Welcome to the ICF International Fourth Quarter and Full Year 2012 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Wednesday, February 27, 2013, and cannot be reproduced or rebroadcast without permission from the company. And now I would like to turn the program over to Douglas Beck, Senior Vice President of Corporate Development. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us to review ICF's fourth quarter 2012 performance. With us today, from ICF International, are Sudhakar Kesavan, Chairman and CEO; John Wasson, President and COO; and James Morgan, CFO. During this conference call, we will make forward-looking statements to assist you in understanding ICF management's expectations about our future performance. These statements are subject to a number of risks that could cause actual events and results to differ materially, and I refer you to our February 27, 2013, press release and our SEC filings for discussions of those risks. In addition, our statements during this call are based on our views as of today. We anticipate that the future developments will cause our views to change. Please consider the information presented in that light. We may, at some point, elect to update the forward-looking statements made today but specifically disclaim any obligation to do so. I will now turn the call over to our CEO, Sudhakar Kesavan, to discuss fourth quarter 2012 and full-year highlights. Sudhakar?

Thanks, Doug, and good afternoon, everyone. Thank you for joining us to review fourth quarter and full-year 2012 results and the outlook for 2013. Our strategy to diversify revenue mix and focus on markets that have the highest growth prospects paid off again in the fourth quarter, and has been a key reason for our successful performance in 2012. Similar to previous quarters in 2012, the strength of our commercial business offset headwinds in the Federal Government arena, leading to ICF's 8.4% year-on-year revenue growth for the period. Commercial work accounted for 29% of fourth quarter revenue, up from 25%, 1 year ago. If you add revenues from international clients to commercial clients, the percentage moves to 33% of our revenues, and with state and local government clients, it moves up to 42% of our total revenues. We did all this while our federal business remained stable. Of course, we remain committed to the federal space and we are allocating our resources to those areas that we expect to be more resilient and that overlaps with our long-standing domain expertise such as health, health informatics, energy, education, digital interactive work and cybersecurity. While 8.4% revenue growth puts us firmly ahead of the industry average, our service revenue performance was even better, increasing 10.6% in the fourth quarter and 13.8% for the full year. This represents revenue directly billed by ICF employees without the impact of subcontractor and other direct costs. In terms of profitability, EBITDA growth continued to outpace revenue growth, increasing 9% in the fourth quarter and 14% for the full year. This directly relates to our actions in mid-year when we eliminated certain positions and reassigned staff to align our resources and projected levels of client spending and to strengthen our ability to capture and support commercial business.…

Thank you, Sudhakar, and good afternoon. As Sudhakar stated, we continue to make progress in diversifying our portfolio, especially with commercial clients, where they continue to show strong sales and revenue growth. Our commercial sales in Q4 represented over 40% of total sales, illustrating this momentum. We succeeded in winning a number of important energy-efficiency contracts in the fourth quarter and we are continuing to expand our penetration of this growing market by focusing on growth along 3 important dimensions. First, in the U.S., we are adding new states to our coverage. Of the 2 large Q4 wins we announced on January 7 and 15, both were in states where ICF had not worked previously. And due to our excellent record of delivery, we'll do exceedingly well in new states where we gain a foothold. We currently are implementing programs in 1/2 of the 50 states and have significant room for growth. Second, while we continue to expand our coverage of residential programs, where we are the market leader, we are aggressively targeting the large commercial and industrial market, known as C&I, where our current market share is much smaller. Our fourth quarter win with the Energy Trust of Oregon, for its existing buildings program, is an excellent example. This 2-year contract for $16 million with a potential for 3 more option years at the same funding level underscores the success of our strategy of offering full life cycle support for commercial and industrial programs. We also recently announced a new $20 million win, that is a Q1 sale, that is also a major new program for us in the C&I market. Third, we are also expanding the suite of energy-efficiency-related services. We recently announced a preferred partner relationship with C3, whose enterprise platform is a leader in providing utilities…

Thanks, John. Good afternoon, everyone. Revenue for the fourth quarter of 2012 was $232 million, an increase of 8.4% compared to the prior year, and revenue for the full year reached $937.1 million or 11.5% ahead of last year. Gross profit margin was 36.7% for the fourth quarter, a decrease from 38.6% in the fourth quarter of 2011. Two items specific to the fourth quarter explain this reduction. First, in the fourth quarter of 2012, we changed the treatment of certain compensation-related expenses. Consistent with federal regulations, we reclassified these compensation expenses from un-billable indirect and selling costs to billable direct costs. Second, we had a change to our benefit plans. Specifically, effective at the start of 2013, we moved to a paid time off leave plan, or PTO plan, which led to a higher-than-normal usage of sick leaves in the fourth quarter of 2012 before it expired. The resulting net impact of these 2 items was to reduce our fourth quarter gross margin by 200 basis points. For the year, gross margin was 37.8%, inclusive of the 2 previously mentioned items, compared to 38.1% in 2011. As we go forward, we anticipate that our gross margin will be in the 38% to 39% range. Indirect and selling expenses as a percentage of revenues were 27.7%, down compared to 29.7% of last year's fourth quarter, and also below what we reported for the first 3 quarters of 2012. The fourth quarter benefited from our continued cost reduction actions discussed earlier this year, as well as the previously mentioned reclassification of certain compensation expenses from indirect and selling to direct costs. Our EBITDA margin for the fourth quarter was 9%. EBITDA margin was negatively impacted in the fourth quarter by $1.1 million, or 50 basis points, due to the net impact…

Thank you, James. This is, of course, a difficult moment to comment on prospects of 2013 with the possibly of sequestration just 2 days away. On the other hand, over the last 3 quarters, ICF has absorbed the impact as clients have been cutting back on spending in anticipation of the March 1 deadline. What we can say is the following: our backlog at year end represents 67% of the midpoint of our revenue guidance range of $935 million to $975 million at 2013. This guidance is based on our current portfolio of business and does not include any additional impact from the formal commencement of sequestration. EBITDA, operating income and net income are all projected to grow at a faster rate than revenue in 2013, thanks to continued productivity gains and expense management programs. We are guiding to earnings per diluted share of $2 to $2.10. We'll expect to continue to report strong operating cash flow in excess of $70 million, which provides ICF with important financial flexibility, and we continue to have an active acquisition pipeline. At this point, operator, I would like to open the call to questions.

[Operator Instructions] Our first question comes from Tim Quillin from Stephens.

As you said, it's a difficult crystal ball right now on the federal market, but I'm just wondering, across your business in federal right now, what feels safer in terms of funding? And what do you feel is a little bit more at risk?

I think just to give some sense -- I mean the first 2 months of this quarter, it did not fell very different from the -- from what was going on in the last quarter. So it sort of has been going along well. We don't know what is going to happen once the commencement -- once the sequestration gets formally, sort of, in place on the 1st of March. But at the moment, the things are -- seem to be in this same normal -- fairly normal run rate state as they have been in the last few months. So certainly, we haven't explicitly heard anything from our clients. The civilian agencies certainly are -- we haven't heard anything explicit, I think from 1 or 2 of our Defense clients, which is a small percentage, as you know, of our overall business, we have heard that they will be doing something, but explicitly what they'll be doing, we haven't heard.

Understood. And second question is just on acquisitions. And first, if you could maybe just give us the report card on how Ironworks and GHK performed versus your expectations when you made the acquisitions a year ago? And then if you could discuss what you're thinking about in terms of acquisitions in 2013 and going forward?

Sure. Ironworks performed quite well. I mean you know their commercial business grew very nicely, slightly higher than what we have told you. We have told you 15%, and I think that it certainly grew a little more than that. The U.S. government business does not grow for a good reason. So I think, overall, they've performed adequately, but their commercial business is very strong, and we think it will continue to be strong going forward. GHK, we had told you they have remained sort of at the same revenue level because of the fact that we have to consolidate and figure out what they're going to do there. And we have a very strong pipeline with GHK, they are doing well. We have sent some senior top -- Jeanne Townend is over there. So we are pleased with how they have done to date, we have excellent people. And I think that, that business will do well going forward, and we're in the right markets with good visibility and earnings sort of the European Commission and certain government markets which are not affected, at the moment, by the downturn in -- or the austerity measures in the U.K. So I think we are really pleased with both the acquisitions, and we're certainly very pleased with the fact that our commercial business for U.K. [ph] continues to crank away.

And how about in terms of the acquisition pipeline?

The acquisition pipeline, is -- we are looking all over, but certainly, we are focused on commercial firms doing -- working with commercial clients in areas which we know well, and we've described them today. I think we are also obviously looking in certain several areas but those acquisitions tend to be very expensive, the ones which people think are all going to -- and say at VA or in certain health care areas. So our commercial pipeline of acquisitions is quite strong, it's quite active, and we think that it will be a year where, just like in the past, we've done 1 to 2 acquisitions a year. We certainly hope to continue that pace going forward.

Our next question comes from Bill Loomis from Stifel, Nicolaus.

Just looking at 2 things. One, just on -- the tax rate was low in the quarter, yet you have the planned cost change. Kind of what was the net impact, if we took both those out, what's the kind of the net impact on EPS in the fourth quarter? And then second, just on -- looks like Hurricane Sandy, the federal grants, will be over $50 billion. So what type of opportunities, potentially, are you seeing to develop there for ICF?

You want to -- James, do you want to answer the -- let me -- yes, go ahead, John. Why don't you do that and then James will...

So this is John Wasson. I'll tackle the Sandy question. I think that we have been following the Sandy funding very closely. I think it's still very early to say with any -- definitively, kind of, what those opportunities will be and how we'll go after them. We are doing some advisory work kind of in a -- some are between $0.5 million to $1 million the total advisory work, working with federal government, state governments and utilities in the affected region, around housing and energy and energy resilience. And so we are involved in this advisory work. We're watching the opportunities very carefully, I think we're monitoring it carefully. And if the right kind of opportunities materialize on the implementation side, either in the energy or the housing area, we'll certainly take a hard look at them and we'll be quite aggressive. I think it's just a little too early to say how the states are going to -- what kind of programs they're going to create and how they're going to go about it. So we're certainly watching it very carefully.

From what I've seen so far, it looks like a lot of -- it's going to be -- it looks like the way these grants are getting parsed out, it's fairly small grants to local level programs. It looks like it's going to be quite different than what we saw with Hurricane Katrina. Is that what you're seeing so far?

Yes, I would say that we're seeing -- yes, more grants and more local players, but again, I still think it's early, Bill. I'm sure I would give up completely on there being a material opportunity for us there. But so far, I wouldn't disagree with what you said.

Bill, this is James. With regard to the tax rate and the impact on the fourth quarter, I guess I'd first say that the tax rate that we experienced for the year and what we saw in the fourth quarter isn't that much different than what we have experienced in the prior year. So it's pretty similar. So it can't be -- depends on what basis you're comparing it to, but if you're comparing that to a 49 -- 40% rate, it's roughly a $0.03 to $0.04 impact on EPS or pickup on EPS.

Thought we'll have a $0.055 cent knock on pretax EPS with the planned change, right? With the $1.1 million? So what was the -- so I'm trying to get the net impact, so I just subtract those 2 and get the net impact? Is that how to look at it?

Yes. Yes. The $1.1 million is a pretax number. So I guess, I'm trying to understand exactly where you're going with that...

Was the tax rate on those expenses at a full tax rate? Or is there a different type of a tax rate associated with those benefits because of the...

No. It's the same tax rate. There was no difference on the -- on those expenses versus others.

Our next question comes from George Price from BB&T Capital Markets.

First thing, Sudhakar, I just wanted to make sure I heard you correctly, you said that your guidance does not assume anything in terms of the impact of the formal sequester? Did I hear that right?

Yes. I think that to some extent, we are -- we think that we already, over the last quarter or 2, have been sort of in a sequestration mode. But we certainly cannot predict what and how the Federal Government will react to it, so we are -- our guidance is based on the fact that we have a certain amount of backlog, which is very comparable to what we had in prior years as we transitioned from one year to the next. And if things remain the way they are, then the guidance is very consistent with our backlog and with the run rates in the first 2 months of the year.

Okay. I guess just kind of stepping back, I mean, so we have full year guidance that, I guess, potentially doesn't take into account everything that could happen as a result of sequestration. Obviously, a lot of uncertainty. I noticed that you're not giving any forward quarterly guidance at this point, I would assume, I guess, because of the uncertainty, maybe you could address that. But I guess, my question is why give full year guidance at all at this point?

We basically -- let me talk about the quarterly guidance issue. The quarterly guidance -- we didn't -- given the timing of the call and given that we have 30 more days to go in the quarter, we really don't know and have gotten no guidance from our clients about how they're going to deal with this, whether there's any e-mail we will get or some communication we will get from them saying this is happening or that is happening. If you did not know the sequestration was going to go into effect in 2 days, you would think this is a pretty normal situation. Everything is going along at similar rates to what has been true in the last few months. So I think that it's just one of those things where -- that's why we're not giving quarterly guidance, because it's just prudent not to give a quarterly guidance at the moment, given this big effectiveness of something which is happening. In terms of why give a full year guidance, because given all the metrics we have traditionally used for a full year guidance, and given that we have good visibility, we have some confidence that if things go on the way they are, then we will do the revenues which we have stated for the full year. Our commercial business is pretty strong, some of the energy efficiency, utilities work we've won is long term, that gives us visibility in the commercial market, and we have confidence in a commercial market with a double-digit growth. So I think that we have made certain assumptions and we've said that if things go along with Federal Government flat to slightly declining and commercial markets growing at double digits, this is what we will do. So that's basically what our guidance is based on, and we think that, that is something which we can share with you, with the provision that things don't dramatically change with this whole sequestration thing.

Right. Okay. I appreciate taking that -- expanding on that question very much. Just one last thing maybe on energy efficiency and the infrastructure work. A couple things. One, you've seen some new wins in the EU market which is nice. And I guess, is that -- is there any pickup in focus for any particular reason by utilities? Or is it just more effective marketing on your part? Maybe if you could give us an update on the California opportunity as well, any sizing timeframe, stuff like that?

Sure. This is John Wasson. I think on energy Efficiency, I think certainly, our focus on the commercial and industrial markets, we -- on the residential side, we are certainly a market leader, we have a significant market share there. I think on the commercial and industrial side, I assume there's more opportunities for growth there and more room for us to run. I think we are seeing, on the commercial and industrial side, some of these more bundled programs that do play to our strengths, and I think that's been a reason for some of our success. I think that there are additional opportunities out there in the commercial and industrial space that certainly give us confidence that we can continue to grow the energy efficiency business. In California, I think we do have -- obviously, we have a presence in California on the West Coast. We are doing energy efficiency work for the major utilities out there. I think that we're -- the more significant larger opportunities we think are later this year or early next year, there was a cycle out there where they, every 3 or 2 -- I think it's every 3 years, they rebid many of their major contracts. And so we're waiting for that next cycle to occur, but I think we certainly believe we can continue to grow our work in California and we'll do so. So we see significant opportunity there. But I would certainly emphasize the C&I play, and then again, there are -- we're looking about half the states, we do think additional states will adopt these programs and provide opportunity too.

I think -- George, were you talking about the California opportunity we just announced?

No. I think John hit it in terms of the, yes, the re-competes coming up that you guys have talked about before.

Our next question comes from Tobey Sommer from SunTrust.

This is Frank, in for Tobey. I wanted to ask if there was any expected indirect impact on the aviation or energy business from sequestration? Do you see any impact on that side?

Well, the aviation business is obviously a partner in their commercial business, they also do airports, I don't see any direct impact on the aviation business from sequestration. I mean, we do, do a little work with the FAA, sometimes material, but for our core aviation business, I don't see any impact there. What was the second sector? Aviation and energy? Yes. I think that we do still support the EPA ENERGY STAR programs, we are supporting the DOE energy efficiency programs. So there's the potential for impact of sequestration there, we haven't seen any yet and we're monitoring it carefully, but there is some potential there, but we haven't seen any yet.

But the numbers, I think the numbers we gave you for growth in the commercial business are all based on our commercial clients and do not -- when we say aviation grew 47%, that's all based on commercial aviation growth and does not include any of the other stuff. We count the FAA and the other work all in the federal arena. So...

And they -- I think the press release mentioned the energy efficiency growth, that was in the commercial space too. And so we certainly see the commercial side of the business, on energy efficiency and aviation, is continuing to grow and not be impacted by the sequestration.

Okay. Great. And just a quick confirmation, the guidance does not include any share repurchase, does it? And what's your thoughts in terms of potential share repurchases?

The guidance does -- this is James. It does not consider any share repurchases. As far as going forward, and I think we've stated in the past that our primary capital allocation priorities will be to focus on using our cash to invest in driving growth, which we'll be investing internally and investing in acquisitions. So that's going to be our primary goal. And we will certainly look to try to maintain a weighted average diluted share count that is at least flat year-over-year, so that's really what we are considering for this coming year, and that's what's in our guidance currently.

Okay. Great. And finally, we're seeing a lot of government services companies getting more heavily involved in the commercial space, that commercial exposure seems more attractive. Are you seeing anything in terms of pricing pressure or margin pressure or increased competition on that side that you have not seen before?

You mean from government services firms in the commercial sector we are in?

That's correct.

There's nothing unusual.

I would say -- this is John Wasson. I don't think we've seen any unusual. I don't we've seen any new pressures on that front. I would don't -- I would say, no, we have not seen that.

Our next question comes from Timothy Q from William Blair & Company.

First I want to ask -- I was trying to back into the organic growth rates from the commercial business, but it's a little tough given the Ironworks mix. Can you give us any color on kind of what the organic growth rate was for that business?

Yes. We -- Timothy, we normally don't give the organic growth rate for that business. But basically, if you -- it was in the high-single digits, if you include the infrastructure management project, which we -- which slowed down, which we talked about the last quarter. But it was in the -- in -- it was much higher in the 12% to 15% range towards the high end of that range, if you exclude that project. So basically, it was -- it was a -- it's in the double-digit -- higher teens, if you include -- exclude the TRTP project.

Okay. That's helpful. And then the comment in the press release about -- I'm not sure if it was the transmission line project there, but there's a comment about one of the large projects being in a public time and period right now. Can you elaborate on that? And how much of a drag was that? And I guess, how long does that continue?

Well. Yes that's a large state and local project we're doing out in California around environmental work related to the bay delta. That's been a significant project for us over the last year. It certainly was strong driver of state and local growth last year. In Q1, as we said, we did wrap up a draft report, it's in a -- we do expect it to pick up in the next several quarters. And so, I don't know, James, have we done enough to sort of -- kind of what we expect?

Yes, what we've -- I mean, it wasn't a common period. We have a little bit of a slowdown in the first quarter associated with that, but we expect that contract to ramp up to normal levels in the second quarter timeframe.

Okay. And then lastly, the EBITDA margin guidance of kind of 9.5% to 10.5%, and given a relatively flattish type of revenue, is there really a significant enough mix between commercial and the government sectors to drive an actual improvement in the margins? Or are you going to get more aggressive on managing the cost, and I guess that's why there potentially could be a margin improvement this year?

No, I think the margin is basically -- the commercial part of the business is growing consistent with what our expectations were, so we certainly think that there's an opportunity to drive margins there. And certainly, the cost is going to be a significant portion of our -- controlling costs is certainly going to be something that which we'll continue to do. But I do think that the mix of business, as it changes, will increase our margin, and therefore, there is a possibility of the margins going up just as we have stated in the past. So I do think that as the portion changes and as the growth of the commercial business exceeds the federal business, I think that weighted average will start making the margins go up.

Right. And this is John Wasson. I would say also to add to that as the commercial business grows, we're also trying to drive the utilization up over time, so you can both get higher margins on the contract unless you drive the utilization up. Now that can certainly help quite a bit too. So I would certainly agree with what Sudhakar said.

Our next question comes from Edward Caso from Wells Fargo.

It's actually Rick Eskelsen, on for Ed. Just a follow-up on the -- talking about the clients being prepared for sequestration. Just wanted to clarify, I mean, it sounds like the civilian agencies -- are they just -- are they less prepared for sequestration or just giving less conversation with you about what they expect for sequestration?

We -- it's hard to tell how prepared they are because we deal with them on specific, individual contracts. And I think we have been asking them about guidance and they have shared with us whatever guidance they have. So we don't have any explicit direction. We certainly have seen the guidance -- DoD has given its different components, and that is far more detailed than the guidance we have gotten -- than the civilian agencies have given. And when we talk to our industry, the Professional Services Council, which keeps very close tabs on this, which is the industry association here. They basically have shared the fact that the civilian agencies have not given guidance in -- as detailed a form as the DoD had. So I don't know what conclusions we'll draw from that, but it's certainly the case that the nature of the guidance is very different in terms of the level of detail, which people have gotten in. And certainly our contracting officers haven't gotten any specific instructions as to what to do on our contracts, which we deal within the civilian agencies.

That's actually really helpful. And then just on the other parts of your market, international and state and local, just wondering if you could give a little more granularity on that? We've heard of improvements in state and local. And then on international, can you just remind us the kind of the split Europe versus Asia? And the trends you're seeing in those 2 regions?

Yes. I think the state and local business -- we do have very substantial portion in California, 60%, 70% of our state and local business in California. So -- and the California fiscal situation has certainly improved and we have seen some green shoots in that market, so we are watching that closely to see how that transpires. We have assumed sort of mid to slightly high single-digit growth in our state and local business this year, and we certainly expect that it's something which we can achieve. On the international business, we currently do around -- you know what, the $40 million also in Europe. Most of it is in Europe, a little bit in Asia. It depends on how you count it. If you count it funded by European agencies working in Asia, then it's one number. So I think it's a mix of government and commercial, but more government, less commercial. And certainly, we see -- we've seen international growth. Again we have said in the mid- to high-single digits, we'll see whether that's something which we can achieve. We had given guidance of flat when we did the acquisition of GHK, because we thought that we need to understand the markets before we start understanding how we can grow them. So I think that we are quite confident that, that will happen. We are -- the Asian markets -- we are basically in China, in Southeast Asia and in South Asia, and those are good markets to be in. The infrastructure business in China, we have done quite a bit of work in both energy and in aviation, and that's growing. It's not enough to move the needle, so to speak, for our overall revenues of the business, but we certainly think that it can in due course, and it's certainly a slight -- mid-term play for us. But the European business can certainly increase and we already have a good pipeline of work, primarily focused on government, where we are trying to do more energy-efficiency work and more environmental work.

And then just 2 quick ones. One, on the quarterly guidance, do you -- is your intent to give quarterly guidance once we're past sequestration or are you switching to annual only? Do you have a thought there?

We have a thought at the moment. We are -- we have traditionally given quarterly and annual guidance. We will -- to some extent, it will depend on what we see happening with the sequestration situation. So we are still thinking about it and we will certainly get back to you as to when we decide, but we haven't decided one way or the other.

Okay. Then last one, just on the cash deployment. You talked about investments for growth, didn't say anything about debt paydown. What's your thoughts on debt? Are you happy and comfortable with the debt level, where it is?

I think, our back agreement...

I mean, we're fine where we are from a debt level perspective. I mean, certainly if we have a line of credit that allows us to borrow up to $500 million if you exercise the accordion feature, and we're at roughly $100 million, $105 million at year end. So we're comfortable as far as where we are and the acquisition fire powder that we have. But certainly, as we end up moving forward, depending on the timing of when the acquisition opportunities may arise, we will obviously look at either -- we'll look at paying down our debt as we move forward.

I think that -- if you are asking about debt levels, which we can tolerate -- we've said before that we can go up to 3x, 3.25x, I mean on our trailing 12-month EBITDA, and we are certainly comfortable doing that. We've been there many times, and we've paid it down. So I think that we have -- so that debt level, which I think we can take at the moment, we are using all the tax generation to pay down debt.

That's -- I was just wondering whether we should assume more debt paydown or not, but you guys answered the question.

Our next question comes from George Price from BB&T Capital Markets.

Just going back to a couple of the questions that were recently asked about some of the different segments and the commercial organic growth and so forth. I'm just wondering if -- maybe you had any thoughts coming into 2013 and perhaps providing some additional clarity into the business by maybe breaking out some of these key growth segments like energy efficiency, aviation, et cetera, maybe breaking down the market segments by commercial and government. There's a number of different ways you could skin the cat, but it just seems like as you push more into the commercial side, and that's a bigger part of the story and a bigger growth driver for the business, getting some more granular information around that would be helpful. Any thoughts?

I mean, we are pretty granular right now. We are -- we've given you growth rates for energy efficiency, we've given you growth rates for -- on the aviation side. It's sort of, to some extent, we are -- I don't -- we will certainly think about that, but we have traditionally not done that for our federal business. We don't give you agency-by-agency growth rates, et cetera. So I think that we don't really have -- it's not so -- to some extent, there is a competitive reason why we wouldn't want to do that. We have tried to make sure we give you as much information as we can to make you understand the business without necessarily trying to make sure that everybody telegraphs to the whole world what we are doing. So it is a balancing act, we will certainly think about it.

Okay. And then just going back to just confirm something, the assumptions. You're basically assuming about a flattish federal business in 2013 and, again, a double-digit growth in commercial. Is that right?

Yes. Flat to slightly down, commercial -- federal business, yes.

Flat to slightly down. Okay. The commercial double-digit growth, can you quantify that, at all, in terms of low teens, mid teens, upper teens, where?

10% to 15%.

Okay. State and local?

Mid-single digits.

[Operator Instructions] Our next question comes from Tim Quillin from Stephens.

Amortization was, I think, $14 million 2012 and the guidance is $9.5 million to $10 million. So presumably, there's a step-down in intangibles amortization associated with some acquisition in the past, maybe you can confirm that. But when precisely did that step-down happen? Is that all right in the first quarter or is it later in the year?

Yes. It is due to a step-down associated with the amortization of some of our acquisitions, and it will start happening ratably throughout the year.

So that will -- it'll go down -- amortization will go down throughout the year?

Yes.

And we have no further questions at this time. I'll now turn the call back over to management for closing comments.

So thank you very much for your interest. We look forward to speaking with you in May. Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.