Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2012 Huntington Ingalls Industries Earnings Conference Call. [Operator Instructions] I would now like to turn the presentation over to Mr. Dwayne Blake, Vice President of Investor Relations. Please proceed.

Thank you, Stephanie. Good morning, and welcome to the Huntington Ingalls Industries Fourth Quarter 2012 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. Reconciliations 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 www.huntingtoningalls.com and click the Investor Relations link to view the presentation as well as our earnings release. With that, I'll turn the call over to Mike. Mike?

Thanks, Dwayne. Good morning, everyone, and thanks for joining us on today's call. I am pleased to report Huntington Ingalls Industries results for the fourth quarter of 2012. Today, we reported sales of $1.8 billion for the quarter and full year sales of $6.7 billion, both up slightly from last year. Diluted earnings per share was $0.98 for the quarter and $2.91 for the full year. Pension-adjusted EPS was $1.30 for the quarter compared to $1.25 last year and for the year, $3.95 compared to $4.15 in 2011. All 2011 comparative earnings and margin results exclude a noncash goodwill impairment adjustment of $10 million in the fourth quarter and a $290 million charge for the full year. The segment operating performance was very strong. Fourth quarter adjusted segment operating margin was 7.7%, up 94 basis points from last year, and for the year, 6.8%, up 55 basis points from last year. The margin expansion was primarily driven by improved operating performance at Ingalls. Including $236 million of increased pension contributions in 2012, free cash flow for the year was $170 million compared to $331 million in 2011, and we ended the year with over $1 billion of cash on hand. We received $6 billion of new awards during 2012, including the detail design and construction of LHA 7 Tripoli and LPD-27, contributing to a healthy backlog that was $15.5 billion at the end of the year. The cash generation that has been realized over the past 2 years, along with the confidence that we have in the long-term performance of our programs, affirm our decision to proceed with a balanced cash deployment strategy that will return cash to shareholders, optimize our capital structure and prudently pursue value-creating growth opportunities. One of these growth opportunities involves the potential redeployment of our…

Thanks, Mike, and good morning to everyone on the call. I'd like to briefly review our consolidated and segment results as disclosed in the press release, then wrap up with some comments on pension. Before I get into the details, all non-GAAP comparisons to 2011 excludes the noncash goodwill adjustment in Q4 and the total goodwill impairment charge for 2011. We are also providing you pension-adjusted operational results including operating margin, operating income and diluted earnings per share to show operational performance without the impact of the FAS/CAS Adjustments. Now if you turn to Slide 4 of the presentation. Fourth quarter sales increased by 5% over the same period last year, primarily due to higher sales in aircraft carriers and amphibious assault ships. Our fourth quarter GAAP operating income was $106 million, pension-adjusted operating income was $131 million, up 11% over 2011. GAAP diluted earnings per share for the quarter was $0.98. Pension-adjusted diluted earnings per share was $1.30, up 4% over 2011, driven by improved operating performance at Ingalls. For the fourth quarter, diluted earnings per share would be approximately $0.23 higher if you exclude the impact of the increased noncash workers' compensation expense related to the lower discount rate, which was $10 million for the quarter, and the increase of $8 million in deferred state taxes in the quarter, which resulted from settlement of prior year deferred state taxes. Turning to Slide 5. Sales for the year increased 2% over the prior year as a result of higher volume on aircraft carrier and surface combatant programs, partially offset by reduced volume on submarine and amphibious assault ships. GAAP operating income for the year was $358 million. Pension-adjusted operating income was $438 million, up 6.1% over 2011. GAAP diluted earnings per share was $2.91 for the full year. Pension-adjusted…

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

[Operator Instructions] Your first question comes from the line of Carter Copeland with Barclays.

Two questions. The first, on Avondale, Mike, when you think about the decision process there, you said your baseline assumption was still closure but that you're exploring the opportunity that you laid out in the press release about a month ago. How should we think about how this process goes? You said there's little or no investment to pursue the opportunity you've outlined. But obviously, that business still has overhead, and I wondered where you stand in terms of building the, sort of, new book of business and what sort of time line you're giving yourself to do that to determine that this opportunity is really viable? How should we think about that thought process from your end?

Well, I think, the first thing to recognize is that the most important asset that we have in Avondale is the workforce that's there. And we're phasing into a market that appears to have a large demand for a highly skilled and qualified workforce. The projects in Louisiana and Texas that have already been announced, and the ones that we know are on the books to be announced, demand a workforce that's larger than is in place in that region of the country today. And so we're being swept -- we're being pulled into that. People are calling for our skilled workforce to be applied to that base. I think there's 2 elements of that, that we have to think through, and we will be working our way through that mostly this year is, number one, how do we sustain the workforce to line up with the work opportunity? Make sure -- how do we bridge from the Navy work that we're doing? If we just go and finish the Navy work, the workforce at Avondale will continue to ramp down through the end of this year when there'd be no workforce left. And we have to kind of understand when would that workforce be required, and is that this year or is that early next year or how do you bridge through that? And that's still unfolding in front of us. And so we're working our way through that piece of it. I think the second part of it is to recognize that it really is about getting the Navy work out of the business so that we can restructure the cost and be affordable. We may have the most skilled workforce in the area, but if they're not competitive, we won't be able to go very far in that marketplace. And so both of those issues, how do we sustain the critical skills that we need, how do we demonstrate our affordability, those are the things that we're going to be working on. I mean, we're working on them now and we'll be working on them through, basically, the next couple of quarters here this year.

Okay, great, and one question on cash for Barb. I noticed that despite the pension contribution, which was pretty sizable, your conversion of net income was still very high at about 116%. As you look forward to next year, obviously, you've called out that the pension contributions will be a little bit higher, that'll be a bit of an incremental use. And I know that the deferred taxes were a bit of a source this year. You said that the cash will be used early on and then, step up over the course of the year, but as I put some of those pieces together, is it still likely that the cash conversion can be better than 100% of net income, again, next year? Or again in 2013?

Okay. So I'm going to sound like a broken record myself, but it all depends on the timing of the ship deliveries and the timing of the payments from the customer because we'll be having big invoices after this delivery. So I won't commit that it'll be 100% cash conversion, but I will commit over a very long period of time, you can look at it that way and it works out.

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 understanding a little bit more about how you would see the CR and sequestration impact. And I know, Mike, you mentioned the Lincoln refueling delay. When you look at the CR, what are the things that you think could impact the company most in '13 and '14? And I'd ask the same about sequestration, knowing that some things are under contract and you probably won't see a lot of impact. But what are the ships that you're most concerned about?

Yes. That's a great question, Doug, and we've spent a lot of time on this. I have said from the beginning that sequestration, by itself, is not nearly the issue for us that it is for a lot of other folks in our space. Sequestration, the way that it's laid out is typically going to -- it's going to be about today's cash expenditures. So the short of it is, the way you get at today's cash expenditures by the government is, you talk about flight hours and steaming hours and training dollars, which is not really in our -- we have some business in that area at Continental and at AMSEC, but it's not the principal source of our business. And from the beginning of this, we've been focused on the continuing resolution. If you want to think about where we are, it's the end of February, we are operating under a continuing resolution for 2013. Well, the fiscal year 2013 started in October, October 1. And frankly, Doug, we go through this every year. You need an appropriations bill to allow you -- new programs to start on October 1. Well, this year, October 1, 2012 is actually March 27, 2013, and we're about halfway through the process, and we still don't have a budget for 2013. So all of the things that were due to start in 2013 have not been allowed to start by the way that the continuing resolution was structured. So in one sense, we look at March 27 as just October 1, except the dynamics of and the interplay between sequestration, the delay of sequestration to March 1 and now the 2 of them are interacting, and amongst themselves creates some level of uncertainty that March 27 is actually going to have an…

Yes, Doug, I don't know how to put my arms around all of the potential variations that are here. The fundamental question is that we're halfway through 2013, we don't have a budget for 2013. We actually are trying to figure out the 2014 budget legislatively while we don't have a budget for 2013. The degree of uncertainty is as high right now as I've ever seen it. We've operated under continuing resolutions in the past. Typically, we've had continuing resolutions with anomalies that would allow us to go start programs on time. This hasn't happened this time and this one has -- this continuing resolution has been exceptionally long, and the prospect of an extension is what our concern is. How the numbers between what happens with the sequester and how that interplays with what the ultimate numbers that come out of a continuing resolution or appropriations bill, how those interact, there's probably as many variations as there are people with opinions. What I would say is that, overall, we believe that the fundamental issue of the fiscal challenges facing the country are strategic issues for us in the -- on the horizon in terms of the size of the Navy and the amount of support that we would be providing from a shipbuilding perspective. There may be things, like we've talked about many times, there may be things where a program might move from 1 year to another because of budget authority issues or outlay issues, that's -- we kind of typically deal with those kinds of things as they come up. But the strategic issue of how big is our Navy, what kind of ships are going to be in it, I think that's a 5- to 10-year time frame, and that's really the longer-term strategic impact of this.

Your next question comes from the line of Peter Skibitski with Drexel Hamilton.

Mike, you mentioned 2013, you're expecting similar revenue to 2012. But following on Doug's comments, it looks like the sequester is going to happen. Is there any way to handicap the top line guidance you've given, assuming that we do get a CR for the full year, or if we get a resolution by -- at the end of March? Is there any way to add some color around that?

Yes. Again, I think there's just so many variables here relative to how this all plays out. If all you had was a sequester and then you had shipbuilding, all of the shipbuilding things happen the way that they happen, our continued discussion about a business that's got flat revenues pretty much holds in place at this point, as best we can understand it. The dynamics of what might happen in a particular harbors and how Continental might be affected or how AMSEC might be affected, those are very important businesses to us. But in terms of affecting the kind of numbers that you're talking about, we're not as -- we're much more focused on the shipbuilding starts that we have to get done.

Okay, okay. Understood. I guess, one last one for Barb. Barb, you talked to 2013 pension, but for a lot of companies, they're projecting by 2014 or so, pension should begin to turn positive for them. Is that something you've taken a look at, sort of, the out year pension perspective?

Yes. Don't worry, we look at it all the time. But I'm not going to go out on a limb there because it'll depend on what asset returns are and things like that. But in 2014, what you see is 25%, I believe, of the pension harmonization coming into play. So that's increase in your CAS recovery over your FAS expense, so it's starting to align more. But I don't want to go out on a limb and say, yes, it's going to be positive, because I've got to take a look at whatever the returns are and I don't have that crystal ball.

Understood. Yes. Just assuming your returns hit your mark, things get incrementally better, it sounds like?

They'll get -- they'll be better than where they are today.

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

It's actually Jon Raviv on for Jason today. Just jumping back to Avondale for a moment. You guys, just to be really clear about trying to find the right partner to deal with a new customer outside of the Navy. I was wondering if you could add a little more color and maybe add some comfort on that front, given the fact that this opportunity would be something new for you guys, how are you making sure that you're not overextending, so to speak?

Sure. We said we needed 4 things, actually, to be successful here. We needed the Navy to support us, we needed the state to support us, we needed a sustainable marketplace and we needed a good partnership or a good partner that understood the marketplace. What we've got is the Navy is definitely supportive of us pursuing this, and the state has been more than forthcoming in trying to create an environment where we could be successful here. Our view of the marketplace is that this looks pretty sustainable, at least for a while, and the demand, the fact that there's a demand for this and it's a pull into the marketplace instead of a push by us into something is a much -- that's a much different perspective than we had a couple years ago when we were first starting to think about what happens with Avondale. As far as the partnerships, what we found is that the folks that are in that business today are looking for good, skilled workforce, and they have been working with us to help us understand what the cost requirements would be, what the quality requirements would be, the schedule performance would need to be, the safety requirements that we would have to be able to perform to. And so we're getting good support from other players in the industry who are looking to us as maybe potential suppliers to them or maybe, ultimately, partners with them as they support this industry. So we're not charging into this with our blindfold on and just suggesting that we can do this better than anybody else. We're actually getting a lot of good constructive engagement from the folks who need to really make this be successful. And so we're treading carefully down that path of "does this make sense?" And as I said, it's going to come down to, "are we going to be able to sustain the workforce and can we meet the competitive requirements that, that industry will require?"

Fair enough. And then, just a quick follow-up on sequester. I know you said you guys are relatively insulated. But you do, do some repair and some O&M-type work, and Navy guidance has basically frozen a lot of that. Are you not seeing impacts from that sort -- those sorts of activities that the Navy has rolled out through the year?

Well, certainly. I mean, the Navy has made some major decisions about -- they're not deploying assets on their normal deployments. They have provisionally announced availabilities for the third and fourth quarter that would not be performed. All of those things, at this point, and let's go one step further, it's more of a CR impact but something as simple as the Lincoln. All of those things -- none of that work is being done the way that it ought to be done. So it's all becoming more inefficient. The challenge for us is that some of that, you just have to wait and see how this plays out because I think what really is going to happen here is that the sequester law will go into effect at the end of this week but then, I think that the resolution of all of this issue is going to become apparent with the resolution of the CR at the end of March. And then, there's a lot of pressure on the sequester itself. My view of it, my personal view, my view is that the law will go into effect and that the energy will be focused on creating an appropriations bill or some kind of continuing resolution that actually creates a stable base for this to go forward in the next month. And so trying to speculate on how that's all going to play out is -- we've just chosen not to try to create any particular cases because we know that whatever cases we create will be wrong.

Your next question comes from the line of Robert Spingarn with Crédit Suisse. Robert Spingarn - Crédit Suisse AG, Research Division: Staying on the same topic, I'd like to try to put a finer point on, at least, the dollars associated with the programs that we've been discussing. And I think you've gone over them, but if I've got this right, you've got or were hoping for fiscal '13 money of around $600 million on Kennedy, about $1.5 billion on Lincoln and I think about $900 million in O&M money on Enterprise. Then, there's a couple hundred million in prior year shipbuilding recovery. I think you mentioned CVN-71, et cetera. So I add all that up, that's about $3 billion plus. How much of that, if -- how much of that is in your '13 expectations? So that we can at least have some context if we get a full-year CR, for example, and there is no special rider for those funds or under what other circumstances might come up here, sequester, et cetera, how much of that $3 billion was in your calculus for '13?

Rob, I would tell you that I'd go back to what we said before, we're assuming that all of this will work out. We're looking at March 27 as being October 1. And so I haven't added the numbers up the way that you have, but our view is that after March 27, we would expect that we would proceed on the path that we had laid out, that these programs would start in accordance with the schedule that's out there. If we find ourselves a month from now in a different place than that, then we will have to have a different discussion. But that's the path that we're on. It's encouraging to me that the Navy has identified the same priorities that we have and I think that our position and frankly, the industry's position, is pretty well understood. I was once told that short-term decisions in this business are political and long-term ones are economic. We're, quite frankly, in the middle of a big political decision right now that's going to play out over the next 30 days. Robert Spingarn - Crédit Suisse AG, Research Division: And Mike, I think we all understand that there's no clear outlook here. But I also think the only to talk about it is to, at least, know what you were expecting. And when I think about that money, and I understand that a good part of that $3 billion is '14, '15 and so forth from your P&L perspective, but is there any way to frame what the 2013 portion of that would be and then, we can all wonder separately about whether or not it happens?

I don't know how to put my arms around that, Rob. I mean, we're looking at a carrier contract that with the -- the Kennedy contract itself was a multibillion-dollar contract that we have been spending money on for a couple years in advance procurement. If the Navy were to decide or if we were to find ourselves in a place where we were not going to go to contract in 2013, the next question is, "Okay, how do you bridge the work that you're doing to the contract whenever it gets awarded?" We've done that in the past. In fact, that's how we did CVN-78. That contract was supposed to be done in 2006. We actually didn't go to contract until 2008. We had 2 years of construction preparation there to bridge from the time when the contract was planned for, to the time that we actually went to contract. That allowed the design to mature more, it allowed all of those things to happen. But the sequence of how all that plays out is something that is very difficult for us to predict. What I do know is that none of these programs, none of these programs are being talked about in terms of cancellation. So that all of this is going to happen, it's really a matter of when and how is it going to happen, and that's what we're trying to work our way through. Our plan today is that it will happen on time because that's the most efficient way for this work to proceed in our business and it is absolutely the best way to be good stewards of the taxpayer dollars. Robert Spingarn - Crédit Suisse AG, Research Division: Yes, and I wasn't trying to ask you how it would play out. I was merely trying to understand how those four programs fit, what they're worth in '13. But I guess, it's sounds like that's just a complex answer. So I'll ask something else instead. On Ingalls, where you've clearly been progressing on your margin plan, at what point do you get enough of those 0 margin ships out the door -- and most of them are gone at this point, that you can give us some visibility into a consistent linear or sequential progression in margins? Do we get to a point we start to see 50 basis points a quarter or something like that?

Well, our story 2 years ago is the same as it is today. We have 2 ships left to go that we expect to deliver this year. This year is a point of inflection for the business and that you will see earnings accelerate. I don't know that we will ever tell you that it's going to be a quarter-over-quarter slope on earnings for any part of our business. To quote my Chief Financial Officer, "This business depends and is lumpy." And so we're headed to 9% from where we are today. This year, we'll probably look more -- a little bit more like last year than it will look like next year. But that's because we're getting those last 2 ships out. We need '14 and '15 to make a progress on the new work that we've signed at Ingalls to get them to the point where they're mature enough to book at the normal rate, and that's what we're focused on.

Your next question comes from the line of Joe Nadol with JPMorgan. Joseph B. Nadol - JP Morgan Chase & Co, Research Division: Mike, maybe I want to try to come at this from a slightly different angle, which is, people instead of dollars. And really, it seems that, obviously, a lot of uncertainty, a lot of different moving parts. But where you're starting to get impacted now on a material programs, it really seems to be the Lincoln, but it's only really just started, or a couple weeks in. And so could you help us understand maybe -- I know you have 37,000 employees in total in the company. How many employees -- what was supposed to be or what is supposed to be the ramp-up rate on labor on that very labor-intensive program as we go through 2013?

Well, the normal course of business and the synchronization that we talk about in this business is that as you finish the Roosevelt, that workforce would transition to the Lincoln. And you know, the Roosevelt is in its last few months and will be heading towards its redelivery, and the people would normally just come off of Roosevelt because you ramped down towards delivery and they would move onto the Lincoln and ramp back up there. Instead of ramping up in the -- inside the shipyard, we're starting to ramp up over at the Naval base. I would say that what's happening to us right now is less about the people that are in the yard and it's more about our hiring rates and what our expectations are for the whole business. The reality is, and I had a chance to tell the President this yesterday, that over the next 5 years, we plan to invest nearly $1 billion in our corporate -- in our Navy business across the whole corporation. We will hire more than 10,000 people, and we will be investing $0.5 billion in the training of those folks. And we are throttling that right now based on "let's get some certainty about what these future programs and the timing of these programs will be." And I'd say, that's probably where the first effect is, is what are we doing with our hiring rates right now? Now let's go hypothesize. We have said that if the Lincoln doesn't come at the end of March or the beginning of April, we will be in a position there where we will have to start talking about layoffs, particularly because of that program. And how many and who and all of that sort of stuff remains to be determined based on how the rest of the business plays out at that point. But yes, we would be affected at that point, and we have a couple of thousand folks working that program today. Joseph B. Nadol - JP Morgan Chase & Co, Research Division: Okay, that's helpful. And then, my second question is on the Virginia-class multiyear, could you just give us your latest -- and I may have missed it in your opening comments, but your latest on if this plays out the way you're hoping, which is during the month of March before the 27th, we get either an appropriations bill or a CR with the anomalies that have been discussed which -- I don't think you use that term, but that's, I think, what I was reading into your comments. If you get that, what your expectation would be, do you still think you can get that multiyear signed by the end of 2013?

We do. The Navy has actually made a pretty good case. You set aside the -- I know it's hard to do for everybody, but if you just set aside the extraordinary budget process that's going on around sequester and the CR and everything, and you can actually find a way to look at the regular budget process that's going on where the budget gets submitted, the Navy defends its budget and the Congress weighs in on priorities, that process has gotten us to a place where the Congress is interested in a 10th submarine in that -- that's a 9-ship Block and they're interested in a 10th submarine, and they're interested in a 10th destroyer in the 9-ship program that we have already bid on. Both of those, to me, are indications of how important the Navy is going forward strategically. And I believe, I don't know whether those 2 platforms actually survived the extraordinary budget process, but I think that -- I believe we'll get to a contract on Block 4 by the end of the year. I do. I'm pretty comfortable with that, assuming that we get through the next month politically.

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

Mike, let me try and ask you a question that you can answer. How about, something about the fourth quarter. If I look at the carrier -- you mentioned -- you've called out the carrier volume as being higher than expected. Can you -- and I think relative to everybody's sales estimates, it did turn out to be higher. Is that more cost plus work that flowed through in terms of hours, is it long-lead material, is it just you're working ahead of schedule? What's driving, I guess, that coming in ahead and related since you were up 2% in sales for 2012. When you say your long-term target has been relatively flattish, are we now talking about flattish off this higher level?

Okay. So I'll take one on the carrier increase in sales. It's just really, it's a cost type contract, and it's just labor and material coming in. There's -- can't really say we're ahead of schedule in any way, but we're progressing well on that program. So I don't -- there's nothing special going on there, it's just timing. So as far as your question related to sales being flat, we're sticking with that story given what our expectations are in terms of the programs to get funded this year. Timing will drive a potential impact this year, but overall, don't see any issues as long as those programs are funded with our long-term projection.

Okay. And Barb, can I ask you another question just in terms of the balance sheet, in terms of some of the moving pieces? The shareholder equity decline from the third quarter and that accumulated loss and I guess, is that all pension? And then, the deferred tax jump, is that all related to the pension contribution, just in terms of those moving...

Okay. So for your first question, the answer is yes. But for the tax, it's a combination of a lot of things on the tax. In the fourth quarter, most state taxes are done and you're doing it for the prior year and it's just an increase provision adjustment related to free spend returns. So it isn't all pension on the tax side.

Your next question comes from the line of George Shapiro with Shapiro Research.

Yes. Barb, in the fourth quarter, the Ingalls' margin, I mean that's a better margin than we've seen for probably 5 years, was there anything onetime in there, like, was there reversal of some of the reserves you took in the third quarter, or is that kind of just what the margin was?

Just what the margin was.

And so then, what happens in 2013 as to why that 5.3% wouldn't be a sustainable margin because, Mike, the implication is if '13 looks like '12, you kind of take the average margin at Ingalls for '12, which is obviously, lower than what you've reported in the fourth quarter.

Well, we didn't say it was or it wasn't. Mike did say it would look a little like this year, but it'll be leaning towards the 5%.

Okay. And then, on the percentage of sales that were probably those 2 programs where you're talking 0 margin now, are we down to somewhere between 20% and 25% of the sales at Ingalls?

Less than 25%.

Your next question comes from the line of Myles Walton with Deutsche Bank.

Mike, before Congress appropriations come in, I think the CNO was talking about the overall shipbuilding plan and kind of where it is today and where it would be if everything that's on the table actually played out like it's on the table. And they talk about a baseline of 295 at this point, ships, by 2020. I think he said it'll be 30 ships lower if everything played out the way it is, 260, 265. Do you have a sense as to what comes out?

No. But what I do know is -- what we've seen is that there's strong support for carriers, there's strong support for submarines and there's strong support for destroyers. There is also strong support for amphibs, but by the normal course of business, we were going to be entering a bit of a lull in the amphib production. LPD-27 could've been the last LPD and LHA 7, we've got under contract, and LHA 8 is out there on the horizon. The Navy has a great desire for amphibs. The Marines are looking for lift capability. But in my -- I've said this before, in my opinion, it is, despite all of that desire and demand, that seems to be where the resources start to thin, in my view. And that's one of our core businesses and that's a big thrust of our political engagement right now is around how do you sustain the amphib lines. We've got a really -- we've squared away the LPD program at Ingalls, and we've got a pretty warm production line down there right now. You've probably seen that we've come up with some creative ideas to use that hull for other missions for the Navy that would create some affordability relief, if you will, for the Navy. And so we're going to continue to push that. But that's kind of the way that I think about it, Myles, is that the Navy's priorities at the top of the list are the carriers and then, the submarines and then, destroyers and the amphibs. That's where our business sits, and we're seeing this resource discussion kind of focusing on the amphib piece, not really on the other parts.

Okay. And then, the other question. We've talked about from a revenue perspective, the CR and sequestration delays. But it's hard for us to see your contract protection relative to margin profit absorption and kind of the dynamics that can occur. Would you advise us to just think about the revenue risk at this point as opposed to any type of adverse drop through?

Frankly, I'd counter back to -- I hate to sound a little bit more like a broken record, but this is tough to handicap because the way that the sequester and the CR now are interplaying with each other and the fact that we are very much more exposed to the CR as opposed to the sequester makes that -- as we said before, the work that we have under contract is probably not going to be terribly affected by the sequester. And the work that we have under contract doesn't get really affected by the CR. So in that sense, we keep doing what we're doing for the near term, and it keeps moving things the way that they've been moving. It's the signing of new contracts going forward that is really the big issue for us, and that's really about what does this business look like in 2015, '16, and '17.

Okay. And then, the last one. Mike, I understand that the opportunity on Avondale and I think it makes sense to explore in the near term, I mean, is it -- do you envision, over the medium term, that it still sits under the Huntington Ingalls umbrella? Or is this more of a -- taking it to a -- from a neonatal stage to adolescent stage?

Well, we certainly don't believe that we can be competitive if the cost structure is a Navy cost structure. So we'll have to find other ways to deal with creating a competitive cost structure for that business. And so I think you have an interesting perspective of -- this is the very beginning of this process and we will be exploring all kinds of alternatives there relative to how do we make that business -- in order to be successful, how do we make it competitive.

Okay. And Barb, what's the funding for the pension look like beyond '13, funding requirements for the pension? I know you said it was discretionary in '13, but beyond that?

We haven't given anything beyond that.

Where did the funding end up for the year?

236 -- I'm sorry, for the -- 2012, minimum required was $64 million and we did $172 million of discretionary, so $267 million.

Sorry, I meant the funded status of the plan at the end of the year. Was it 1.1?

We continue to maintain a 90% funded based on what now is called MAP-21, but on a PPA basis.

And the final question will come from the line of Brian Ruttenbur with CRT Capital.

The last question, G&A. Let's ask a real simple one. G&A in 2013, is it going to be less than 2012 or more than 2012?

That's a tough one to call. Pension expense drove G&A up from 2011 to 2012, and it'll really depend on what my pension expense looks like. And so I gave you ranges. So it could be close, it could be a tiny bit higher.

Okay, great. And then, as I look at it, Mike, it seems like maintenance services as you put in there, services are at a bigger risk than products. Is that the correct way to look at it? If we are going to take anything out, assuming a CR and sequestration, would I be taking it out of the products side or the services side?

I mean -- Mike talked about that AMSEC and CMSD are probably less insulated, so it would be out of the services side for that.

That concludes the...

Well, thanks for your time today, folks. I think we've demonstrated that our crystal ball is no better than yours relative to the politics that are out there. And the next month is going to be a pretty dynamic time. It'll probably be a new story, if not every day, every hour between now and the end of March. And as you know, we are very, very heavily engaged in that process to the best of our ability. And the thing about our business is it shows well, there's no misunderstanding about how important our programs are. The alignment we have with the Navy relative to the importance of getting the '13 budget, the things that they are prioritizing are the things that we prioritize. And I think the President's visit to our shipyard in Newport News yesterday just demonstrates the priority that our business has and the alignment we have with our customer. We've got a political process we've got to work through over the next month, and we'll be doing that. But our core business is staying -- we're very pleased with where that is. The progress that we've made in the last 2 years, but really, over the last 5 years since Barb and I first went to Pascagoula. Our focus on safety and quality and cost and schedule continues to drive the performance of this business towards our goals in 2015. And where I sit today, I'm not backing off of that. I think that we'll fight our way through the politics, but the execution and the risk retirement and the creation of value in this business, we're very focused on and then, we keep moving ahead on that. So thanks for your engagement with us, and thanks for your time today, and we look forward to seeing you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect, and have a great day.