Good day, ladies and gentlemen, and welcome to the Third Quarter 2012 Harris Earnings Conference Call. My name is Janetta, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over for your host today, Ms. Pamela Padgett, Vice President of Investor Relations. Please proceed.

Hello, everyone. Good morning. Welcome to our Third Quarter Fiscal 2012 Earnings Call. On the call today is Bill Brown, President and CEO; Gary McArthur, Senior Vice President and Chief Financial Officer; and Dan Pearson, Executive Vice President and Chief Operating Officer. And before we get started, a few words about forward-looking statements. In the course of this teleconference, management may make forward-looking statements. Forward-looking statements involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. For more information and a discussion of such assumptions, risks and uncertainties, please see the press release and filings made by Harris with the SEC. In addition, in our press release and on this teleconference and the related presentation, we will discuss certain financial measures and information that are non-GAAP financial measures. A reconciliation to the comparable GAAP measures is included in tables of our press release and on the Investor Relations section of our website, which is www.harris.com. A replay of this call will also be available on the Investor Relations section of our website. And with that, Bill, I turn the call over to you.

Thank you, Pam, and welcome to our Third Quarter Fiscal 2012 Earnings Call. I'll quickly review some of the highlights of our third quarter results, turn it over to Gary to walk through the details of the financials and then come back to you with a few comments before opening the call to questions. Turning to Slides 3 and 4 in the presentation. Harris posted solid third quarter results with orders, revenue and non-GAAP earnings all higher compared to prior year. Revenue increased 4% to $1.48 billion, and book-to-bill was greater than 1. Non-GAAP EPS of $1.39 increased 18% over the prior year and was driven by operating income growth at RF and Government Communications, nonrecurring royalty income and a lower share count from first quarter repurchases. On the last call, I said we were going to be conservative on cash deployment with a focus on rewarding shareholders. We resolved a significant financial drag from the Cyber hosting facility and completed a thorough review of our business portfolio, and we've made good progress on all 3 fronts. The company continues to generate strong free cash flow, and at the end of February, we increased our dividend by 18% and raised our target payout ratio from 20% to 25%. We also announced in the third quarter that we are exiting the underutilized Cyber hosting facility, and the process to divest the assets is progressing quickly. Our business portfolio review is well under way and today, we're announcing the decision to divest Broadcast Communications, which we believe is no longer aligned with the company's long-term strategy. The combination of a lack of effective integration by the company over the last decade coupled with a market outlook that is not as promising today as once believed led us to conclude that the best -- that the business is best owned by another party. Although Broadcast is no longer core to our company, we believe the business has the potential for strong growth and margin expansion, is led by a solid leadership team and has long-term value for someone who brings a focused approach to the broadcast and media market. It's our intention to use the proceeds to return cash to shareholders and invest in growing our core businesses. Also, as we said on our last call, the slower government spending environment requires increased attention to operational excellence and lowering costs, including a sharper focus on supply chain, factory and field costs, overhead rates and employment levels. The guidance that Gary will give in a moment reflects the cost-reduction actions we are taking in the fourth quarter that will benefit us in FY '13. I'll turn it over to Gary to comment on segment results and guidance outlook, and then I'll come back with a few comments before we open the call to questions. Gary?

Thank you, Bill, and good morning. Moving to segment results on Slide 5. Revenue for RF Communications was $538 million compared to $550 million in the prior year. Tactical Communications revenue was $398 million and declined 8%, driven by a significant decline in DoD. Although down slightly due to transitioning to Phase 2 of the Australia order, international revenue was at a healthy level and supports the strong double-digit growth expected for fiscal 2012. In Public Safety and Professional Communications, revenue growth was excellent, increasing 18% to $140 million with strong growth in both products and programs. Operating performance for this segment was very good, with operating income increasing in spite of lower revenue. A favorable product mix, cost containment and lower manufacturing costs all resulted in higher operating margin of 33.8%, up from 32.5% in the prior year. Orders for the segment totaled $629 million, and book-to-bill was 1.17. Tactical Communication orders were $534 million. Book-to-bill was 1.34, and backlog was $717 million. We continue to see demand for our products from all branches of the U.S. DoD. From the U.S. Marine Corps, we received a $64 million order for Falcon III radios, and we were awarded a $49 million IDIQ contract to provide Unity Multiband Land Mobile Radios to our Marine Corps first responders. Following the close of the quarter, Harris was awarded a 5-year, $400 million IDIQ contract from the U.S. Special Forces, with an initial order of $39 million for Falcon III hand-held radios with wideband networking. We also expect an award later this fiscal year for the 4-year potential $500 million JTRS seizures next-gen IDIQ contract for Falcon III radios, including handhelds with wideband networking. Late yesterday, the Joint Program Executive Office awarded Harris a $26 million IDIQ contract to provide the Soldier Radio Waveform…

Okay, thank you, Gary. We're focused on positioning our company for continued success in an increasingly challenging and uncertain environment. Over the past 6 months, I spent a considerable amount of time in Washington meeting with administration officials and elected representatives, who are all wrestling with the trade-offs and tough choices to tackle the deficit problem we face as a nation. How that debate plays out in an election year has significant implications for our company, the defense industry and our nation as a whole. And I don't expect much more clarity on the situation until we're well into our next fiscal year. In that environment, we'll continue to focus on the things we control, aggressively addressing our cost structure and relentlessly driving productivity, improving cash generation and conservatively deploying capital with a focus on rewarding shareholders through dividends and share buyback, maintaining a healthy balance sheet and investing appropriately in technology innovation to improve our competitive position. We have very strong core franchise businesses led by an outstanding team that's committed to satisfying our customers and creating shareholder value. And on June 4, I look forward to talking to you more about our plans for next year and beyond. And with that, I'd now like to ask the operator to open the line for questions.

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

Just 2 quick ones. I wondered if you might elaborate on some of the areas of strength and weakness in the quarter? It look like PSPC was awfully strong, and I know, Gary, you highlighted a sort of big opportunity pipeline there. I wondered if you might speak to the strength you're seeing there and, at the same time, speak to IT Services, which looked like it was pretty weak in the quarter.

Okay, Carter, talking first to Public Safety and Professional Communications, we do see a very strong pipeline. There's opportunities like the San Francisco mass transit authority ahead of us, opportunities in Trinidad, some big opportunities that will help. We obviously have good wins in the past from what we win in the province of Alberta and the state of Oregon, so that business is very well positioned. If you go to the IT Services business, as I mentioned, we did lose the Patriot program, which is impacting this year pretty substantially. I think it's down $67 million year-over-year, as expected. And then we have seen just a pretty tough IT spending environment. It seems like the U.S. Government is just not spending dollars where they don't need to, and a lot of awards are moving to the right, and so that's been pretty tough for us. I think the good news, though, is we're not seeing continued weakening. I think it's starting to look like it's bottoming out, and we're feeling good about where we're ending up, I guess, for our guidance for the year now that these changes have occurred and where we expect it to go next year.

And one for Bill, briefly. On Broadcast, I'm sort of interested if you can tell sort of why now and what you and the board were thinking with respect to when is the right timing? I mean, I understand you're trying to focus on the core and your core businesses, but the same time how you evaluate the appropriateness of the timing, given that the business is sort of hovering around breakeven right now? Is this something -- how did you weigh the pull of fixing that business some more and potentially having some more interested buyers versus focusing on your core today? Any color there would be appreciated.

Yes, Carter, thank you. It was a pretty long conversation with the board over the last 6 months, but it's not a new topic with our board. It's been discussed quite frequently over the last several years, given where Broadcast happens to be and some of the charges that have been taken in the past. And it's been an active discussion with our board on is it a fit? How do we make it better? What is the timing if we decide to exit? All those topic tend to come up quite a bit, and we had a long conversation about that. In our view, given the tough environment that we're facing, we think it's important for us to just focus our resources, including our management time and attention, on the businesses that we know to be core to our company so we can be successful into FY '13 and beyond.

Your next question comes from the line of Joe Nadol with JPMorgan. Christopher Sands - JP Morgan Chase & Co, Research Division: It's actually Chris in for Joe this morning. I was hoping you could give a little more color on the outlook for RF Communications. It seems like Tactical Radios will be down. I noticed both the domestic and international pipeline came down a little bit this quarter. Could you just perhaps say how much of that business might be down next year and what the offset is in Public Safety?

Yes, the revenue for next year for RF will be down 3% to 4%, as we showed on the guidance page. The Tactical Communications business we expect to be down mid- to high single-digits. We expect PSPC to be up high single-digits. Christopher Sands - JP Morgan Chase & Co, Research Division: Okay, great. And then -- and I know you mentioned in your guidance doesn't contemplate anything for sequestration. Anything for a continuing resolution in the fourth quarter?

As Gary went through in some detail, we don't contemplate in any of the guidance or discussions today sequestration because, like everybody else, we don't know if, how much, is it going to be across the board, is it going to be targeted? So we really can't comment on any hypothetical scenarios or what the impact may be to the company. But we've done some contingency planning that we can quickly adjust our cost structure if it happens. And one of the things that is on our mind, it's a near-term concern, is the potential impact on our first half, given the likelihood of a continuing resolution and some uncertainty around sequestration that it may cause some of our customers to push things out of it. We're in a situation where our fiscal year straddles sequestration. So our first half will come into play later this year with a potential continuing resolution. But relative to that, keep in mind, our content on large high-profile platforms is relatively modest. Our products, in our view, are closely aligned with where the DoD has stated their priorities to be, smaller, more nimble, more capable fighting force, a network battlefield, special ops, all of which we have some strength in. And also helping us as well is what we see to be some strength in the international business, which, as you know, was a little bit more than half our Tactical Communications business. So we are anticipating that there will be a CR that will put some pressure in the first half, but I think the bigger issue is the looming sequestration.

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

Just couple of clarifications on some of the components in the outlook. Is it correct that the new 2012 guidance does not have any changes in segment revenue or segment operating margin other than moving Cyber and Broadcast? There's no change to any of the remaining legacy business. Is that correct?

That is correct with regards to RF and Government Communications, no change at all to the forecast. I think -- to the guidance. I think I gave the specifics on the Integrated Network Solutions. And if you just looked at kind of guidance where it was and guidance where we're coming out now and, big picture, moving Cyber into discontinued operations, there was a plus up. And then by moving Broadcast into discontinued operations and then the lower income and revenue and Integrated Network Solutions, those were both down as well as the restructuring charges that we're taking in the fourth quarter. So net-net, that's kind of where we're at.

Yes, specifically on the ROS on INS is also impacted by margin erosion in healthcare. We said before it was going to be profitable. Now it won't be, and that's a key part of it.

Okay, okay. So those are all of the main components?

Correct.

And then with 2013, Gary also alluded to taking the proceeds from the sale of Broadcast and buying back stock. Does the 2013 EPS guidance specifically estimate what you'll get for Broadcast and then translate that into repurchasing shares and a lower share count? Or would use of proceeds from Broadcast be upside to this initial fiscal '13 guidance?

What we have done is assumed that a transaction takes place at the end of this calendar year, so mid our fiscal year, and $200 million, whatever the proceeds happen to be, will be used to deploy into share buyback in the third quarter of next year. And that's what we've assumed. As Gary mentioned, we've just initiated a process to launch a sale, but we're just getting started.

Got it. And then just one more for you, Bill, now that you've had a few more months to sort of get your arms around the business, I wonder what your view is on when the bleeding stops at RF? How many more quarters or years until that business can go back to top line growth and stop having margin compression? And perhaps, if you could, within that comment, on what you think the right long-term margin we should all be thinking about is in that business?

Well, what we're going to do today is provide you an outlook for '12 and where we're at in '13. Anything beyond that, I think, is going to come to a conversation later on in June. But I think I may take exception and correct you on the bleeding. It's been certainly one of the most successful franchises we own. It's doing extremely well. It's a global market leader, a leader in the U.S. with exceptionally strong margin. It's a fantastic team, outstanding technology. And in fact, one of the things that we're doing in the guidance in FY '13 with margins coming down is investing in R&D to grow the business over time. So I wouldn't say it's a bleeding business. I would say it's actually an extremely successful one.

No, I don't disagree. But I think the stock's multiple, in a lot of ways, reflects how difficult it is to forecast what the long-term growth rates and margins are going to be in that business. So any color you could give there, if it's today or if it's when you guys get us all together in June, I think, would be super-helpful to investors.

We understand, and we'll provide more in early June. But as we see -- going into next year, we do see, not unexpectedly, some softness in U.S. DoD tactical radios, and we have anticipated that. But fortunately, we're seeing some strength in the international arena.

Your next question comes from the line of Rich Valera with Needham & Company. Richard Valera - Needham & Company, LLC, Research Division: Gary, I was wondering if you could tell us how much nonoperating income you have baked into fiscal '12 from either a dollar or cents per share and if there's any of that baked into fiscal '13?

Yes, in '12, it's $10 million to $12 million is the range that we're giving. And for FY '13, it's actually $2 million to $3 million of expense, which is returning to kind of our historical levels. This year, we benefited from some royalty income kind of one-off patent sales. We don't plan for those. We do have a team that works on that, and they come in kind of intermittently. So this year, definitely $10 million to $12 million. Next year, an expense of $2 million to $3 million is what's in our guidance. Richard Valera - Needham & Company, LLC, Research Division: Great. I just wanted to clarify. The expense reductions you're taking in the next quarter, those are expected to save $20 million to $30 million in fiscal '13? Is that correct?

That is correct, and that is based into the guidance. Richard Valera - Needham & Company, LLC, Research Division: Right. And then finally just with respect to IT Services. Gary, in your prepared remarks, it sounded like you feel like that business is bottoming after apparently some weakness, I guess, throughout this year. I'm just wondering what you're assuming for fiscal '13. Are we looking at that as sort of a flattish business now? Or do you see that going down more or, in fact, returning to growth at some point?

Right now, we're looking at it more as flattish to up, not flat to down, but not seeing strong growth. So that's kind of what's baked into our guidance based on the environment we're seeing.

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

Bill, I don't know if we should wait until June for this, but I thought I'd see if I could ask you one more time. Do you think you're done at this point with the portfolio reshaping? I think you've certainly sort of made your mark on the company so far in terms of strategy and reshaping things. Would you say you're done at this point? Or is there more to go?

We don't see any other portfolio reshaping at this point in time.

Okay, got it. And I just want to ask you, within RF, you gave us a sense on fiscal '13 in terms of Public Safety versus Military. Is it safe to assume that international Military revenue within RF for fiscal '13 will be up, or no?

Yes, we expect within Tactical Communications that international will be up mid-single-digits.

Got it. And then last question, can you give us a sense of how much you expect RF R&D to be up in fiscal '13?

I think we're going to come back to that in early June, because we can give you a little bit more sense not just in what's happening with the investment, but more importantly, what we're spending it on and why we think it's important. But I would say if you look on page that shows the margins, we're going this year from about 33% to about 30% to 31% next year, and half of that decline is relative to gross margin. Part of it is just mix between PSPC and the tactical business. Part of it is price. Part of it is volume. The other piece of -- the other half of the margin erosion comes from investments we're making, principally in R&D.

Your next question comes from the line of Michael Lewis with Lazard Capital Markets.

So I have to applaud you on this broadband -- or, I'm sorry, this Broadcast divestiture. It just never made sense to me, but I'll move on. Gary, the after-tax loss from Cyber was about $100 million. I think the expectation when you announced it was $70 million to $80 million. What's the delta there, and was there -- why was it higher?

There was some additional software that we decided to throw into the mix, and then we also had some lower prices on the building than what we expected. Those are the, really, the 2 main components, and the number we did give you does include the losses from the business as well. So if you took the $100 million, I think you get down to what we said, the $70 million to $80 million. We're still in the kind of high-80s of where we're coming out on the building and some additional software and stuff we threw in, and then the rest of it is the losses just from the business.

Okay, and then you brought up Patriot. And that was a tough loss. Have you done the math? If you backed out Patriot program, what would the IT business look like on a year-over-year basis pulling that out? Have you done that math?

I haven't done the math specifically. But as I said on the call, the business overall was down about $67 million from Patriot. I don't have right in front of me last year and where we're at, but it has declined some. In the quarter, it was almost all Patriot. And rather than just guessing it, let me do the math and get back to you.

Okay, that's fair. And then one final question. You're embedding the R&D tax credit into your expectation, which somewhat varies with some of your peers. What would the tax be if the R&D did not hit?

About 1% higher, about 0.8%, to be precise on the math. So it's in that 1% higher range if we do not get the R&D investment tax credit next year.

Your next question comes from the line of Mark Jordan with Noble Financial.

My question is related to acquisitions. Historically, they've been used to build segments, gain scale and focus for the company. Kind of seemingly, the 3 remaining groups have that scale and are focused. Does this mean that in the coming years or coming couple of years that there may be a greater emphasis on buybacks and dividends rather than acquisitions? Or do you still see more opportunity to build scale?

I don't think I would necessarily conclude that. I think for the near term, we don't see a lot of M&A activity happening at Harris. Frankly, we've got our plate a little bit full right now with what we're doing with Cyber and with Broadcast and just with the overall environment and me understanding and resetting the strategy. But M&A will clearly play a role in our long-term strategy at the company, and I expect we'll get back to that. And there will be some balance between share buyback and M&A.

Okay, a follow-up, Gary. Historically, you've kind of looked at capital deployment over a 3-year timeframe. Do you have thoughts relative to what you see from a deployment standpoint for the fiscal '13 to '15 period, which will be the next 3 years?

I think I'll probably reserve some of that for, again, our Investor Day in June, but we did give some guidance when we raised our dividend that we're now targeting a 25% payout ratio, so that kind of brackets where we've been on dividends. And we've been actively over the last several years in the market buying back a couple of hundred million dollars of our stock I talked about this year. That's kind of our normal practice again for '13. That's our expectation, and then we'll use some of the proceeds from broadcast to add to that. So I think that 25% payout ratio and around a couple of hundred million a year is at least our current thinking.

Your next question comes from the line of Yair Reiner with Oppenheimer & Co. Yair Reiner - Oppenheimer & Co. Inc., Research Division: So first, I want to make sure I understand the guidance. It looks like you gained about $0.13 through the first 9 months of the year by shifting the Broadcast and Cyber losses off to discontinued ops. So by keeping your nominal EPS target unchanged, it looks like you've actually lowered kind of the base-case guidance by about $0.15 on a full year basis. Am I looking at that the right way?

It's very close, yes. Yair Reiner - Oppenheimer & Co. Inc., Research Division: Okay. And then in terms of the cash from divesting the Broadcast business and exiting Cyber, you said around $200 million for Broadcast may be towards the third quarter next year. Is that what you expect to make in total? Or is that kind of a conservative estimate? And then where should we see kind of the money coming in from getting out of Cyber and selling those assets?

What we said was we would use $200 million from whatever the proceeds were for divesting Broadcast to buy back shares. Our assumption is that the transaction closes at the end of this calendar year, so we use that proceeds of $200 million in Q3 FY '13. We fully expect that the proceeds will be substantially higher than that $200 million. [indiscernible] Yair Reiner - Oppenheimer & Co. Inc., Research Division: Are you ready to give us some kind of range for that?

No. Like I said, we've truly have just initiated the internal process of the launch of sale, so we're not even close. Now you mentioned about Cyber. We do expect that to conclude towards the end of this fiscal year or into early FY '13, and that will be incorporated into our cash flow guidance. Yair Reiner - Oppenheimer & Co. Inc., Research Division: Got it. And any kind of sense of what those assets are worth? Or is that also TBD?

I think TBD. Yair Reiner - Oppenheimer & Co. Inc., Research Division: Okay, and then just one other quick one. On the guidance for 2013, your profit margin for INS is quite broad, 8% to 11%. Can you give us a sense of what are the factors that potentially take you to the higher end or low end of that guidance?

Maybe I'll start with that and, Gary, and pass it to you. Clearly, we do have expectations for continuing growth and margin expansion in CapRock, which is benefiting from very, very solid integration work over the last year. And we do expect to drive the healthcare business from a loss to profitability in FY '13. And I'd say those are the 2 biggest factors that would drive it. I don't know if you want to...

No, I think you hit the 2 main ones, Bill. And as I said, IT Services pretty flattish on the revenue side, and the margins won't change dramatically.

Your next question comes from the line of Gautam Khanna with Cowen.

A couple of questions. Like could you talk about what specifically you're going to get that payback on the restructuring?

The charge we're taking in Q4 is about $5 million, and it's for -- obviously, it's just a charge for the employment reduction. But when I add in employment, employees plus contractors, we're anticipating a reduction across the company of about 2% of our total population of contractors and employees, and it's -- I'm not going to talk about the specifics about where that's going to be, but that's what drives the very substantial payback in FY '13.

Okay. Anything -- you characterized the RF tactical pipeline as still being pretty elevated. I guess, when we look back, the bookings quarter-to-quarter have been pretty choppy, this quarter being an exception to the upside. But could you characterize kind of what you see in the near term with respect to order potential? Are there any large ones that are close at hand? How should we be thinking about kind of book-to-bill in the June and September quarters so that we're potentially protected at the sequester?

I mean, maybe I'll start and maybe toss it to Gary. I think on a year-to-date basis, our book-to-bill is just less -- it's a little less than 1, it's about 0.96. And we've had a very nice Q3, very strong international orders. Of course, we don't and we won't today provide any sort of guidance around orders or when they're going to happen or project a year-end backlog. But so far, year-to-date and on an LTM basis as well, the book-to-bill has been relatively good. I don't know if, Gary, you want to...

No, I think you've covered it again, Bill. I mean, we have had -- we won a great IDIQ contract with the Special Forces. We see another one coming up with the JPO office on seizures, and we did some initial orders. I would still expect that, as in the past, our orders are pretty lumpy from one quarter to the next and won't necessarily change. So some quarters, we're up, as this one. Last quarter, we were down some overall. As Bill said, year-to-date, 0.96 book-to-bill. And we're just not going to get into the pattern of trying to predict where that's going to be.

Are there any lumpy, large ones out there on the international front that you can point to?

There's good opportunities, again, in the countries that we've talked about, and they're hard to predict timing. But you've got the country in Central Asia. You've got Iraq. You've got a country in Northern Africa. You've now got Australia that we're into Phase 2, and other phases will come. We mentioned Brazil as having opportunity. And so it's hard to predict whether they'll do that in steps, or sometimes you get a big award. And so I'll just leave it at that.

Your next question comes from the line of Chris Quilty with Raymond James. Chris Quilty - Raymond James & Associates, Inc., Research Division: A question with regard to the broadcast divestiture. If you're unable to receive what you consider to be a fair bid for that business, would you consider spinning it off to investors in the same way that the microwave business was divested some years ago?

We're going to -- I'm going to defer that to later in the year when we actually start the process and start seeing what the activity happens to be. I don't think I would comment on any structure. Our intention today is to divest the business in a sale with cash returning to the company. Chris Quilty - Raymond James & Associates, Inc., Research Division: And if you were to look today at your business portfolio, is -- which area would rise to the top as the one where you would most likely invest?

Again, I'm going to push that to a later conversation. I don't think I want to speculate today on where across the portfolio we're going to invest cash proceeds or cash in terms of an M&A perspective. Clearly, I did reference the increasing investment we'll see in R&D next year in our RF business, both in Tactical Communications as well as PSPC. We'll also see a little more R&D spending, internal Iraq [ph] spending at our Government Communications business as we invest in developing products and innovation for future growth. But that's really the things we're going to focus internally. We're clearly getting back to what are the businesses at our core and making sure they're fully funded and are successful. Chris Quilty - Raymond James & Associates, Inc., Research Division: Okay, and if I can, the -- on the Tactical Radio business, correct me if I'm wrong, but the MWDR [ph] contract is currently the sort of the biggest opportunity sitting out there with the U.S. Government. Can you give us a rundown of where you stand in terms of certifications for that program, both in terms of Rifleman Radio, waveforms and encryption relative to the competitive field and when you expect a likely contract award for that particular contract?

Chris, it's Dan. The procurement's been delayed about 3 months right now, that's kind of where we're at out of the contracting shop. But quite frankly, for competitive reasons, we're not going to talk about what certifications and other things that we're going to do in that radio, channel, 2 channels, how it's going to be configured. Clearly, it's something we're very much focused on with our RF team. But from a competitive perspective, we're not going to talk about it. We did get [indiscernible] certification for SRW. And as you've seen from the JPO, we're very happy with the software contract, but we're moving along our path with all waveform, just like we have, but we're not going to get in the business specifically, especially on these very competitive [indiscernible].

Your next question comes from the line of Josephine Millward with Benchmark.

Can you talk about funding sources for the U.S. Tactical Radio market going forward, in particular on the $400 million SOCOM and the $500 million seizures IDIQ contracts? In the past, they were primarily funded by the supplemental. So how do you get visibility going forward in this environment?

We're feeling pretty good, Josephine, about the visibility on the funding. Basically, about 80% of the revenue that we're forecasting for FY '13 U.S. DoD is already either funded from backlog or in the GY government budget of '12, so leaving only 20% of the funding to come from FY '13 appropriations. So overall, it doesn't come from any particular one line item. Some of them are easy to identify, but we've sat down with our RF team and gone through every line item of where that revenue is expected to come from. And as I said, 80% of it, of what we're expecting next year is already funded.

That's very helpful. Can you provide a more detailed breakdown of your assumptions for your guidance for Integrated Network Solutions? What's the growth rate assumptions for CapRock and healthcare next year?

I don't think we're going to give today any more granularity on INS or GCS. I did provide, I think, quite a bit of insight into our thinking on the RF business for obvious reasons. But I think I'm going to push out into early June any further conversation on guidance on INS.

Your last question comes from the line of Pete Skibitski with Drexel Hamilton.

Yes, just a follow-up. On the healthcare IT margins, guys, I'm just wondering why the loss in the quarter? And maybe, Bill, if you have kind of a target margin rate for that business?

Well, I think the issue in the quarter is what we've seen over the last 6 to 9 months is in the commercial -- first of all, the government healthcare side of our business is performing very, very well, and we're thrilled with that. We're executing well. We're winning new contracts, and we're feeling very, very good about that. And if you can recall in the last earnings release, I talked about our ability to sort port some of those capabilities from the government side into commercial. Last year, we bought a company called Carefx. Clearly in the commercial side, the market is still evolving. Needs of customers aren't entirely well-defined, which sometimes requires a higher-cost customization of the software, and that's what we're seeing now in some of the losses that are occurring. But we see ourselves evolving the product. We think costs will come down. We think conversion rate of opportunities to orders should improve, and we expect that business to be profitable in next year. So I think that's the direction we'd give today.

Thank you, everyone, for joining us, and we hope you join us for our June 4 Analyst Meeting in New York City. Thank you.

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