Lockheed Martin Earnings Call Nuggets: Order Outlook and Intern Account Sequestration
Carter Copeland – Barclays Capital: Just a quick question on the order outlook. Obviously, the book-to-bill was about 0.8 by my calculation and it looks like, obviously, you have a plan to have a pretty big step-up there in Q3 and Q4 to hit the levels you talked about on the previous call. You said you hadn’t really still seen any impact from sequester, but I wondered if you could give us an update on your expectations for orders and if anything is changed since the last quarter and how that will shape up for what you are thinking about 2014?
Bruce L. Tanner – EVP & CFO: So I’ll start off by saying actually we’re slightly ahead of where we thought we would be at this point in the second quarter. I try to tee that up. I think either the first quarter or the – call it end of the last year, but we’re actually tracking about as expected or slightly ahead of plan. There is several items and I ask probably just kind of run down the list by business area just to give you an idea what we’re expecting to happen over the next few quarters. So the second biggest item, obviously, is the closure of the last six and seven negotiations for F-35. And when that happens, Carter, I mean, think of the increase in orders as being somewhere in the $4.5 billion to $5 billion amount for just that one closure of contract negotiation if you will. And we are expecting that to happen in the third quarter. I think we’re making good progress on that. Marillyn can fill in some of the details for you if you’d like at a later point in the call. We also have a number of competitive orders for watching in MST in the third quarter, including Space Fence and Air Missile Defense Radar program, AMDR. We also have an Aegis order for the basic Aegis program. Collectively those are about a $1 billion again that we’re expecting in the third quarter. Missiles and Fire Control has both domestic and an FMS order for the THAAD program that’s expected in the third quarter, so think of this as the annual buy from the Army on the domestic side and one of our international customers tagging on to that order. And that’s, I think I said, worked about $1.5 billion in the third quarter. IS&GS as usual is nothing – no one program individually significant, but the third quarter is expected to be higher than either the second or the first and then Carter as we look forward I would expect that the fourth quarter as usual will be our highest quarter of the year. Just to sort of summarize all that, I think the third quarter you should of us probably being back at a level maybe slightly higher than where we are or where we were in the first quarter and if all comes as I just laid out including some of those competitions we should end the year pretty close back at about the $80 billion level like I’ve been talking about the past two quarters.
Intern Account Sequestration
Robert Spingarn – Credit Suisse: Bruce or Marillyn, this could go to both of you. But I wanted to just talk about what we learned in the interim between last call and this call from DoD on sequester. I think about $1 billion was taken from 2013 money for F-35, and it appears to cut I think five aircrafts from the air force and about two from the Navy and the Marine Corp., with the remainder of the 1 billion being RDT&E? So to what extent, if at all, does this impact LRIP-6 and probably more likely LRIP-7 negotiations? How should we think about that those lost seven aircraft from the 29 aircraft originally funded in ’13?
Marillyn A. Hewson – CEO and President: First I’d say that our customer really has not come out with a definite position on how they are going to take the intern account sequestration. I know there has been a lot of speculation. I’m not going to speculate with you on what they’ll come out with, we’re working closely with them they are looking at different scenarios of how they – if they’ll address it, one thing I will say is that they are very supportive of the F-35 and we’ll just have to see how it comes out. We’ve seen – in terms of any impact that we might see on F-35 it will be backfilled probably by international opportunities because as you can see that’s where we are going to ramp up. In fact, we look over the next five years close to 50% of our orders will come from international customers. So, we’ve got to just wait until they come forward with – wait until the Department of Defense comes forward with what their plans are and then we will adjust accordingly.
Bruce L. Tanner – EVP & CFO: Just to add a little bit to what Marillyn said. I think the negotiations on 6 and 7 were clearly targeted to sort of peak the quantities sort of pre-sequestration. So, think of the negotiations that we hope to close fairly quickly here. As being the same quantities we had embedded within the fiscal years themselves not adjusted for sequestration. I think, Secretary Kendall has been pretty vocal and depressed about trying to peak quantities and trying to prevent sort of the reopening of contracts. So, we are optimistic that that kind of plays out well for that negotiation that we are not impacted to the level that you talked about. As Marillyn said, we are watching the FY ’14 budget closely but at least we’ve sort of non-comparisons, in particular, the President’s budget there seems to be more reductions to non-aircraft elements of the program than aircraft programs which we think from sort of the build rate and bringing the overall cost profile of the program down is the right move from our perspective.
Robert Spingarn – Credit Suisse: So, Bruce, if I am going to understand what you both just said it is not so much about quantities it is more about total dollars and these dollars don’t necessarily come off of unit price but from other areas of the program?
Bruce L. Tanner – EVP & CFO: I think you said it just right, Rob. In fact I have said we had a media event this morning and I think I said in my prepared remarks that we are seeing less impact from sequestration sort of (indiscernible) large than we expected to through this part of the year. I’ll say, frankly from our perspective, I can’t speak out for all of the industry, but I think the Pentagon – all the way up and down the Pentagon have been very prudent in the way that they’ve managed the sequestration impacts and I think they’ve done a very nice job doing that from an industry’s perspective.
A Closer Look: Lockheed Martin Earnings Cheat Sheet>>