likely or less likely to continue to look at acquisitions as a growth or part of the growth story.

Well, let's see. Actually, I think that probably should be a dual answer. I'll offer my thoughts, and then I'll turn it over to Horacio to offer his thoughts. I think it's been a good acquisition for us, as we pointed out in our comments. It's been delivering what we expected it to deliver, both financially and from a capability standpoint. In terms of our appetite for acquisitions, it's neither greater nor less than it was when we did the DSES acquisition. We believe that there will be opportunities in this market. We'll just have to see what comes out. And if we see an acquisition that fits with our culture and fits with our strategic intent, I'm sure that we would make that. Horacio, I don't know if you want to...

I was in Panama City last week and had a chance to spend -- which is one of the major BES facilities, had a chance to spend time with the team there, talking about opportunities and so forth. And it is clear that this was the right acquisition for us to make. And we're very excited, they're very excited, and we're more and more talking about us instead of us and them. And so it's working the way you want it to work, and it's good. The other reality is acquisitions, especially as you're trying to integrate them, are hard to do and they take a lot of effort. And the BES acquisition has proven that, which we already knew once again. And so I think Sam said it exactly right, is we're both learning. We're getting excited about the opportunities that this particular acquisition represents to us. It made sense with our strategy. It made sense with the culture. And if anything, it reaffirms our strategy of being thoughtful and selective.

Yes. We're not out to acquire revenue. We're out to acquire capabilities and sales channels that fit with our strategic direction.

Our next question comes from Carter Copeland of Barclays.

A couple of quick ones for you. Sam, I wondered, the cash flow once again was really strong. It looked like about 97% conversion of adjusted net income. I wondered if, first, if you might comment on if you think that sort of trend, in general terms, can hold for the year. And then one for Horacio. I wondered just on the basis of your comments about staying close to the customer and not trying to get ahead of the demand but being sort of emphasizing agility, I wondered if you might comment on the win rates you've seen and sort of organically in the last quarter or maybe 2 quarters and maybe put some perspective on that relative to what you've seen historically.

All right. Well, let me do the cash flow, and then I'll -- from a cash flow standpoint, I do expect that to continue over the long term. If you take a look, we have again set out to reduce our capital expenditures. And we've done that, as we talked about in the past, by moving to a hoteling environment, which reduces our physical footprint. By the same token, if you look at what's evolving in the IT world, things like moving to the cloud help you reduce your -- actually reduce your IT expenditures while increasing your capabilities. So I expect that trend. We will also continue to focus aggressively on managing our receivables and make sure we turn those quickly. I will tell you that we're watching cautiously, some of the paying offices now are undergoing furloughs. So we feel like that will be a short-term phenomena between now and September 30 and we're watching that trend closely. But in terms of the long term, we don't see any change in our ability to convert our earnings into cash. Kevin, I don't know if there's anything you want to add to that.

No, I think if you remember last year in the second quarter, the government pushed an incredible amount of money out the door and we had a huge cash influx. And as Sam just said, with the furloughs this year, we wouldn't expect to see that type of inflow in Q2. But long term, I believe we have one of the best receivable processes in the industry, and we'll continue to fine-tune it going forward.

Are you seeing any benefit? I remember there was a pretty substantial benefit associated with cash taxes and option exercises that you [indiscernible] tracking to what you had originally expected? Or is there any change, given the rise in the stock price?

Well, I think in terms of the cash taxes, that was -- we had -- left over from the original Carlyle transaction, we had substantial net operating losses. And of course, we have chewed those up, to use an accounting term. So we're paying taxes more or less at our [indiscernible] rates.

Okay. And to the win rates?

I don't perceive any significant change in trends on our win rates. As Sam pointed out when he was discussing the shape of the business, we have a smaller senior team. And so we're more targeted in what we go after now and in particular in which markets, we are doubling down to invest and how we do it. And I think that's -- bodes long-term well for our ability to gain share in the parts of the market that we believe are going to grow. The other trend that's there, that's been there for a while and continues to intensify is things moving to the right and sliding to the right, and that's been there. You see some of that in the way the funding patterns evolve. You see some of that in the way backlog overall evolves. And so that's -- I think, for the time being, that part of it is here to stay. And there's not a lot you can do about it. And then even after you win, as an industry, I think we've gotten too accustomed to protesting some of this stuff. And so you win it, and then you have to wait to be able to turn it on until you work your way through all of that. But I don't think any of that is either going to be a surprise to you or any of that is new. I don't think there's nothing particularly noteworthy on that end other than what we've been seeing for a while.

Our next question comes from Edward Caso of Wells Fargo.

Could you talk a little bit about pricing, and pricing on both from a renewal basis and on a takeaway basis?

If you're referring to are we seeing a compression in margins in terms of our wrap rates and so forth, then I think it is mixed. But again if you look -- our business is very diverse, extremely diverse. Sometimes I'm amazed at all the things that we do. If you look into that portfolio, again there are areas where there are margin opportunities and there's areas where compression is going on. But it's clear that the competition is -- the easiest way seemingly sometimes to take share is to price aggressively. So then we have to make a decision, are we going to price aggressively to maintain? Or do we just allow that to go other places? And those are the sorts of decisions that any business has to make. So we'll continue to manage through that.

Can you -- you've discussed several times about you're tightening up your bench, or another way to call it is your improved utilization. Can you give us a sense maybe in percentage points how much utilization has improved over the last 12, 24 months and how much more opportunity there is going forward?

Well Ed, we have never talked about utilization. Again utilization is one of those things that varies by the type of services we're providing. But I think it'd be safe to say that we've seen 2-plus percent increase in utilization over the last several years.

And how much room is left to go?

Well, stay tuned. We're continuing to fine-tune our bench management capabilities. So again, we've tried to factor all of that into our guidance which we've laid out for the year.

Our next question comes from Robert Spingarn of Credit Suisse. Robert Spingarn - Crédit Suisse AG, Research Division: I wanted to just start with a high-level question. Ralph, maybe this could be for you or perhaps Horacio. But you've spoken throughout the call about the uncertainty in the environment. But since the government came out with some programmatic detail back on June 14, would you say you have a little bit more clarity today than you did a quarter ago?

It's Horacio. I'll try and take that. Every quarter, we think we're going to have more clarity the next quarter. But the reality is the -- sort of the continued political uncertainty continues to drive into operational uncertainty. You're now -- there's now the discussion of a government shutdown again and all of that. Who knows if it'll come to pass or if it won't? So I think that at the macro level, the situation isn't all that different. And even at the micro level, there's a huge amount of uncertainty. We have a pretty important actually program for a client doing work that is very unique with talents that were -- it took us years to assemble the group. And then that program got defunded overnight. And so we reassigned all of those people to do other work. And 2 weeks later, the client came back and said, "We just found additional funding, we want to turn this back on." And now we have to say, "Well, all these folks who were working at one place are now working at another place. The new client is very happy with them. It's not just as easy as going back and asking for a mulligan." So that's the reality of the business as it exists. And so when we talk about tightening of the bench, what we really have tried to do is work our business in such a way that, to the maximum extent possible, we have the availability to transition people from things that go away to things that come in as quickly as possible. And that's what we're going to continue to do. I think it's not that we don't spend time looking at the macro trends or the micro trends. It's not that we don't spend time talking to our clients about these things. It's that just there's just too many unknowns at all of those levels. And so we have continued to execute around this notion of becoming more and more agile. I could spend the next hour describing to you all the things we've done in the last 12 months alone to become more agile and more responsive to this market. And that's what we continue to do. And then because of that, we've had the ability to place some important bets through the Strategic Innovation Group and then through other means in order to double down in areas where we think there's going to be growth and try and get ahead of those. Because regardless of the funding environment and regardless of all that, we are pretty confident that those are things the government is going to need to do. And we want to have the leading position in those areas.

Just to show that I'm not avoiding your question, I would just like to put a little overlay on it and say that we're in an interesting and challenging time right now. But on the other hand, we have such a seasoned group of leaders that have been through so many different trends in the government, good times, bad times, unprecedented times, the 9/11s of good and the dot-coms of bad and so on and so forth, we actually have great confidence in our internal ability to learn quickly and to relate back to previous experiences and be able to manage the business with great confidence in terms of whatever is coming. And so we, I think, have grown. While we're not happy about it, we've grown very comfortable operating in uncertain environments because we really have the tools and we understand how to exercise those tools appropriately to be able to get results. And I think as we look at our results over time, it bears out what I've said about the fact that having that experience base and the knowledge and the confidence to operate a business like that is something that's served us very well over time, and I do believe will continue to serve us well, no matter what it is that comes up over the coming months. Robert Spingarn - Crédit Suisse AG, Research Division: Okay. This actually segues into 2 different areas I just wanted to explore quickly. One is on commercial. And given that you're building that business back up, is there any way to quantify what percentage of your recent -- or what the trends, I should say, in terms of percentage of commercial in your sales and bookings as we move forward here?

Well, we've maintained a posture that says it's inappropriate to talk about relatively small pieces of our business. And what we said about commercial, international is it continues to be less than 2% of our total. And when it gets significant, then we'd talk about it. But for us to start talking about small pieces of our business, we just don't think it's appropriate to... Robert Spingarn - Crédit Suisse AG, Research Division: Well, that's fine. I mean, at some point though, Sam, it's going to become more than small, right? Do you have a timeframe on that?

We're working real hard. So the practical matter is we're a big firm, so it takes a lot for us to -- for something to become significant to us. Robert Spingarn - Crédit Suisse AG, Research Division: Okay. And then just a couple of quick ones -- I'm sorry.

No, I was just going to say that the bottom line is we continue to invest. It continues to be a focus of ours. And we're hopeful that we have a reason to talk about it in the future. Robert Spingarn - Crédit Suisse AG, Research Division: Okay. And then just going back to your -- you talked about funded backlog and bookings. What type of assumption is in your guidance with regard to bookings as we go forward here? Can you see a third quarter -- I'm sorry, a calendar third quarter like last year here, especially given the fact that the 2 prior quarters in the calendar here have been a little bit weaker in 2000 -- calendar '13 and calendar '12? So I'm speaking about the March and June quarters are softer this year than the prior year, and so you've got a little more ground to make up even with the lower sales.

Hey, Rob, it's Kevin. Let me take a crack at that. I would expect that we will see an increase in backlog for the September quarter. If I remember right, last year in the third quarter, our book-to-bill number was something like 2.15. That's quite a target to aim at. I'd be hesitant to say we'd reach that amount, but we do expect an increase.

Increase from today.

Increase from today. And I would also say actually our book-to-bill for the current quarter is actually identical to last year this time. So we are seeing the same trend. Most of the bookings across our client base seem to come in actually in the month of September. And we expect that trend to continue this year. Robert Spingarn - Crédit Suisse AG, Research Division: Yes. Kevin, you're right. I think the big difference is the March quarter. It was a fair bit different than the prior year, so that's why I was referring to the first half of the calendar year.

Okay. Well, you're right about Q1. Robert Spingarn - Crédit Suisse AG, Research Division: Yes. And so last thing, Sam, cash. You talked about it a little while ago. And I think furloughs were brought up by someone else. Should we see any interference with cash collections here as we go forward with the government off -- at least, certain people off 1 day per week?

Well, I think it's too early to tell. We do believe that if there is, let's call it, a perturbation there, to use an old term, then it'll be short-lived. It'll something that will be over with by September 30. So yes, let's just see. What's clear is I do not think we'll see a repeat of what we had in the September quarter last year, where the government just really pushed money out the door. As you'll recall, that the September quarter, which was the GDP, the growth in GDP, and that was the growth number that was used during the election, was up like 2.6%. And then when you broke into that, when you looked into that, you saw that 0.9 of that growth, or what's that a 1/3 or so, was from defense spending, whereas really defense spending overall was flat. And where that number came from was just a significant amount of cash that was pushed out the door in that quarter. I think our receivable days, Kevin, correct me on that, went down to the low 60s.

It might be even 59.

59 or something like that. We certainly, particularly given the furlough, we don't see that happening again, whether or not it comes off of the current trend at 65. If it moves, we don't expect it to move much and we don't expect it to be long term. But let's just see. I think the entire government is trying to figure out how to work with furloughs at this point.

Our next question comes from George Price of BB&T Capital Markets. George A. Price - BB&T Capital Markets, Research Division: So on the -- in the intel sector, have heard of some instances, just kind of checking around a little bit. I've heard of some instances where a new program starts maybe being held up a little bit because some intel clients don't want to put new contractor "work" out in this environment given all the negative media attention from Mr. Snowden. What are you seeing? Are you seeing any of that? And I haven't really heard of any impacts to existing work but would love to hear your thoughts on those.

Well, I don't know that we have seen any impact from existing work. I don't know that we have seen any impact from -- on future work either. I think we are working closely with our clients. Our clients have been very supportive to us and we're very supportive of them. George A. Price - BB&T Capital Markets, Research Division: Okay. And then last question, just on kind of going back to M&A trends. Can you talk maybe about the M&A outlook? I mean, I know you said you were still looking, and it depends on fit, and you're no more or less likely. But perhaps in terms of what you're seeing available out there, is there any uptick in potential opportunities, qualities of those opportunities, interest in selling, maybe thoughts on valuation of the opportunities that you are seeing? Just would like to hear your perspective on that.

Just in very general terms, I don't know that I've -- and then Curt also tracks these for us. I don't know that I've seen a significant uptick. There's always been lots of, let's call it, small things that have been there. But in terms of the larger things, I think what you're seeing is actually spinouts, different companies either actively or tacitly, let's call it, marketing sections of the business that don't fit with their longer-term perspective. I don't know that we've yet seen the big increase in, let's call it, sizable firms being put on the market. Curt, I don't know if you want to...

I would agree with that, that we've seen sort of the over-the-transom, small deal flow relatively stable for the last several months and the bigger things just aren't coming up to market.

This ends the question-and-answer portion of our call. I would now like to turn the call over to Ralph Shrader for closing comments.

Well, thank you. I hope that we've been able to show that, even in the midst of some very unprecedented external factors and some very uncertain market conditions, that we've been successful by focusing on those important things that we really can control. And to reiterate, those are serving our clients well and managing our business effectively. We kept revenue nearly flat quarter-over-quarter and grew our earnings, operating income, net income and margins. And we continue to generate strong cash flow. We're executing against our strategy and we're very confident in our ability to continue to deliver value to our shareholders. I want to thank you, all, for joining us here this morning.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.