Good day, ladies and gentlemen, and welcome to the Northrop Grumman's Second Quarter 2014 Conference Call. My name is Jasmine and I will be your operator today. At this time, all participants are in listen-only mode. (Operator Instructions). I would now like to turn the call over to your host, Mr. Steve Movius, Vice President, Investor Relations. Mr. Movius, please proceed.

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

Thanks, Steve. Good afternoon, everyone, and thanks for joining us. Our second quarter results reflect our team’s focus on delivering top performance for our customers and our shareholders. As a company, we continue to focus on superior program execution, affordability and innovation. I'm proud of our team's performance and their dedication to serving our customers. This strong sustained operating performance combined with favorable pension trends and share repurchases contributed the higher second quarter earnings per share. We are very pleased with the results of the half way point of the year. Based on year-to-date performance we are raising guidance for segment operating margin, total operating margin and earnings per share. Our year-to-date segment OEM rate is 12.6% slightly higher than last year's results. For 2014 we now expect a low 12% segment operating margin rate and a low 13% total operating margin rate. We are increasing our EPS guidance to a new range of 9.15 to 9.35. Second quarter and year-to-date sales are consistent with 2014 sales guidance which is unchanged at 23.5 billion to 23.8 billion. We continue to see growth in our international business partially offsetting the impact of domestic budget pressures. We expect this trend to continue in the second half of the year. Cash from operations totaled $572 million for the quarter and we ended the quarter with the cash balance of approximately $3.5 billion. We continue to expect healthy cash flow this year and our guidance for cash from operations and free-cash flow is unchanged. Turning to cash deployment. During the quarter we repurchased 6.1 million shares for 741 million. Year-to-date we've repurchased 10.9 million shares at 1.3 billion. And our weighted average diluted share count has been reduced by 9% year-over-year. And we've now passed the half way mark toward our goal of retiring…

Thanks Wes and good afternoon, ladies and gentlemen. As Wes said, another solid quarter. Our team continues to execute very well and I want to add my sincere appreciation for their efforts. My comments today will focus on our quarter and year-to-date sector results and I'll provide a little bit more color on our EPS guidance for the year. The increase in our EPS guidance essentially reflects our strong second quarter performance and our current expectation for a 9% reduction in weighted average diluted shares outstanding for the year. Turning to the sectors, Aerospace Systems second quarter sales declined $111 million or 4%. On a year-to-date basis, sales were down 3%. Lower volume for both periods reflects declines in unmanned systems and space programs with lower Global Hawk production activity and lower development activity on Fire Scout being the two biggest drivers of the trend. These decreases were partially offset by higher volume on the NATO AGS program. I would note that we continue to see unmanned as a long-term growth driver for our company, particularly as international opportunities emerge. Current unmanned revenue trends reflect a normal pattern we would expect as mature production activities ramp down like the Air Force Global Hawk program and transition to and ramp up on development programs like NATO AGS and Triton. AS second quarter operating income and margin rates declined due to lower volume and quarter-over-quarter differences and risk retirement and performance improvements. But on a year-to-date basis AS operating income rose slightly and operating margin rate was very healthy at a 12.5% rate. For the year, we continue to expect AS sales between $9.7 billion and $9.9 billion and based on the strength of year-to-date results we now expect an operating margin rate of approximately 12% versus our prior guidance of high…

Thanks Jim. As a reminder, each participant should limit themselves to a single question. Jasmine will open the line at this time. Jasmine?

(Operator Instructions). And your first question comes from the line of Carter Copeland with Barclays. Please proceed.

Hey. Good morning, gentlemen or good afternoon I should say, and good quarter.

Thanks, Carter.

Wes, I wanted to ask a big picture question for you, because it's getting to be that time of year where everybody gets engaged in their strategic planning process. And when you look at where we are this year and where we've been in the past couple years, you were obviously doing some planning with considerable amounts of uncertainty. And I realize that per your comments, there's still a good bit of uncertainty about what may happen in ‘16 and where the ‘15 budget may come out. But when you sit down and you start crafting that long range plan, how is that different this year relative to perhaps some of the scenario analysis and stuff you've done in the prior years, and how much more emphasis are you putting on revenue growth and benchmarking on things like that as opposed to what you saw in the planning process of the prior years?

Well Carter, I guess I would just provide a kind of broad view of how we see the overall environment. Clearly, the deal that was reached at the end of last year that looked out for two years that was very helpful. It provided a little bit more stability compared certainly to where we had been in the prior years. But the reality is our customers of necessity plan over a much longer cycle than two years. And I would say that they are still struggling to plan effectively, given that we have a law on the books that says the sequester returns at the beginning of 2016. Now you’ll notice, everyone else did that when the President put forward his budget recommendations, he was pretty clear that to support national security, we could not be operating at a level that was dictated by the sequester. So, there are kind of two benchmarks out there right now, one is the President's budget and the other is the sequester. And it does create some fairly substantial uncertainty in the planning arena, particularly from the customer optics as they are trying to profile out these multiyear programs and investment cycles and quite frankly as they are struggling to deal with everything that's going on around the globe, given the budget pressures that we have in place today. So, I would say that there remains a fair amount of uncertainty out there. Clearly the events around the globe, I think are highlighting the importance of strong national security capability. And hopefully as we move along through this year and get into next year, we'll have a congress that can tackle some of those challenges and come to grips again with how to really go forward on a budget perspective. In the more near…

Yes, just since we have probably a good portion of the Northrop team listening, and they all know that we're doing multiple scenario planning for our plan; I just want to reinforce your comments and the level of uncertainty that as you look at a multi-year planning process that range of uncertainty over the years dramatically escalates. And so, yes, Carter we are continuing to do multiple scenario planning even in today's environment.

I think it's just a healthy thing for any enterprise to do as well because it allows you to be prepared for a variety of outcomes and to test your decisions and your assumptions against a variety of outcomes.

Thanks guys.

Thank you Carter.

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

Hi Jason.

Hi it’s actually John. Hi, good afternoon guys. It’s actually [John Aviv] on here for Jason sorry to disappoint.

Good afternoon John.

Hey, how are you? Quick question on about IS in the in-theater exposure. I was wondering if you could size that for us in terms of what you’re so close to there because revenue perspective and also which program that might be and given the fact that should surround the way out over the next couple of years. How much more downsize is there than at what point and what altitude do you see there for some longer-term growth?

We’re going to turn to our information systems expert Mr. Movious to answer that question.

Sure. The in theater for the company which is a combination of efforts over in theater as well as those contracts funded with OCO funds was about $1.1 billion last year we expect it to be about $900 million this year and IS does have the biggest piece of that. Of the $200 million decline the bulk of that is coming out of information systems. We have four programs that program areas that make up like two thirds of that sales volume and IS holds at least a couple of them. So the bake in program which quite frankly will have legs even after the in theater effort is over. The CRAM effort which will probably drop-off more materially as the in theater efforts wind down and then our electronic systems has a product area in IRCM as well as the laser business which again will drop-off somewhat, but has the long-term viability in the marketplace. So the $900 million, is it going to decline in the future yes, but a significant portion of that will continue into future year periods.

Thanks.

Your next question comes from the line of Doug Harned with Sanford Bernstein. Please proceed.

Yes, thank you.

Hi Doug.

Hi. I was interested in unmanned because now when you look forward and if you’re looking at some of the opportunities out there, I’d love to hear how are you seeing them in, now that includes Navy U-Class variance of the global product platform. But what I am interested in is as you see unmanned aircraft industry mature do you see certain segments where you’re best positioned to compete perhaps others that may not suite you as well. How do you look at this market going forward today?

Well that we’re very excited about the opportunities in the future on unmanned. It’s still a capability really an industry in its infancy in many respects. The great success that unmanned has enjoyed in the past decade I think is testament to the potential, but we’re really just at the very beginnings of that. At global hawk clearly kind of set stage for where things can go from our perspective. The ability to really see a large area and see it perceptively to deploy a variety of different censor capabilities and to the common integral part of the operational doctrine of how things get prosecuted. And I think really helps at the stage and then building on that with the Triton program for the Navy, the Triton program moving along very well which had some really good recent progress completing the initial flight test program and for looking forward getting into [RF] as we get into next year. And then on top of that the success we’ve enjoyed with the UCAS-D program and lending an unmanned aircraft on the deck of an aircraft carrier, all of those things I continue to see as real-stage setters for where this can go. And go not just domestically but internationally as we talked about on some of our calls and at the conferences in the past we’re seeing a growing demand by our allies around the globe for this class of capability and we’re looking forward to supporting that particularly given the support for that outcome that we’re seeing from the United States government with DOD policy focusing substantially on making sure that our allies can have this class of capability and use it in a way that’s highly integrated with U.S. operational doctrine. So there is a good path forward here, the…

And do you see it as a steady source of growth in revenue, or is this something where we may have to wait a few years to really see it move?

I think, there are clearly some near term things that are moving ahead in terms of driving some growth. I mentioned Triton going into LRIP, that's an important part of the process for us. I mentioned the international ones. So, I think it's, it won't be every single quarter, that we've got some great news, but if I think if it on an annual basis over the next few years, I'm continuing to be optimistic about the vector for this. And clearly over the longer term if you take a (inaudible) look, I think this will be transformative.

Okay. Well, thank you.

Thanks Doug.

And your next question comes from the line of Yair Reiner with Oppenheimer. Please proceed.

Great. Thank you. So book-to-bill looks like it would have come in close to 1, had the E-2D contract signed in the second quarter. How are things looking for the back half of the year?

So book-to-bill at E-2D had been an earlier would have been closer to 1.5 fleet. And I think E-2D is just another reminder that the long cycle businesses that we have such as AS and ES tend to get their awards in lumps. And so we have to think about that over the longer period of time.

As well as international.

And Jim’s right, international as well comes in lumps. So we don't guide on awards to book-to-bill for the year so I won't give a projection for the second half. I would just say we're pleased with how things are going.

Great. And then if you could just rephrase or try an earlier question again about the budget trajectory. I guess if you look at even the lower budget that's out there, the sequestered budget looks like 2015 is a bottom. Obviously there is a disconnect between when there is a budget authority and when there is an outlay. But it seems that there is, things that are bit different about the cycle, there is little bit of noise from OCO and so forth. Is there a reason to think that your DoD revenues are going to be substantially different than what we see in the budget authority?

Always hard to tell. Again you made a point and the difference between budget authority and outlay. Ultimately what this comes down to is the customers’ confidence and taking a longer term view that if they start meaningful program activities they're going to be able to get then done. The last thing they want to do is get started and have a calamity on the budget side that creates great efficiency. So there are tough decisions that our customers are going to need to make over the next couple of years as best they can given the haziness of the crystal ball right now. And we'll see where that goes. I continue to see our portfolio as very well aligned with strategic directions that our customers are moving and will need to move given what's going on around the globe whether it’s unmanned, the work we do on a variety of manned aircraft systems, the work that we do in C4ISR and Cyber as well as the work we’re doing in logistics and modernization; I am really pleased with how the portfolio is aligned for the longer-term, but this business is trying to call a trough I think is time (inaudible) right now.

Okay, thank you.

And your next question comes from the line of Howard Rubel with Jefferies. Please proceed.

Thank you very much.

Hey Howard.

Good afternoon. You’ve talked about changing your investment profile or I mean frankly it’s a portion of capital that you expect to have reasonable returns on going forward. Could you elaborate on some of the decisions that went into building these new facilities and are there multiple solutions to having these facilities available to you and how is it proved your competitiveness wise?

Yes, thanks Howard. Any time you make a decision to invest in a new facility you can have to test it against a variety of potential outcomes. And Jim talked a little bit earlier about the scenario work that we do and that’s an important part of it. The facilities that I mentioned in my remarks that ones in Florida in particular are locations where we not only have a great legacy of doing really good work, they are also increasingly centers where we’re able to pull our teams together and really focus the benefit of having collocated teams to come up with new ideas and propel the current programs that we have underway. So, I would say that none of the facilities that I have mentioned so far are speculative facilities on some future opportunity. These are activities and facilities and capabilities that will both benefit our ongoing business as well as positions incredibly well for some of the things that we see on the horizon. There is a natural benefit and we’ve seen this time and again across the company, a natural benefit of pulling together these steps of capabilities with people who can bring a wide variety of discipline to address some of these increasingly complex problems. And if I look at for example what we're doing in Melbourne today and the manned aircraft design center of excellence that we're establishing there, we've had a long-term just tremendous set of capabilities in Melbourne, but we've had other capabilities that we have scattered around the country. And this gives us an opportunity to pull some of those things together, get that people together in a more focused manner to drive some different outcomes for us. And I'm excited about what we already have going on there and what it will represent as we get that activity completed.

So just a follow-up, not only does this sort of position you for some business, future business opportunities, it also may and I don't want to use the word lower cost, but maybe improve productivity or enhance some other, I mean that’s sort where you…

Yes, absolutely. From an affordability perspective, it is almost always more efficient to have teams collocated in facilities that we optimize the use of those facilities as opposed to widely distribute where we have sub-optimal utilization of multiple facilities. So there is a really important affordability and competitiveness perspective that goes into this center of excellence architecture. Jim could you?

Yes. Just our most valuable resource is our people. Allowing our people to be collocated where they can share experiences across a wide range of programs is invaluable. There is no way to really quantify the benefit that comes from being able to utilize the resources on a more effective basis across multiple programs rather than having dedicated to individual programs and then just the sharing of experiences and ideas that comes from being next to the person and seeing what they are working on and how they are approaching the problem. So yes, there is capital that’s going into facilitate the sharing of the resources but it really is how do we best utilize our people resources.

Just one last perspective on this Howard and I don’t want to beat it to death but as you know we are a company built of acquisitions. And so there are -- have still over time been sort of the reminiscence of doing things in different locations that sort of came along to the acquisitions. In some respect this is another sort of next natural step of really integrating the company in a tighter manner and standing back and looking operationally at how we are getting things done and asking ourselves the question is, is that really optimal and in some cases it wasn’t. So we are fixing that and we think we are going to get a really good benefit from that.

Maybe just to conclude, I mean getting the money out of Jim, I recognize probably was quite a challenge. There must be a very -- there has to be a good hurdle here, is what I'm…

Absolutely, the discipline remains high.

Thank you.

Thanks Howard.

And your next question comes from the line of Myles Walton with Deutsche Bank. Please proceed.

Hello Myles.

Thanks, good afternoon guys.

How are you?

Good. Wes, I was wondering if we could take a path down the cyber lane. And I want to ask the question in a way of what are the enablers for you, or any defense company to succeed in moving away from the national security tier of cyber security and more into the business or even the personal commercial tier of cyber security, so more looking at it from the blockages that exist today and the potential for those blockages to be removed in the future that would open up markets for you or companies like you.

Let me give kind of a broad perspective on that. First and foremost on the cyber side, our expertise and focus continues to be on the national security side of it. That's what we have been doing well for many, many years. And we see an incredible demand for that both in the U.S. government as well as in the governments of a number of our allies around the world. As you know that there is hardly a domain that is as boarder less as cyber. So, when it comes to thinking about the needs of both our country and that of our allies, those needs really do spend in a very broad way. So, we see that as a very important dimension and really I would say focusing our efforts in that direction. There are clearly concerns within our country around how this plays and broader realm; either we’re talking about the critical infrastructure or domains beyond that and I mentioned all the way to [bookings]. And we are obviously focused on how we can help in that regard. We have a lot of work that we do with U.S. government organizations, particularly with the Department of Homeland Security that has principal responsibility for the critical infrastructure and the implications of cyber vulnerabilities to the critical infrastructure. So, we're channeling a lot of our energy and capability and to making sure we're supporting DHS as effectively as we possibly we can. When it comes to more of the commercial side of this, over time we like other companies in our industry take a look at how we might use some of our technologies to help beyond our core emission area. In each of those areas, our history as we tend to find the right partners and figure out what makes the most sense; we are typically not a company on the forefront of a commercial side of markets. So we test that from time to time, we look at it from time to time and spend a lot of time talking to others who are in that marketplace to see if there is an avenue which we can both be helpful to generate some value. But I would just reinforce that our company is primarily focused on the business we're in. And we see a big opportunity there. And I want to be careful that we don't get too diluted in chasing things that really aren't up our rally.

That makes sense and I appreciate the color. Thanks Wes.

Thank you, Myles.

And your next question comes from the line of Rob Stallard with RBC Capital. Please proceed.

Thanks very much. Good afternoon.

Hi, Rob.

Quick question on information systems; Wes, you mentioned this is your -- probably your shortest cycle business. I was wondering if you could give us an idea of what sort of trends you'll be seeing there in terms of better proposal activity and those bids actually being turned into awards.

Well, it’s certainly our shortest cycle business. It took the quickest if you will hit when the federal budget pressures came into play and we've seen that across the industry for similar businesses. It continues to be extraordinarily competitive. Our team in information systems is doing an absolutely great job of picking up the competitions that we want to go out and pursue and being successful on them. We had a reasonable quarter in terms of awards in IS so..

Actually reasonable to six months.

Actually that’s right, for the last six months has been quite good. So I am very satisfied with how we’re positioned in that area. It is a business that I see is very important to our company for the long-term not only in its capabilities in the cyber arena that we were just speaking about with miles but also broadly in C4ISR and the work that we do in that domain or all of those domains that are embedded in C4ISR. IS is an absolute leader in our industry and those capabilities are core to what we do more broadly across the enterprise. So we’re testing it out like everyone else in that side of the space, but I am very, very pleased with our competitiveness the portfolio of capabilities that we have in IS, I think is strong in terms of the breadth of the support. Like all of our businesses, we continue to assess all the pieces of it and we look hard at where those are and how we see them for the long-term. But on a relative basis, I think IS is doing well.

In a dead environment they’ve performed very well.

They have.

Okay. Thanks very much.

Thank you Rob.

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

Hi.

Yes. Thank you very much. Couple of questions so with the situation changing in the mid-East and Iraq and some of the other conflicts we have. Is that have any impact either positive or negative on your international sales in the near-term and as you look forward?

You know, Cai I think its just a reminder that there is instability in our world and that both we in the U.S. and our allies around the globe need to be capable of dealing with those things, and does that translate into something in very near-term I really don't see that, it's hard to tell. Might there be some things that pop-up as a result of it? Yes, potentially and we do stay in very, very close contact with all of our customers around the globe to make sure that we are as responsive to as we possibly can be to their emerging needs and are looking forward for them and bringing ideas to them from a security perspective. But I would characterize what we're seeing around the globe right now as more of as having more of an impact on the (inaudible) I'm thinking about use for a more capable and robust global security environment.

Okay. And then switching to Aerospace, your margins were down I guess your EACs were down some 58 million. That is not excluding new potentials like long range striving new class. It looks like your business is switching from development to more production E2D, NATO AGM et cetera F-35. Should we on an ongoing basis expect that EACs in our sector might be coming down as you've completed the development, but then that as you move into production and as you get more form mix that maybe your inherent profitability would improve so the margins would be stable or maybe moving up excluding those two new programs I mentioned?

That's great Cai. I would agree with everything that you said that could be happening. As we get, as we transition from more of a development activities into production margins generally are improving, adding more international content normally would improve margins as well. But as the major new development opportunities ahead of us well. Ultimately what happens with both the international opportunities and the new domestic development opportunities will influence what the overall aerospace margins are going to be on longer term basis.

And Cai I would add as I have said before I am delighted to have the downward pressure on our margin rates that results from taking on new development programs what that means we are being successful in competing for the new opportunities. So that’s the way we are focusing as a team we see there is substantial opportunities out there and we intend to compete for them and hopefully are successful in a significant number of them.

Clearly, you do. But if we just think about the core business, excluding those two to three programs, is it fair to assume that the profitability should start to -- should improve ex- EACs, as we move forward? Because you will have more production work and you will have more foreign work?

I don’t think you get ever to think about margins ex-adjustments, adjustments are a normal part of the business they occur every quarter at every company, even in production. So you there are always risk and opportunities that a program is looking to manage and control and the nature of estimating cost over a multi-year period to which our airplane programs that we received today take about three years to perform on them. So there are going to be risk and uncertainties, opportunities associated with every single one of those contracts and in some cases we are going to do better than we thought and maybe in other cases not as well. We are really working hard to make sure that our team understands first what are the risk and opportunities, so that we can manage them to reduce the risk and harvest the opportunities. But ultimately you're always going to have EAC adjustments.

Okay. Great. Thank you very much.

Thanks Cai.

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

Hey Sam.

Hello. I wanted to go back to a comment you made about the buyback during the initial remarks, which is you went from down 8% to down 9%. And it just seems like looking at where you are at the end of the quarter in the queue, add back a lot of options, if it just stayed there, you would get pretty close to 9% for the year. So I'm just trying to think about how you're thinking about buyback. Because the second half cash flow is clearly much stronger than it was in the first half. And why wouldn't the underlying share count be going down more than the 9%, just given where you are year-to-date?

Well, recognize that we are talking about the weighted average shares outstanding for the entire year. As you go through the year, every month is worth less to that average for the year. And compared to last year, we were fairly heavy in our share repurchases in the second half of last year. So, that is a 9% reduction off of last year's average influenced by the timing of last year's share repurchases. So at this point, our ability to get substantially greater reduction in weighted average shares for this year is relatively small.

Okay. That's fair. And if I can just follow up on the E2D multi-year that was just signed. When does that, when does work on that contract start and is it the type of thing where you do get a margin degradation kind of going back to the question just before, when you first start and then you have to work your way back up to a better margin?

Actual work has started on that multi-year contract and it will typically has a traditional U-shaped approach associated with it. So start off small as we get into the more production and deliver aircraft, again we're recognizing aircraft when recognizing revenue when aircraft are delivered here. So the revenue recognition is going to be more back and loaded. And we're estimating costs for a multi-year contract five years we're likely to start off at a somewhat conservative margin rate and then as we go through time and realize the opportunities and minimize the risk have the opportunity to step up margins.

Okay, thanks.

And your next question comes from the line of John Godyn with Morgan Stanley. Please proceed.

Hi, John.

Hi, thank you for taking my question and congrats to Steve on his extended responsibilities. I wanted to talk a little bit about revenue. It just seems like on a few of these segments aerospace ISPS you're tracking high versus the full year guidance. You didn't revise the revenue guidance in those segments and I am just curious if there is any kind of specific puts and takes that would highlight that might be driving a sequential downtick?

The revenue is always influenced by timing of deliveries or on the cost to cost contracts by the timing of cost and cost is many times influenced by sub-contracted deliveries. And so those kind of factors when are deliveries actually going to occur and we obviously have a schedule we can predict based on the schedule but we work hard to try to accelerate to the schedule and at times if we have supply issues or other issues, we may slip the schedule for a few days and or a month weeks whatever. We’re talking about multi-billion dollar products then it take too much to affect revenues. And then just the cost, cost as I said largely influenced again we have a pretty good sense of our cost of people, people related cost, timing of sub-contractor cost can have a significant impact on revenue on a quarter-to-quarter basis.

Got it. So you wouldn’t flag anything in particular driving…

Not at all.

Got it. Thanks guys.

Hey Jasmine, this is Steve. I think we got time for one more.

And your next question comes from the line of Joe Nadol with JPMorgan. Please proceed.

Thanks guys.

Hi Joe.

Hi. So, Wes your backlog has been ticking down a little bit still but the rate of decline seems to have abated quite a bit over the last few quarters. I was wondering if you felt the same way if you feel a little bit more a little better about the bookings environment more generally. I know you’re not going to give a target you already answered that question you’re not going to start giving bookings guidance but maybe just some big picture color. And then specifically you have an E2D that you already have in Q3, obviously the LRSB looking into next year, what are the other big opportunities domestic and international if you look over the next 6 months to 12 months?

Yes, thanks Joe. It’s one of those environments where well it’s tough, it makes everybody focus a little bit more on competitiveness and I’ve been pleased with the competitiveness of our enterprise. It's delightful to see that we're being successful on a wide variety of fronts and what we're taking on. But as I said in my earlier comments, I am a little bit reluctant to get out ahead of what we see going on in the budget cycle because there is just a lot of uncertainties there yet. And it's important that we all be as clear as we can about the uncertainties that we see. We do have a number of great opportunities in front us. I spoke a little bit earlier in response to Doug’s question on unmanned about some of the international opportunities we see there on the unmanned side. On international, historically electronic systems has been our primary business with about 20% to 25% depending on the year, the sales that ES being international and ES is doing very well and pursuing its international business. And I think this year there will be some place around 25% on their sales internationally. So kind of the new story for us on international is on the Aerospace Systems side of things, both unmanned that I spoke about earlier as well as some opportunities on the manned side whether we're talking about our part of F-35 or the E-2D international opportunities. So we're excited about that. And I also mentioned a little bit earlier in response to Myles question on cyber that cyber also represents some interesting international opportunities for us. So, we do see international is continuing to be a growing part of our business this year, as we've said before are up on international relative to…

Thanks.

Thank you, Jeff.

Well, this concludes the Q&A portion of the call. Wes, final comments?

Well thanks Steve. As I said earlier the first half of the year has again demonstrated that our team’s focus on performance is enabling us to do well for our customer and for our shareholders. So thanks everyone for joining us on the call today and thanks for your continuing interest in our company.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation.